CONFIDENTIAL
What is the position in the current capital works programme in the light of the proposed reduction of the garrison.
f.
Third Stage
4.
The Garrison.
At the second stage it may be that the £41 million figure will have been varied to some extent, on the basis of 5-2/3 major units.
2.
b. At this stage the UK team would be asked to state broad implications of garrisons costing e.g. 35, 30, 25 million at September 1974 prices.
C. The object of this is to try to identify what options might be open in case sufficient money cannot be found by the two Governments to maintain a garrison of 5-2/3 major units.
Fourth Stage
5. Hong Kong's Budgetary Situation.
{
To establish the size of the present Hong Kong contibution at September 1974 prices.
b.
Might Hong Kong's contribution be a graduated one?
C. Should the contribution be expressed in sterling or Hong Kong dollars or both?
a.
Hong Kong's capacity to pay an increased contribution is clearly vital to the discussions. It will therefore be necessary for the general effect of a greatly increased contribution on Hong Kong's budget to be examined,
It is proposed that this should be done by the Financial Secretary in a discussion with Mr J Hansford.
e.
Fifth Stage
6. Form of "Inflator"
a.
The agreement must contain a clause providing for cost inflation during the currency of the new agreement. It is proposed that the inflator should be discussed separately by a sub-committee.
Sixth Stage
7.
Publicity.
a. The presentation of an increased contribution presents both the UK and Hong Kong with problems. We should try to agree a common approach to publicity.
b.
Both the timing of annoncements and their content should be agreed as far as possible.
A - 2
CONFIDENTIAL
CONFIDENTIAL