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growth in the economy or greatly increased Government resources from the existing economy, and probably both. The growing sophistication of Hong Kong industry and the needs of the population over the next decade require an increase, and improvement, in secondary and technical education and the extension of compulsion to secondary as well as primary education as soon as the necessary places are available, (see paragraph 4 et seq of Annex D).
9.
Assuming the money is available, the obvious scope for expansion lies in the fields in which the Government is
already doing much: housing, education and health, together with the administrative apparatus necessary to support the greater public expenditure required. In some sectors, e.g., education and health, nearly all of the cost would presumably be borne on current account; but in some fields changes in the system of financing could make a considerable contribution.
The housing programme, for instance, has been remarkable by
any standards but in our view the degree of subsidisation has
been unnecessarily high and the rates of amortisation
unnecessarily long; the rents of the old estates were as low
as 6% of market levels. We therefore welcome the new policy of the Housing Authority, begun in December 1974, of increasing rents with the ultimate aim of achieving 50% of market rents.
Abrupt action would provoke civil disturbances, and it is
accepted that the process must be gradual, but it is essential that
steady progress should be made in realising further resources by
raising both domestic and commercial rents to realistic levels.
Use can be made of the existing machinery to ensure that where
the means of individual tenants are not equal to increased rents
special assistance should be provided. We also think that
borrowing could make a contribution, and note that the Hong Kong Government is at present negotiating a loan of approximately HK$300 million from the Asian Development Bank for this purpose. We also support the policy announced by the Financial Secretary in
February of encouraging better-off tenants to buy flats
through a home purchase scheme. Such a scheme is at present being
prepared.
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