CONFIDENTIAL
HONG KONG: STANDING COMMITTEE TO MONITOR THE PLANNING PAPER: BUDGET FOR 1977/78
Introduction
1. Mr Haddon-Cave, the Hong Kong Financial Secretary, presented his sixth Budget on 2 March 1977.
2. After a lapse of many years, the practice of sending a broad summary of the Budget before its presentation to the Legislative Council was revived on Lord Goronwy-Roberts' instructions. A preview of the Budget was received by telegram from Hong Kong three weeks before Budget Day. The department, in consultation with the Secretary of State's Special Economic Adviser and the Economists Department, submitted initial comments on the Budget summary on 17 February. On the department's advice, Lord Goronwy-Roberts telegraphed to the Governor saying that he had hoped to have seen some indications of the Hong Kong Government's budgetary strategy und of their long-term financial planning. He asked the Governor to let him know his thinking on these points and added that the Budget summary had provoked some thoughts that he would wish to discuss with the Governor, either by correspondence or during the Governor'u next visit, after he had seen the full text of the Budget statement.
3. In response to the Minister': message, the Governor telegraphed again on 24 February. He provided a financial planning forecast for the next three years. As for the Budget strategy, he gave extracts from the draft of the Financial Secretary's statement, which consisted mainly of explanations of "guidelines" which were to be followed. Lord Goronwy-Roberts commented on the Governor's report that he was uneasy about the emphasis that was placed on difficulties in the way of achieving the planned increase in social services spending.
4.
The Governor wrote to Mr Stewart on 26 February saying:
"Last year it emerged that there were criticisms in the FCO of the substance of the Budget and it became dubbed 'regressive'. This pejorative and highly inaccurate term took root and proved damaging ... The object of this letter is to put in a plea that if criticisms of this pretty compli- cated document emerge, they are put to us for comment before they are submitted upwards. I think such a procedure is only fair, both to Ministers and ourselves. We would, of course, ensure that our comments were sent quickly so as not to hold up any review exercise in the FCO."
I shall write to the Governor after the Committee has discussed the Budget.
CONFIDENTIAL