3564
6
11. A special item which it is proposed to bring into next year's revenue. as already intimated to Hon. Members of Council, is the balance of the Govern- ment House and City Development Fund, amounting to $839,704.12. This will in fact be used for the building of the new Government House which is the first stage in the development of the area in which the present Government House and Colonial Secretary's Office are situated. The necessary authority of Legislative Council will be sought in due course.
Expenditure.
12. Expenditure for 1939 is estimated as follows :-
Recurrent Expenditure
Special Expenditure
Public Works Extraordinary
$35.220.902
989,583.
2,883,285
38,502,760
For purposes of conversion the dollar has been taken at 1s. 3d. for the payment of sterling salaries and 18. 23. for other sterling payments. After deducting the total estimated revenue of $36,097,325, including $839,704 from the Governmen House and City Development Fund, there will be a deficit of $2,405,435.
The position at the end of 1939 is estimated to be as follows :—
Excess of Assets over Liabilities at 1st January, 1938 Revised estimate of Revente, 1938
$ 14,002,278
35,660,000
Revised estimate of Expenditure, 1938
49.662,278 36,135,365*
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Estimated excess at 31st December. 1938
13,526,928
Estimated Reveme, 1939 (including Government House and
City Development Fund)
.36,097,825
Estimated Expenditure, 1989
49,624.248 38,502.760
i
Anticipated Excess of Assets
December, 1939
over Liabilities at
31st
11,121,488
13. The major increases over the 1938 estimates, with the reasons for them, are as follows :-
(i) Head 2. Colonial Secretary's Office: $249.183. Mainly due to the transfer to this Head of the salaries of all Cadet Officers and members of the Senior Clerical and Accounting Staff on leave.
(ii) Head 5, Charitable Services: $248,490. Increased grants arising out
of the refugee problem and social policy.
(iii) Head 60, Air Raid Precautions: $288,065. It is now possible to provide a little more fully for essential expenditure on this aspect of defence; but the present estimate is still largely tentative and may have to be supplemented before the end of 1939.
(iv) Head 6D, Defence Contribution: $1,408,320. The contribution is assessed on the higher estimate of revenue for 1939 but provision is also made for the payment of additional contribution in respect of 1938, which it is estimated will amount to $948.670.
• Including $980,000 for building loans and unallocated stores as in paragraph 7.
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(v) Head 13, Kowloon-Canton Railway; $119,357. Increased costs owing
to more traffic.
(vi) Head 17. Medical; $338,432. In addition to the extra cost of the greater number of patients owing to the influx of population a general expansion of medical services is considered essential, especially in the light of the recent emergencies connected with refugees and the epidemics of small-pox and cholera.
(vii) Head 19, Pensions; $470,000. This Head shows a steady annual increase. Recent changes in the terms of new appointments are expected to effect a saving eventually but not in the near future. (viii) Head 20, Police; $134,432. Increased staff owing to greater respons-
ibilities.
Increased staff and larger Air
(ix) Head 214, Post Office: $130,484.
Mail payments.
(x) Head 25A, Public Works Recurrent; $138,900. An endeavour is being made to catch up arrears of maintenance incurred during the financial stringency of a year or two ago,
(xi) Head 25B. Waterworks; $529,407. This is composed mainly of
two items increase in maintenance charges $129,500 and contribu tion to Renewals Fund $399,907. The latter is in effect a new charge on general revenue arising out of the plan to make the Water Department self-supporting.
(xii) Head 31. Public Works Extraordinary, $1,055,385. See paragraph 14 and separate memorandum by the Honourable the Director of Public Works.
14. The programme of Public Works Extraordinary, which is discussed in detail in a separate memorandum by the Honourable Director of Public Works, includes besides the usual items of a regularly recurrent nature and provision for the completion of various works in progress, new provision for the commencement of a number of large new works in accordance with the programme already dis- cussed in Finance Committee. The works is hoped actually to start in 1939 are the new Government House, Infectious Diseases Hospital. improvements to the Taipo road connecting with the through road to Canton, and certain new buildings for the Police and Air Raid Precautions work. It is proposed to charge all new works connected with the Water Undertaking to loan account. (See paragraph 18).
15. The total estimated expenditure for 1939 is very appreciably higher than in 1938 or in any previous year (although comparisons are much affected by varia- tions in exchange). After allowing, however, for the expected deficit the surplus of assets estimated at the 31st December, 1959, will still excred by a comfortable margin the minimum of $10,000,000 which it is desired to maintain as a reserve. The increases in expenditure, where they are not either automatic or forced upon the Government by the current exceptional circumstances, are no more than an attempt to meet needs which have long been recognised as urgent. After deduct- ing extraordinary expenditure (Special Expenditure and P.W.E.) and the exceptional payment of arrears of military contribution in respect of 1938, expenditure amounts to only $34,281.822 and is within the ordinary recurrent revenue.
D. LOAN WORKS AND PUBLIC DEBT.
16. Of the total loan of $25,000,000 authorised by Ordinance 11 of 1934, 34% Dollar Bonds to a nominal value of $14,000,000 was issued in 1934 at 99% producing $13,860,000. At the end of 1937 $24,085,981 had been spent, of which $10,225,981 had been met by advances from surplus funds. This method of financing has been continued. By 30th June, 1938, a further $325,768 had been advanced, making $10,551,749) in all. The revised estimated total expenditure at 31st December, 1938, is $24,950,000, of which $11,090,000 will have been advanced from surplus funds. In addition, authority has been given for the charging of additional expenditure to a new loan to be raised, expenditure being met in the meantime by advances from surplus funds. On this new loan account $289,374 had
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