1

(cop) /

2

5.

(+)

Managers or District Officers on the

administration 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 leung 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.

The strength of the Police was increased by

1,500, and a heat-radio network was introduced.

!

1

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% in money terms over 1976 or 16% in real

terms. We propose to carry on this extraordinarily fast

pace of expansion this year with a further increase

estimated at 26% in money terms or 21% in real terms.

6.

The dust is now settling on the swingeing restrictions

?

> imposed by the ELC 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

CONFIDENTIAL.

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