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considered that the advantages of making Government more responsive to local opinion outweigh the undeniable disadvantages: but the ground would have to be well prepared, not least of all with Peking.

22.

It is improbable in any case that representatives emerging from the lower income groups will be able to undertake the duties of LegCo and ExCo membership without payment and if"Members" were introduced their remunerations would have to be considered; and it may be that the two bodies could become more effective with effective secretarial help and research assistance. Government expenditure for these purposes will need to be regarded as a necessary burden on the taxpayer. It would in any case be small compared with the cost of the Government Service as a whole which absorbs 38% of total revenue.

23.

There may be opposition in Hong Kong to changes of this nature and the process will need to be evolutionary rather than revolutionary in character; but if the Governor manages to effect the first step in June without difficulty (by the appointment of a number of members drawn from a wider social background than heretofore) we must look for some acceleration in the process over the next few years. It may not be possible to move at a pace sufficient to contain the criticism in this country of the present institutional framework in the Colony; and indeed some of those who criticise the non-elective system of government without sufficient regard to the "Chinese dimension" will never be satisfied. But it could certainly be made more credible by the inclusion of LegCo members drawn from the independent trade unions although we recognise that these unions constitute a very small proportion of the work force. It would be desirable, for optical reasons alone, for the Governor to appoint such a figure in June; and, indeed the present carefully conceived system for reform might well come under pressure in Britain without it. Further appointments of members with a trade union back- ground would seem dependent on the growth of effective, and independent trade unionism. The low-profile study of industrial relations referred to in paragraph 19 of Annex C may point the way forward on the develop- ment of trade unionism generally: or alternatively produce convincing sociological and political explanations for their failure, so far, to gain popular support.

24. Meanwhile the Governor must base plans for social reform on the growing public support and enthusiasm for them which it is hoped will produce a climate in the present Legislative and Executive Councils conducive to the necessary legislation and eventually to an increase in

/taxation.

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