1
3
1st. January, 1931. These facts
are:-
(I) That the Unofficial Members, in June 1930, very strongly opposed such increases of salaries, and that it was then pointed out by Mr. John Owen Hughes, the then Senior Euro- pean Unofficial Member (see Hansard for 1930, at p.77) that, at the ex- change of 1s. 10d. such increases of salaries would result in the Colony having to pay
two million dollars extra for the increases in sterling and dollar salaries.
(II) That the direct consequences were (see Hansard for 1930 at pages. 176 and 177) that the Government were compelled, in order to balance their Budget for 1931, to impose the following additional taxation, name-
ly:-
(1) An amusement Tax, to produce
3 lakhs of dollars.
(2) Increases in light dues and in fees for Government Buoys, and in other items of revenue af- fecting shipping, estimated to bring in $364,000.
Valuable Privileges In further support of our conten- tion, that, in the event of such a deficit unfortunately arising, the taxpayers should not share the burden with the Civil Servants, we would point out that
(i) Civil Servants possess the fol- lowing
very valuable privileges, namely, pensions, passages for them selves and family, housing or rent allowance, privileged rates for medi- cal attendance, continuity of employ ment, safety of employment and pro- tection against arbitrary dismissal.
(ii) That, as the result of the pre- sent depression,
very drastic cuts of their employees, by many business have already been made in the salaries
houses in this Colony, and
in
many
(iii) That, Colonies, in order to meet bad times, British
already been made and are still in cuts in salaries or in allowances have force.
Fersians and I am gravely perturbed
the minimum
at the prospect of an estimated deficit surplus balances the sum of $2,095. of $830,000, after taking from ou 789, thereby in one year reducing our surplus balances to figure permitted by the Secretary of State; particularly as it follows the year 1935 in which we have already an estimated deficit of $152,966, and the year 1934 which had an actual deficit of $1,574,870. This dipping, year after year,
cur surplus balances must stop, or we shall in- evitably find ourselves in a most diffi- cult position.
ace.
into
Exchange a Menace
we
In 1934 we budgeted at 1/3 and were fortunate in getting an average budgeted at 1/4 and were lucky to rate of 1/6%, whilst in 1935
Notwithstanding, experience an average rate of 2/-8. these favourable rates, substantial deficits follow- the residents of this Colony will con-
To pass on, we have no doubt thated. To-day we are budgeting at 1/8 and who will venture to foretell the tinue to face up to the present dif- future? The exchange factor is al- ficult situation with resolute courage, ways a problem in budgeting-to-day (3) The increase of the General but we most strongly deprecate their it is more than a problem, it is a men-
Assessment Rate by 4%, from being saddled with additional taxa- 13 to 17%, ton bring in about tion. We are convinced that a low one million four hundred thou-exchange would much benefit our local industries, and would also, by causing an influx of capital for investment, tend to relieve the present abnormal
the known are not these can be met by stagnation in business
factors, for conditions. Incidentally, too, a low dollar would
counter-measures, but it is the nebul- uncertainty, the sword of improve our tourist traffic.
Damocles that hangs suspended which may or may not fall; probably it will, In the past but when no-one can tell. we have always had a sound currency basis to work on for the purpose of budgeting, as there has existed a
sand dollars.
Those additional taxes, imposed to meet those increases of salaries, are still with us, and in times of depres- sion like the present, they are even less popular than when they were first imposed.
Accordingly the Unofficial Members contend that the taxpayers of this Colony are already paying amply for those increases of salaries (which are still in force) and that, to make the taxpayers pay more in 1936 if a sharp drop in the dollar should unbalance the Budget, is a palpable injustice to 'the taxpayers of this Colony. In such an event, as already stated, the Civil Servants ought solely to bear the burden of such a drop, to the exclusion of the taxpayers, who have already been sufficiently mulcted.
Unconstitutional
At this point somebody may ask:- "Why do the Unofficial Members raise this protest just now, instead of waiting for the contingency to oc- cur?"
1. Our answer to that, Sir, is that we gather, from the above-quoted pas- in the Colonial Secretary's sage speech, that the Government has al- ready been in communication with the Secretary of State on the subject of the possible deficit, and that the Secretary of State has, already, with- out the Unofficial Members of or the Finance Committee of this Council being consulted in any way, "sanc- tioned" a scheme whereby such deficit is to be met partly by additional taxation and partly by cuts in the Isalaries of Government Civil Ser- vants. That procedure of the Gov- ernment we object to as being un- constitutional.
We are painfully aware of the fact that the Unofficial Members of this Council are in all matters of voting in a hopeless minority, but surely that fact makes it all the more im- perative that they should at least be consulted before any definite arrange- ment is come to with the Secretary of State for meeting a possible de- ficit in the finances of the Colony by means, of additional taxation
Perhaps we may be told that we Unofficials shall be consulted, if the emergency in question should arise, but what a farce any such consulta- tion must be, in view of the passage in the above-quoted, speech of the Colonial Secretary, in which says: "The Secretary of State has already given his sanction to action' Jon these lines" i.e., on the lines of parti ly meeting such a deficit by additional taxation.
he
In conclusion we would add that we place great reliance
upon that close co-operation between all sections of this community which has been of such marked assistance to Hongkong's progress in the past. (Applause.)
EXCHANGE MENACE
Sir Wm. Shenton Pessimistic
On Future Outlook
USE OF SURPLUSES
the
The Hon. Sir William Shenton, addressing the Council, said:-Sir, On a careful consideration of the Estimates, I am unable to take, in a measure,
same view of this Colony's financial position as my colleagues. In the preparation of a Colonial Budget the following prin- ciples are, I think, fundamental:- (1) The Budget must be balanced; (2) where actual balancing is im- practicable no effort must be neglect- ed to reduce the annual deficit; (3) in framing estimates of revenue and expenditure regard should be had not only to the conditions of the moment but also to the general probabilities over a cycle of years; (4) while ever effort should be made by Government
assist the recovery to
of trade it would not be proper to assume that recovery will be sufficiently rapid to justify regarding the present emer- gency as one of a purely temporary nature which can legitimately be tided over by the use of surplus balances; (5) estimates should be drawn up on the assumption that the present conditions are likely to pre- vail for some time to come.
!
Colony faces to-day is not only pecu- The economic position which this iar but, I believe, novel in its history.
The difficulties
ous
solid and natural value of silver. To- day no-one can predict what to-mor- row will bring forth.
For years past the currenty policy of this Colony has been to keep the value of our dollar in line with that of China. To-day the margin is such that trading becomes almost impossi- ble. The currency of China at the moment is, I believe, no longer on silver but is a managed currency and who knows what the next move will be? The value of silver has, we are told, been artificially enhanced by the policy of the United States of America and that a continuance of this policy will provide them with most of the available stocks of this metal. Who will venture to prophesy how long this policy will be maintained?
I should like to draw attention to an extract from the City Notes of the London Times of the 15th August last which states as follows "Monetary disturbance was caused in the East when America was busy forcing up the price of silver, and now a great disturbance is being caused by a re- versal of that policy. Hongkong is faced with an awkward problem for yesterday her exchange fell one penny to 1/11 being the rate below export point. Ordinarily the Hongkong authorities by modest operations in silver would have been able to cor- rect this position, but with one large buyer exercising absolute predomin- ance over the silver market it is im- possible for the authorities to resort with the same confidence to the usual adjusting operations".
I believe the above position has I accept these principles as iminuta flight of currency from this Colony arisen on more than one occasion when able as the laws of the Medes and might have taken place, but for the
action of the Chief Manager of the Hongkong and Shanghai Banking Corporation. The able way in which he has controlled our currency posi- tion has met with universal apprecia- tion.
Difficult Times
93