the contrary, there is sound reason for graded shop rents to be increased. Even after the 25% rent increase in 1976, the average inclusive rent for these shops now represents less than 20% of the real commercial value as assessed by the Commissioner of Rating and Valuation. Because the rents are so low, and rates are based on the real value, half of the rental revenue from these shops is paid to Government as rates.
5
The proposed increase in net cash terms, for all shops, other than restaurants would range from $12 to $77 per month; for 91% of
The only the shops, the net increase would be below $50 per month. premises which would have a net increase of over $100 are 39 restaurants
The which occupy more space and have much greater business turnover. effect of the proposed increase of 25% would bring existing rents up to just under 25% of commercial rental value. The additional revenue generated by the proposal would be $4.3 million.
6
Although a greater increase could arguably be justified, a 25% increase is suggested this time, so as to avoid speculation that increase will be progressively larger in future. Obviously, a repetition of the 1976 increase of 25% may suggest that increases will be 25% every two years; but it is thought that acceptance of a two-year cycle of rent increases would be to some extent easier to achieve if the percentage is kept steady.
Public relations
7
Rent increases are never popular and there will inevitably be opposition from affected tenants. However, it is the view of the Housing Department that the opposition generated can be reasonably contained, if the Housing Authority is given the same degree of Government backing as it was given in 1976 with regard to the previous 25% increase of graded shop rents and more recently with regard to the 25% rent increase of the majority of flatted factory units. The Secretary for Home Affairs advises that a careful public relations exercise would have to be mounted in order to convince the public of the need for a further increase in these shop rents. The organisation and efficiency of pressure groups continues to improve and they can be expected to attempt to capitalise on the public's lack of understanding of the overall situation, in order to foster their own ends. This, combined with public unease over the immediate economic and employment outlook, is likely to lead to some opposition to the increases proposed. Never- theless an increase of up to 25% could probably be shown to be acceptable. In publicity, emphasis would be placed on the relatively small cash increases involved rather than on the percentage of the increase.
CONFIDENTIAL