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The Committee now proceed to consider what portion of this charge should be borne by colonial revenues.
18. In the correspondence between the Colonial Office and the Governor Appendix of Hong Kong, already quoted, it is stated that "Her Majesty's Government B, No. 1, admits that the larger part of the garrison of Hong Kong is maintained for No. 3, para. Imperial purposes." It is unnecessary to consider how far that statement is 8, No. 12, applicable to existing conditions, for even if it were held that the garrison is paras. 7 now maintained chiefly, or solely, for local defence, the revenues of the colony and 8. would not admit of its bearing any large proportion of the cost of its garrison. The revenue of 1888 is estimated at 266,1201., while the cost of the future garrison will amount to 283,000%.
.
19. As stated in para. 10, the colony in 1865 defrayed one-fifth of the estimated cost of its garrison, this amount representing 16 per cent. of its revenue at the time the contribution was fixed (para. 13).
One-fifth of the cost of the future garrison would amount to 56,0001. which represents 21 per cent. of the estimated revenue of Hong Kong for 1888.
para. 12.
20. Looking to the fact that the proportion of charge fixed in 1863–64 Ibid, No. 1, was very moderate, and that the intention at that time was to augment it, para. 15,
and No. 3, a rise in the colonial military expenditure from 16 per cent. to 21 per cent. of revenue would not in itself seem excessive. If that amount were defrayed by the colony, it would leave the expenditure on the Hong Kong garrison to be incurred by the Imperial Government at 224,000l. as compared with 80,000%. in 1865. The ratio of increased charge to both Colonial and Imperial funds would then be identical-viz., 180 per cent.
21. Bearing in mind, however, that the colony has just incurred a capital expenditure of 116,000l. on defences, and that it is recommended in para. 34 that it should incur a further capital expenditure on the construction of barracks, charges which it did not incur in 1863 when the contribution was originally fixed; and that it will have to provide for the cost of local Militia and Volunteers, at a possible cost of 3,000l. a-year, the Committee consider that one-fifth of the cost of the regular garrison or 21 per cent. of revenue in addition to the above charges would for a time press unduly on the colonial
resources.
22. Taking the proportion of military expenditure to revenue fixed in 1863-64-viz., 163 per cent., the charge to the colony for its garrison at that rate, on the basis of its estimated revenue for 1888 would give 43,9087.; striking from this the 3,9081. as a possible expenditure on local Militia and Volunteers, the sum of 40,0001. a-year is arrived at. This represents one- seventh of the cost of the garrison as against one-fifth which the colony paid in 1865, and 15 per cent. of revenue as against 16 per cent., the proportion of military contribution to revenue fixed at that date.
23. The Committee recommend that the future contribution of Hong Kong towards the cost of its garrison should be 40,000l. a-year for five years from 1st January 1889, and that at the commencement of 1893 the contribution should be reconsidered with a view to its readjustment in 1894.
24. In addition to its expenditure on defences the colony has, in recent years, undertaken various public works for the improvement of its sanitary condition, for the supply of water to the City of Victoria, and for other minor services. These have not only absorbed the whole of its accumulated balances,
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