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intended to fill some of the gap left by the absence of a provident fund scheme such as exists in Singapore. Experience of the latter suggests that its mortgage facilities for house purchase are preferred to retirement benefits as an insurance for security in old age.
(f) In a place as crowded and still as badly housed as Hong Kong, provision for leisure becomes an important obligation of Government. Good progress was made in this field, including the expansion of the new Recreation and Sports Service to cover all city and rural districts; establishment of a Country Parks Service with the necessary equipment to administer and protect the countryside, presided over by an Authority and a Board; the establishment and funding by Government and private subscription of the Jubilee Sports Centre at Shatin; the opening of an Arts Centre and the funding of a Conservatory of Music. Two large indoor stadia, a sports centre on the Wanchi reclamation, and several swimming pool complexes are all under construction. (g) To make life in a better environment possible, the population must be spread out into completely new towns. For this, improved communi- cations, in both city and New Territories are essential. Rapid progress was made during the year in a large number of projects including the mass Transit Railway, many flyovers in the city, new road tunnels out of it, and new highways in the New Territories. Double tracking of the Kowloon/Canton Railway is proceeding, and a consultancy on its electrification has been let.
(h) New sites and widespread developments in the New Territories require a different sort of administration to that of the more picturesque and less crowded past. The administration was reformed last year by the appointment of Town Managers or District Officers on the administra- tion of each new town or district. For the first time a specifically New Territories personality was appointed to the Legislative Council. A sub-committee, including strong Heung Yee Kuk membership, chaired by Sir Yuet-keung Kan, was appointed to examine the vexed question of levels of compensation for land resumed by the Government. (i) The strength of the Police was increased by 1,500, and a beat-radio network
was introduced.
5. The foregoing are only some of the major features of a Government operating at full stretch over a very wide field. In money terms these activities, and all others provided for in the Budget of 1977/78, represented an increase of 24 per cent in money terms over 1976 or 16 per cent in real terms. We propose to carry on this extraordinary fast pace of expansion this year with a further increase estimated at 26 per cent in money terms or 21 per cent in real terms.
6. The dust is now settling on the swingeing restrictions imposed by the EEC on Hong Kong textile exports. Two facts in particular emerged. The restrictions will pull back Hong Kong's growth rate unless non-textile exports or other earnings can be increased proportionately; secondly it is clear that until the end of recession releases Governments of developed countries from protectionist pressures, small and politically impotent units like Hong Kong cannot place the reliance on the terms of the GATT that they once could.
7. In these circumstances the Hong Kong Government is acting along two lines :
(a) It is doing everything it can to encourage diversification of its economy, principally by the provision of more land, and also of land at preferential rates for new industry which will assist diversification. Other aspects are being examined by a specially appointed committee. (b) Hong Kong's imbalance of trade with its major export markets represents a special risk in the current protectionist atmosphere. In particular
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