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many economic levers at their disposal, including borrowing
and revenue-raising instruments; and plans to achieve a
further cushion above the HK$25 billion. The HKG view, as
summed up by the Governor, was that the capitalisation proposal was technically feasible but politically impossible, in the circumstances of Hong Kong.
4.
Ms Brown commented that the political argument that the
capitalisation proposal would not run with the Chinese was a judgement that had not been tested. It should be possible
to construct a rationale to overcome the political
obstacles: the case made good economic sense and would
remove a liability from the former SAR, the Chinese had
already asked HKG to set aside funds for pensions (for the
whole civil service) and therefore should appreciate the
purpose. Mr Burns said that we would be committing
ourselves to a long period of uncertainty if we entered into
a debate with the Chinese now. It was clear that HMA Peking
as well as the Hong Kong Government regarded capitalisation
as a non-starter.
5. Mr Stone noted that we had refused to consider the
Chinese demand during the Airport negotiations that Hong Kong set aside HK$15 billion for pensions: It had taken a year to come to agreement recently on some minor technical changes in the laws on pensions.
It was
6. Mr Kerby was certain that Mrs Chalker would conclude
that there was no doubt that an obligation, albeit not necessarily a legal one, existed for HMG to put in place some arrangements for HMOCS officers in Hong Kong. politically unthinkable that we could get away with doing nothing. Mr Burns noted that, whatever the formal legal position, the trend of recent jurisprudence was to accord the right of judicial review in such matters, including
the issue of adequate consultation. Ms Brown said that it would be for Ministers to judge the viability of doing nothing.
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