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social security system. / Her Majesty's Government have an obli- gation to ensure that Hong Kong is administered in the best interest of all those who live there, and Ministers have made clear their view that this will require the eventual intro- duction of a comprehensive Social Security system.
4.
The precise means by which this objective is to be achieved must largely be for the Hong Kong Government to decide though we will need to monitor the process closely. I suggest that at this stage we should confine our detailed comments to two points arising from those sections of the Paper (paragraphs 9-19) which argue the pros and cons of the three alternative schemes put forward for consideration: the question of a Government contri- bution, and the question of whether or not death and retirement
benefits should be included in the initial scheme.
5. On the first of these points, the paper seems to assume that the Government should bear the administrative costs of the scheme.
But this amounts to little more than a token contribution and our
aim should be to get something more substantial so that the scheme
can play a part in the broader policy of rectifying the present unequal distribution of wealth in Hong Kong. At the very least the Government should undertake to contribute to the scheme any savings that might be made in the Public Assistance Scheme as a result of the introduction of the new scheme. Otherwise the pro- posals could have a positively retrograde effect on wealth distri-
bution.
6. On the second point, it is regrettable that the memorandum seems to come down against the inclusion of retirement and death benefits at the outset on the grounds that there might be political objections. For understandable reasons (ExCo papers can leak) these objections are not spelt out in the draft memorandum. However, the Hong Kong Political Adviser confirmed to me when I saw him earlier this week that the possible political objections
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