3
Public Finances
ALTHOUGH the approval of the Secretary of State for the Colonies is still required before decisions are made on certain major matters including currency and banking, the Colony in other respects has complete autonomy in financial affairs and the ultimate financial authority is the Legislative Council.
Hong Kong is financially self-supporting apart from the cost of its external defence to which a substantial and recently increased contribution is made. Since 1958 Hong Kong's contribution to British defence expenditure has been £1 million a year. In August it was announced that an additional £6 million would be offered over the next six years in the form of a contribution to the costs of the army and air force building programme in the Colony. Revenue from local sources meets the cost of all works and services. The Legislative Council is the sole taxing and spending authority. Apart from the Housing Authority, which has a certain measure of autonomy, there are no financially independent subordinate bodies similar to the local government authorities in the United Kingdom and other Commonwealth territories. The revenue and expenditure figures therefore represent all the public income and all the public expenditure of the Colony excluding 'below the line' operations covering various funds.
A small deficit was returned in the first financial year after the war. Since then with the exception of 1959-60 when there was a deficit of some $45 million substantial surpluses have been accu- mulated. Comparative figures for the past four years are shown in Appendix VII. The accumulation of these surpluses in the varying economic conditions which the Colony has had to face since the war is a considerable achievement, particularly since it has been achieved after charging annually against current revenue all capital expenditure other than a comparatively small amount financed by borrowing. In 1961–2 capital expenditure totalled $329 million; in 1962-3 $430 million and in 1963-4 $544 million; this last figure
Page 45Page 46