94
4. The witnesses who appeared before the Commission did not, as stated already, complain of the undue weight of taxation in Hong Kong, but they probably considered the burden only by comparison with the position in China and not on its intrinsic justification which is of course the only valid test. The relative weight of the taxation in any community is in a sense immaterial, what really matters is whether it is justified by the services the Government renders and whether these latter are essential and such as the taxpayer can afford in the conditions prevailing. Any extravagance in the establishment or the conditions of the public service or in administrative policy constitute a burden which industry and trade must ultimately shoulder.
5. The budget shews a balance between expenditure and revenue but only by making the appropriation for Public Works Extraordinary disproportionately small. In other words standing charges, largely personal emoluments, leave an ominously small margin for the development necessary to maintain Hong Kong's competitive position. The fact that a purely fortuitous rise in exchange has come to the rescue of the Government should not be allowed to obscure the real position or to lull the community into apathy in the matter of retrenchment and the restoration of financial equilibrium. This problem obviously requires separate handling and the Commis- sioners could only give it cursory study. We are, however, unanimously of the opinion that the recommendations of the Retrenchment Commission of 1931 should be seriously reconsidered. In fact, we consider that the Commission did not go far enough. They would undoubtedly have recommended a more vigorous wielding of the axe had it been possible to foresee what the coming three years of depression and steadily rising economic nationalism had in store for the Colony. Nor are we satisfied that the Government was convinced that cutting down the establishment was imperative. Vigorous and enthusiastic officials find it easy in a bureaucratic Government to extend their departmental activities as the financial consequences are submerged and obscured by the aggregation in one budget of state and municipal expenditure. A logical preliminary step in retrenchment is to curtail services. Only then can personnel be reduced.
6. An outstanding instance of what we mean came to our notice in connection with the Harbour Office. One of the shipping members of the Commission com- mented on the large number of marine surveyors employed-16-which it is under- stood greatly exceeds that employed in Singapore. Upon investigation it was found that so long as Hong Kong remains a port qualified to give a B.O.T. certificate, the number of marine surveyors required for this service is regulated by the Board of Trade and does not rest with the local Government. It is therefore for the shipping community to decide whether the advantages accruing from this service outweigh the cost of it.
7. The next step involves the recruitment locally of a larger contingent of the Government Service and the employment of temporary officers for special works. This relieves the budget of permanent sterling commitments and provides greater control of expenditure in times of depression.
8. Retrenchment on the lines above indicated would need to be accompanied by measures calculated to reduce to a minimum the dangers of "graft", the common enemy of all Governments, both East and West. Rumours have long been current amongst the public that some departments of Government are not above suspicion in this respect. We refer to this matter with extreme reluctance, appreciating that these rumours are unsubstantiated by proof. They are, however, so persistent that we feel it to be our duty to bring them to the attention of the Government, be- cause it is vital to the future prosperity of the Colony to leave no stone unturned to ensure that the service is maintained at that high standard of integrity and honesty which built up the Colonial Empire and without which it cannot continue to flourish."
9. The Commission excluded the question of Military Contribution from considera- tion as outside their terms of reference. We were, however, surprised and gratified by the magnitude of the funds disbursed in the Colony by the Naval and Military Establishments. So important is the role the Services play in the Colony's internal economy that we would press on the Admiralty and the War Office to utilise the station to the fullest extent possible in their dispositions of ships and military units.