X
This matter was discussed this afternoon at a meeting (over which Sir S. Caine presided) with Kr. Follows and others. The general conclusions reached were:-
(a) that this was a desirable project which we
should like Hong Kong to go ahead with; but
(b)
the Treasury would not be likely to approve the issue of a loan for the purpose here; and
(c) in these circumstances the best course would
be for Hong Kong to endeavour to finance it, as far as possible, from surplus balances, raising whatever additional money was necessary by way of a local loan or premium bond issue. There will probably be no objection, for this purpose, to their exceeding the present limit of their local loan commitments, which have not yet been fully issued. Mr. Follows said that he thought that they could probably raise another $20,000,000 or so by way of local loans if necessary.
Sir S. Caine said that he thought that we ought to have fuller particulars of the scheme before coming to a final conclusion. He asked whether the scheme would consist of a series of reservoirs such a nature that it could be cut short at a given point if the population of Hong Kong were to begin to decrease. Mr. Follows said that he thought that this was the case, and he indicated that it was unlikely that Hong Kong water supplies would derive any benefit until about after 5 years work.
Despite the Governor's comment to the effect that he saw no prospect of financing the scheme from revenue, Mr. Follows felt that it might be possible to finance some part of it, at any rate in the initial stages if it was spread over a period of 10 years or so, from surplus balances. It was agreed that it would probably be necessary to consult the Treasury as regards the extent to which the present limit for local loans could be exceeded.
The next step will, I think, be to take this point up quickly with the Treasury and then give the Governor a general picture of our view, in that of to above minute, emphasising, inter alia, that there will be no possibility of financing any portion of the scheme with assistance under the C.D. and W. Act since any loan issued under that Act would fall to be borne against Hong Kong's allocation under the Act and would have the same effect as an ordinary C.D. and W. grant.
The draft despatch prepared for transmission to the Governor should be seen by Sir S. Caine before he leaves the Office with,
B.S
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1.P. Bancroft, Treasury 3. Report by Dr. Dicey
12.7.1948.
W/
w/c (1)
14.7.48
27-6-48.
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