3
Financial Structure
ALTHOUGH the approval of the Secretary of State for Foreign and Commonwealth Affairs is 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, and towards this it makes a substantial contribu- tion. Under an agreement covering the five years from April 1, 1971, to March 31, 1976, Hong Kong will make a contribution in kind and in cash amounting to £40 million. About £28 million of this contribution will be spent in Hong Kong on capital works and on the maintenance of buildings which will revert to Hong Kong if no longer required by the Armed Forces. The work is undertaken by the Public Works Department on behalf of HBM Department of the Environment in Hong Kong.
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 Hong Kong other than 'below the line' operations of various official funds.
A small deficit was returned in the first financial year after World War II. Since then, with the exception of 1959-60 and 1965-6, when there were deficits of some $45 million and $137 million, respectively, a series of surpluses, some of them substantial, have been accumulated. Figures for the past four years are shown in Appendix 14. The accumulation of these surpluses in the varying economic conditions which Hong Kong has had to face since the war is a considerable achievement, particularly since it has taken place after charging annually against current revenue all capital expenditure other than a comparatively small amount financed by borrowing. These annual capital spendings have been as high as $735 million; in 1970-1 they totalled some $551 million.