CONFIDENTIAL
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Public Finances
4.
Revenue collections so far this year have exceeded expectations.
However, the increased revenue will be absorbed in meeting increased
expenditure stemming from the 1979 civil service salary awards,
higher public assistance rates, increased payments under the Defence
Costs Agreement following pay awards to the Armed Services and
increased expenditure on illegal immigration from China and refugees
from Vietnam.
Public Works Programme
5. The Governor has stressed that, notwithstanding the need to cut
back demand and relieve pressure on the building industry, priority
will still be given to the public housing programme. However there
has been criticism of the Government's decision, announced in the
1979 budget, to reduce the annual public housing target from 40,000
to 35,000 new units of accommodation. The housing programme is
particularly sensitive at the moment because of the increasing
pressure on accommodation caused by the massive influx of immigrants
from China. The criticism takes little account of the fact that even
at 35,000 units, the programme is still nearly double the size it
has been any any time in the past.
6. The Governor may wish to outline how he expects the measures in
the 1980 budget to affect the public works programme, and what the
public reaction is likely to be.
Hong Kong and General Department
CONFIDENTIAL