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CONFIDENTIAL
XCC(77)11
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機密
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A skeleton format of a proposed balance sheet and notes on the balance sheet which would be used for the 1976-77 accounts and subse- quent accounts, is attached at Annex C, for demonstration purposes. figures shown for land values are not the final figures, but are assessed figures using the convention described in paragraph 5(a) above. It has been assumed that the Housing Authority's activities in 1976-77 will not show any marked change from those previously envisaged and the general revenue reserve figures in the balance sheet has been augmented to reflect this. While both the figures for general revenue reserve and the Hong Kong Government contribution therefore are at this stage only approximate estimates (as are the other items shown in the balance sheet), it is con- sidered that the arrangements proposed would show explicitly the relative financial involvement of the Hong Kong Government vis a vis the Housing Authority.
Implication for the Housing Authority's rent policies
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As explained in the previous memorandum (paragraphs 18, 19), acceptance of the foregoing proposals means that the Authority will be able to introduce a more flexible rent policy. Rents will not be tied to the cost of individual estates but will have regard to:
(a) tenants' ability to pay;
(b) general price levels, and a fair relationship with rents
in the private sector; and
(c) such factors as location, the quality of the accommodation,
and other relative advantages and disadvantages.
Rate of return
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As explained in the previous memorandum (paragraph 20), having removed the need for rents to be cost-based, the Authority should be required to show a reasonable rate of return on Government's contribution (excluding the value of land). The rate of return should be at a level that ensures prudent financial policies on expenditure on the construction and management of building and on setting rents and other sources of revenue.
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The rate of return required in a year will be related to a base consisting of the total of Hong Kong Government's contributions (but excluding the value of land). The notional payment due to Government (and to be reinvested), in respect of the Hong Kong Government's con- tribution will be related, therefore, in any year to the base consisting of the sum of:
CONFIDENTIAL #2