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one direction. China now derived £600 million a year in foreign
exchange from Hong Kong.
3.
Mr Jeaffreson explained that public expenditure in Hong
Kong was geared to revenue, which in turn was geared to the overall trend of the economy. The current sluggishness in the economy, coupled with price inflation over the past year, had therefore
resulted in the possibility of a $2,000 million deficit in the
1975/76 Budget. The present intention was to close this deficit
by reducing expenditure by $1,000 million, and to raise between
$500 and 600 million each by way of loan finance and additional
taxation. Thus, work on some items in the Government's ambitious
social programmes would be delayed by at least two years.
4.
Mr Cater outlined the structure and the work of the
Independent Commission Against Corruption. Corruption no doubt
existed in Hong Kong, as it did elsewhere, but the ICAC had enjoyed
a large degree of co-operation both from Government departments and
from the population generally, and had succeeded in recruiting a
considerable number of good quality, devoted officers. In the
first 11 months of its operation the ICAC had made 114 arrests of
which 66 had resulted in convictions and 25 were being prosecuted.
The sentences passed by the courts, particularly those involving
the confiscation of unaccounted wealth, were generally considered
to be satisfactory. Mr Cater was confident that the ICAC would
achieve significant results in 2-3 years' time.
5.
Lord Goronwy-Roberts remarked that the education system could make a significant contribution to the fight against corruption but that the system should itself be cleared of corruption first.
6.
Lord Goronwy-Roberts thanked the Hong Kong officials
present for their presentations, which he noted would be expanded
upon individually later in his programme. He indicated that he
would appreciate similar presentations on constitutional advancement
and on Hong Kong's relations with China.
Government House 13 January 1975
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