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was agreed which took account of all these points.
7.
As regards minor works and maintenance, in view of the existence of actual expenditure records by PWD Hong Kong and no difficulty foreseen in accounting for inflation, the HK Government was in favour of treating this element in a similar way to capital works for cost sharing. From the UK point of view, there were some advantages in the present arrangement whereby all work was done regardless of cost and a notional sum included in the agreement even though this figure had not been reached in most years. with the projected change, some audited account of the work carried out would be required. It was agreed that there were no overriding reasons for not reverting to a basis nearer to actuals and a form of words to become paragraph 8 of the MOU was jointly accepted.
Item 4 Other Provisions in the MOU
8.
New paragraphs were proposed by the HK Government to cover the position whereby having become a major contributor to the Garrison costs, it would be able to call for a review of any of the cost elements. It was pointed out that certain cost elements eg the pay of Service personnel, could not be susceptible to any such review. With this in mind, an additional paragraph to become paragraph 10 of the MOU was agreed.
9. The Inflator Agreement included as Annex B to the MOU would be expanded within its paragraph 2 as proposed under Item 2 when figures were available. It was also agreed that paragraph 4 of that Agreement should be amended to reflect what had been agreed under paragraph 3 of the MOU. Paragraphs 5 and 6 could be deleted, the former because of the figures to be included in paragraph 2 and the latter because the point had been incorporated into para 9b of the MOU. A variation to paragraph 3(j) of the Agreement was proposed by Hong Kong to make it read "for (ix), movements in the annual rents of the flats in Hong Kong in use by the Garrison". This was accepted subject to it proving practicable to assess the inflation element for hirings in this way.
The Revised Memorandum of Understanding
10.
The revised draft MOU produced as a result of the meeting is attached.
Distribution
HK Govt (Mr L M Davies)
CBF Hong Kong
UK
Those present plus
AUS(CF) MOD
D of DP(C) MOD
DDAQ MOD
ASD 2 MOD AUS(L)
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6 copies
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3 copies
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