and Enter
YOUR TELEPHONE CONVERSATION OF 24 FEBRUARY WITH O'KEEFFE.
(only receival -2/m)
1. THE PUS WHO IS AT PRESENT ABROAD WANTED THE PLANNING MEETING TO BE HELD ON 11 MARCH TO CONSIDER THE PAPERS ON JAPAN, CHINA AND HONG
KONG TOGETHER. EVEN THIS WILL LEAVE US LITTLE TIME FOR THE FURTHER
REVISIONS WHICH WILL BE NECESSARY BEFORE SUBMISSION TO THE
SECRETARY OF STATE.
nt 2.
WE WERE GRATEFUL FOR YOUR DESPATCH OF 13 FEBRUARY ON THE
FUTURE OF HONG KONG. THIS WAS IN LINE WITH OUR OWN THINKING
AND HAS BEEN USED TO REFINE AND AMPLIFY THE FIRST PART OF THE DRAFT
PLANNING PAPER COVERING THE CHINESE INTEREST IN HONG KONG AND THE
POLICY WHICH SHOULD BE FOLLOWED IN DECIDING WHEN AND HOW TO APPROACH
THEM ABOUT THE LONGER TERM FUTURE OF THE COLONY.
3. AT A MEETING SHORTLY AFTER YOUR DEPARTURE FROM LONDON THE PUS
SAID THAT YOU HAD ALSO AGREED TO WRITE A SECOND DESPATCH COVERING
THE DEVELOPMENT OF HONG KONC'S INTERNAL POLICIES ON THE ASSUMPTION, WHICH WE SHARE, THAT THE SECRETARY OF STATE WILL CONTINUE TO DE CONSTITUTIONALLY RESPONSIBLE FOR THE COLONY FOR THE NEXT DECADE (AT LEAST). AS WE UNDERSTAND IT, HE WANTED THE PLANNING COMMITTEE TO HAVE YOUR VIEWS ON THE POSSIZILITIES, TAKING INTO ACCOUNT LOCAL FACTORS, SET BESIDE THE OFFICE VIEWS ON WHAT IS DESIRABLE AS SEEN FROM LONDON. OUR AIM WOULD, OF COURSE, BE TO RECONCILE THE TWO VIEWS TO THE MAXIMUM DEGREE POSSIBLE IN THE FINAL DRAFT OF THE
PAPER TO BE PUT TO THE SECRETARY OF STATE. IN VIEW OF THE IMPORTANCE OF THE ISSUES (AND INDEED OF THE VISIT ITSELF), WE THINK THAT IT WOULD BE HELPFUL IF YOU COULD RETURN. FOR CONSULTATIONS AND ARE SO
RECOMMENDING TO THE SECRETARY OF STATE.
L..
WE REALISE THAT THE PREPARATION OF THE SECOND DESPATCH COVERING A WIDE FIELD PRESENTS DIFFICULTIES? AND WE KNOW THAT THE PUS
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CURRENT IN THE OFFICE. IN VIEW OF THIS WE ARE NOT SENDING YOU THE DRAFT PLANNING PAPER IN ITS PRESENT STATE BUT IT MAY HELP TO FOCUS YOUR PAPER IF I SUMMARISE THE GENERAL THRUST OF THE SECTION DEALING WITH FUTURE INTERNAL POLICIES,
5. THE MAIN CONCLUSION IS THAT DEVELOPMENT OF POLICIES IN THE FISCAL SOCIAL AND LABOUR FIELDS CAN ONLY BE SUCCESSFUL WITH THE ACTIVE SUPPORT OF YOUR OFFICIALS AND WITH THE CONSENT OF EXCO AND LEGCO. PARLIAMENT WILL, HOWEVER, NEED TO BE CONVINCED THAT THE ADVICE OF UNOFFICIALS IS GENUINELY REPRESENTATIVE OF HONG KONG OPINION. THE KEY, THEREFORE, IS THE DEVELOPMENT OF INSTITUTIONAL CHANGE ALONG THE LINES RECOMMENDED IN YOUR DESPATCH
OF 30 MAY 1974: BUT THERE MAY BE SOME SCOPE FOR SEPARATING MORE CLEARLY THE FUNCTIONS OF EXCO AND LEGCO TO ALLOW THE LATTER TO BECOME A MORE OPEN FORUM FOR DEBATE. VIEWED FROM HERE,
VIEWED FROM HERE, FISCAL REFORM IS THE NEXT PRIORITY (PARTICULARLY THE INTRODUCTION OF AN INCONES TAX HIGHER, MORE BROADLY BASED AND PROGRESSIVE THAN PRESENT DIRECT TAXATION) AND A DIFFERENT APPROACH TO THE FINANCING OF CAPITAL EXPENDITURE. GREATER RESOURCES SHOULD ENABLE ACCELERATION OF SOCIAL SPENDING ON HOUSING, EDUCATION AND HEALTH. IT WOULD ALSO SEEM DESIRABLE TO BRING LABOUR STANDARDS AND SOCIAL SECURITY PROVISIONS AT LEAST UP TO THE BEST OFFERED IN HONG KONG'S ASIAN NEIGHBOURS AND COMPETITORS. PROSPECTS FOR TRADE UNION DEVELOPMENT WILL NEED TO BE ASSESSED IN THE LIGHT OF THE RESULTS OF THE LOW PROFILE. STUDY,
6.
FINALLY THE PAPER CONSIDERS THE HONG KONG/PRITISH RELATIONSHIP AND THE NEED FOR BOTH SIDES ADEQUATELY TO UNDERSTAND EACH OTHER'S DIFFICULTIES. IT WILL BE ESPECIALLY IMPORTANT TO CONTINUE THE GOOD WORK YOUHAVE BEEN UNDERTAKING TO PROMOTE A MORE PRO-BRITISH ATMOS- PHERE IN THE COLONY, THE DEPARTMENT HERE WILL NEED STRENGTHENING AS WILL THE ADMINISTRATIVE STRUCTURE IN HONG KONG.
7. WHILE NOT WISHING TO LIMIT YOUR OWN CONSIDERATION OF WHAT MIGHT BE DONE INTERNALLY IN HONG KONG OVER THE DECADE, IT WOULD BE HELPFUL IF YOU COULD DEVOTE SOME SPACE TO THE ABOVE POINTS
CALLAGHAN
COPIES TO
MR MASEFIELD PLANNING STAFF MR DART ECONOMISTS D
FILES HE/HKIOD HD/FED OLA
MR CORTAZZI MR LARMOUR MR MALE
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