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XCS(71)3
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To sum up, the military garrison to which the present defence costs agreement was intended to relate was based on 5 2/3 major units (but with a distinct possibility that this might be further reduced by one), there was a subsequent decision to increase this after 1971 to 7 2/3, but this has been subsequently modified to 6 2/3; and it is on this basis that the present paper has been written. These changes have made it difficult to present the matter to Honourable Members before this, now, late date: and for this delay apologies are tendered.
Basis for Formulation of a Contribution
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While it remains the intention to achieve, if possible, a solution before the introduction of the forthcoming Budget, it has to be recognised that this may not now be possible, since even after the views of the Executive Council are received it will be necessary for the proposals to be submitted to United Kingdom Ministers for their observations, and to the Finance Committee of the Legislative Council,
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The composition of the military garrison is currently: teivasy
3 Gurkha battalions
2 British battalions (70 Mom Dada Labels via m
1 British Artillery Regiment
1 British Armoured Squadron (equivalent to 1/3 major unit)
1 Gurkha Engineer Squadron (equivalent to 1/3 major unit)
British Forces Headquarters elements.
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Apart from the difficulty of determining the actual costs of the garrison arising from the changes of policy referred to above, another difficulty arises. This is to determine the underlying principle on which any offer might be tendered to HMG. As has been recalled above (see paragraph 4) there has been previously a fundamental difference of approach in Britain and in Hong Kong to the justification for a defence contribution. Different calculations would result according to whether regard was had chiefly to capital or recurrent costs, total costs or foreign exchange costs, internal security or external defence, etc. The 1966 view taken by HMG was that the contribution was related to the foreign exchange costs of that part of the garrison which was provided for the purposes of maintaining internal security. It was a view which did not commend itself to Unofficial Members of both Councils, with whom joint meetings were held at that time, but it is only one of various possible views, each of them controversial in its own way.
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After careful consideration it is suggested that the least in- appropriate basis upon which to found a proposal by the Hong Kong Government would be to relate it to the economic benefit to Hong Kong of spending by the Ministry of Defence in Hong Kong on the defence of the Colony, not attempting to distinguish between internal security and external defence, but eliminating from consideration the cost of defence arrangements not directly related to either the internal or external defence of Hong Kong as such. Put another way,
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