124
quarters contemplated that rents should be charged sufficient to show a gross return of about 34% on the capital cost. The rents proposed to secure this return appear to have approximately equalled in practice the rent allowances paid, indicating that they were approximately 50% of the rentals an officer might reasonably be expected to pay if living outside Government quarters. This principle was more definitely recognized by the Salary Commission of 1919 which recommended rent allowances at the rate of 50% of the rent actually paid by the officer. Rentals for Govern- ment quarters were, however, fixed at 6% of salary on the precedent of the practice at Ceylon and later in order to remove certain anomalies the present system of rent allowances was introduced.
6. It is clear from this history of the matter that rent allowances were originally introduced deliberately in order to supplement salaries, that the provision of actual Government quarters came later and that it was always intended that the rents paid for such quarters should be less than an officer would have to pay to an outside landlord. Government houses and flats were not erected or purchased in large numbers until some years after the initiation of the scheme of rent allow- ances and Government quarters have never been available for more than a small proportion of senior officers.
7. When the general review of salaries by the Gollan Commission took place in 1929 the scheme of housing assistance and rent allowances was accepted and endorsed and was taken as part of the basis on which salaries were then fixed. Although not strictly within our terms of reference we think it desirable, in order to correct misapprehensions, to point out that although sterling salaries fixed by the Gollan Commission were higher than those previously in operation there had pre- viously been in operation a system of exchange compensation which greatly increased the actual emoluments drawn by sterling paid officers; and the increase in sterling salaries were insufficient to compensate for the withdrawal of this exchange compen- sation system.
8. A further revision of certain salaries has recently been made, primarily in order to bring into harmony with salaries in other Colonies the emoluments attached to posts forming a part of the Unified Colonial Services which have recently been established in the Colonial Empire generally. We are immediately concerned only with the effect of these new scales as regards payment for quarters, but it may be noted that these scales, which apply only to new appointments and promotions, are in general somewhat lower than existing scales and in particular provide lower pensionable emoluments so that some ultimate economy may be expected from their introduction. The feature which principally concerns us is that under the new scales officers will be required either to pay a full economic rent for quarters up to a maximum of 15% or will be entitled to wholly free quarters as part of their emoluments.
9. In our opinion the present system substantially carries out the intentions in mind when the original system of rent allowances and assisted quarters was devised. The rentals of 6% at present charged may be regarded as approximating to 50% of the economic rental based on costs.
10. We have also been supplied with information regarding the practice as regards provision of quarters for Government officials in other parts of the British Colonial Empire. In African colonies the usual practice is to supply free quarters to all officers. In the West Indian Colonies, Mauritius and other smaller colonies the provision of any Government quarters is exceptional. In the remainder Government quarters are usually supplied at rentals varying from 6% to 10%. In brief where quarters are supplied by Government it is nowhere the practice to charge a full economic rent. In the Straits Settlements and Ceylon rentals of 6% of salary are charged as in Hong Kong.
11. Our unanimous conclusion is that having regard to the origin of the present system of rent allowances and housing assistance, to the fact that existing