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2
2. Mr McLaren is, however, in my view, right not to be
complacent. A number of important internal problems remain, viz;
a. RELATIONS WITH THE UK (para 6).
Undoubtedly these have improved but we neglect this aspect at our peril. In particular we must make every effort to improve our own earnings from Hong Kong both through invisible and through visible exports. People in Hong Kong for their part cannot afford to forget that their very existence depends
on the UK.
b.
TAXATION
1. I can well understand the argument in the last sentence
of paragraph 9. Increases in taxation need to be handled carefully, but the Hong Kong line tends to be a bit exaggerated.
C. TRADE UNIONS
I think that we are going to have problems with Professor Turner's report. The Hong Kong Government clearly expect that it will not be to their liking. On the other hand, the TUC may well support items in Professor Turner's report which the Hong Kong Government wish to reject.
a.
SOCIAL SECURITY
I do not find Hong Kong arguments about the extensiveness of their public assistance scheme and the objections to compulsory contributory schemes for social security convincing. I am sure that we shall need to keep up the pressure on this side.
e.
HOUSING
I am inclined to think that the belief expressed in the last sentence of paragraph 17 is optimistic. I fear that we may indeed have private slums in Hong Kong. In that case the Government may be forced to buy these up or enforce
standards.
f. CIVIL SERVICE
The shortage of candidates for senior posts in two or three years time referred to in paragraph 19 underlines the desirability of expanding secondments from the UK. We have
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/agreed