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admit that in labour legislation Hong Kong must move faster and later admitted that more money should be found for transfer payments. Unfortunately he had backed down on his apparent acceptance at the meeting with the Secretary of State on 3 May of the appointment of a Trade Unionist on Leg Co. All he could suggest was the inclusion of a man who was a Trade Union Adviser and who had been active on Mutual Aid Committees, but he stressed that this man must not be counted as a Trade Unionist. He added that he would put a Cable and Wireless strike leader on the labour advisory board in the hope
He could not, he that in due course he would graduate to Leg Co. asserted, go further than this.
He asserted
4. On the budget the Governor was defensive. categorically that Hong Kong was exempted from consulting London (the Colonial Secretary is to give us the reference!).
But I think he recognises the need to increase taxes once the revenue commission has reported. He showed no enthusiasm for the Deputy Financial Secretary's arguments that higher rates would lead to move evasion or a flight of capital. (Interestingly enough I found the Chinese Deputy Director of Home Affairs, Mr Chui, spontaneously urging higher and more progressive taxation and the Mutual Aid Committee Secretary whom I met called specifically for higher public expenditure on welfare facilities as a necessary crime prevention measure,
5. I sounded out the Governor on the question of the Financial
I remain convinced Secretary's future but got no real reaction. that he and his deputy, Mr Jones, are among the main obstacles to reform but the Governor was reluctant to admit this or to face up to the consequences which are of course very substantial.
6.
The Governor was highly critical of the FCO handling of the planning paper and told me that I should have sent him a copy of the draft (despite the PUS's instructions). He would not admit that part of the difficulty had been his own failure to send us at an earlier
I studiously avoided any stage his despatch on internal affairs. attempt to rake over the history, stressing throughout the need to make sure that we as agreed a paper as possible before he returned to London in the week beginning 19 July.
han
24 May 1976
Star Collage.
HA H Cortazzi
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