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planned by the Hong Kong Government, should include better provision for rest days and statutory holidays (both by 1 January 1977) and the introduction of compulsory annual leave with pay (by 1 January 1978); the prohibition of employment of minors under 14 years of age by 1979 and under 15 by 1980 (ie as soon as there are the assisted secondary school places available); the wider coverage of industry safety regulations; improved sickness benefit and redundancy payment. But the absence of a minimum wage, statutory hours of work for all workers and provision for overtime are also particular subjects for criticism: thise will need to be reconsidered. The programme must also ensure more rapid progress in the application of ILO Conventions. Although significant progress has been made in labour legislation in recent years, it is essential to be satisfied that this will continue along the lines and within the timescale suggested above.
Fiscal
22.
In addition to labour legislation more will have to be done in the field of social expenditure along the lines of the programmes outlined in paragraphs 26-28 below. These will, of course, add an extra financial burden, particularly at a time when the Hong Kong Government has already undertaken a number of other programmes essential to the development of an urban society: eg, organised recreation and other services for youth; a modern communications system including an ambitious underground railway; and urban renewal and improvements (see Annex D). We have some doubts of the Hong Kong Government's ability to finance this programme without an increase in the level of direct taxation or recourse to borrowing or probably both. As a preliminary step, a Committee has been set up to make recommendations about reform of the fiscal system, and these are expected by early next year. We cannot at this stage expect proposals from the Hong Kong Government on the fiscal measures that will then follow. The Hong Kong Government considers that the correct approach to forward planning is to establish what social programmes are necessary and at what level and to work from this to an estimate of the appropriate level of public expenditure. From the 1976/77 budget papers it is possible to derive an estimate of total public expenditure of 22% of the estimated GDP in 1979/80. It is not possible at this stage to say whether the programmes outlined below can be met from this.
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