CONFIDENTIAL
011700 MDHN 75951
FEW DAYS.
5. WE SEE ADVANTAGE IN MAKING THE DOCUMENT PUBLIC BOTH AS A MEANS OF RESPONDING TO PUBLIC REQUESTS FOR MORE INFORMATION AND TO HELP IN THE NEGOTIATIONS WITH THE CHINESE. THEY WILL OF COURSE POINT
TO AND COMPLAIN ABOUT THE CONTINGENT LIABILITIES. BUT WE BELIEVE THAT MANY IN HONG KONG WOULD SUPPORT OUR POINT OF VIEW THAT BY ACCEPTING CONTINGENT LIABILITIES WE ARE PURSUING THE MOST COST
EFFECTIVE MEANS OF FUNDING THE AIRPORT AND AIRPORT RAILWAY DEVELOPMENT. THERE WOULD ALSO BE CONSIDERABLE VALUE IN DEMONSTRATING THAT THE COST TO GOVERNMENT IN THE FORM OF CAPITAL EXPENDITURE AND EQUITY INVESTMENT HAD NOT RISEN BETWEEN JULY 1991 AND MARCH 1992.
6. WITH THE CHINESE WE WILL ALSO, AS APPROPRIATE, DRAW COMPARISONS WITH THE COSTS TO GOVERNMENT IN FEBRUARY 1991 4 OPTIONS PAPER. IN ALL 4 CASES THOSE COSTS, WHEN CONVERTED FROM 1990 TO MARCH 1991 PRICES, ARE THE SAME AS OR MORE THAN THE PRESENT COST ESTIMATES. TWO OF THOSE OPTIONS HOWEVER ENVISAGED DEFERRING THE AIRPORT RAILWAY FOR 5 YEARS.
7. WE WILL ALSO, AS APPROPRIATE, MAKE USE OF THE LONG RANGE FORECASTS IN THE 4 OPTIONS PAPER TO UNDERLINE THE POINT THAT WE NOW HAVE A FAR MORE COMFORTABLE CUSHION OF RESERVES THAN WHEN THE AIRPORT MOU WAS SIGNED. IN THE LONG RANGE FORECASTS IN THE 4 OPTIONS PAPER, FOR EXAMPLE, WE ESTIMATED THAT RESERVES AT THE END OF 1991/2 WOULD BE BETWEEN HK DOLLARS 72.4 - 72.9 BILLION. IN FACT THEY ARE HK DOLLARS 92 BILLION. WE WILL ALSO OF COURSE BE PREPARED TO EXPLAIN WHY THE RESERVES ARE SO MUCH LARGER THAN WE FORECAST IN FEBRUARY 1991. THE 3 MAIN REASONS ARE UNDERSPENDING ON THE CAPITAL WORKS PROGRAMME, GREATER THAN EXPECTED REVENUE FROM LAND SALES, AND THE EFFECT OF REVENUE MEASURES IN THE 1991 BUDGET.
WILSON
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