196
1,120,000
Separation Allowances to certain categories of civil servants during a limited period when their families were unable to join theni owing to shortage of passage accommodation
This shows that Recurrent Expenditure was $5,891,595 lower than estimated, and Special and Extraordinary Expenditure, $76,340,590 less than the Estimates. As regards the latter, it was decided after the Estimates were framed to raise a loan to finance rehabilitation measures and all expenditure incurred on such measures was accordingly transferred to an advance account pending the raising of loan funds. The total so transferred was $30,360,747. The few items remaining under Special Expenditure and Public Works Extraordinary include the following which are not directly related to rehabilitation and were not considered suitable for inclusion in the loan;---
Grant to Hong Kong University..
$
1941 to 1946 Local Accounts
25. To turn now to the financial position locally at the end of 1941 and on the resumption of Civil Government in 1946, in view of the loss of records, it is impossible to produce accurate figures as at the 25th December, 1941, but it is estimated that the position was as follows:-
LIABILITIES
$
$
100,000 London... 1,425,000(a)
ASSETS
Deposits Special Funds
6,745,051 379,918
Cash Local..............
Currency Funds
(Notes & Coin)
12,647,534
1,525,000
96,709
Repairs to Railway property damaged by typhoon
Water Works Renewals Fund...
1,158,293
Less local Bank
66,796
overdraft
57,015
Emoluments of Military officers temporarily seconded to Civil
Government
Exchange Adjustment Account..
505
38,685
Advances
Anti Epidemic Measures
26,800
Suspense
1,467,985
13,645,149 790,606
Grant to Lingnam University..
20,000
Investments etc.:-
Special Funds
227,000(a)
Currency Funds:-
Local
London
11,182,324
1,455,210(a)
Surplus Funds
(Fixed Deposit)
1,689,000(a)
General Revenue Balance
(Hong Kong Government
1940 Loan at market value)
5,225,460 (a)
23,461,994
Cash invested in Reserve
Food Stocks
8,710,561
44,393,295
18. The reduction in rehabilitation expenditure was due mainly to the prolonged delays in executing orders placed outside the Colony for stores and equipment generally and to the fact that insufficient materials and staff were available to enable the programme of works to be carried out as expeditiously as had been planned.
19. As regards Recurrent Expenditure, the net savings on Personal Emoluments totalled $3,465,767 and on "Other Charges", $2,425,829. As will be seen from Appendix 9, expenditure was below the estimates under most heads of expenditure.
The largest reductions were under Miscellaneous Services where there were savings of some $585,000 on Hotel Accommodation for Government Servants and of approximately $125,500 on Outfit and Re-equipment Allowances; requirements under these sub-heads having been overestimated.
ASSETS & LIABILITIES
1941 to 1946 London Accounts
20. After the enemy occupation of the Colony, the Colony's accounts in the United Kingdom were maintained by a specially constituted London Accounts Office. This office worked under the direct instructions of the Colonial Office and, of course, had access only to the balances existing and revenue accruing in England. Audited accounts are available covering the period from the 1st September, 1941, to the 30th April, 1946, and the Statement of Assets & Liabilities as at the latter date has been incorporated in this Report as Appendix 5:
21. A summary of the Revenue & Expenditure for the period, prepared locally, constitutes Appendix 6. This statement shows that Revenue amounted to £4,518,178 and Expenditure to £4,529,039, giving a deficit of £10,861.
22. It will be seen that the revenue was largely derived from two items-Income from the Exchange Fund, £1,802,059, and Grants in Aid by the British Government amounting to £2,500,000. The final incidence of the latter, though treated in London as a grant, has not yet been decided. Other items included a refund by H.M. Government of £79,209 in respect of the maintenance of evacuees in Australia, contributions to the Widows' & Orphans' Pensions Scheme collected from the salaries and pensions of Hong Kong officials, £62,187, and recoveries of various accounts due to the Hong Kong Government, £67,167.
23. The main items of expenditure were Maintenance and Relief Payments made to internees and Prisoners of War and to evacuees and others in Australia, Macau and Free China etc., £1,048,745; Volunteers' Pay and Pensions etc., £444,546, and payments to Civil Defence Workers and Temporary Civil Servants, £78,970. This Government has made strong representations against many of these charges to the Colony's funds and it is under- stood that the matter is under consideration by the Colonial Office.
24. The General Revenue Balance held by the Crown Agents on this Colony's behalf at the 1st September, 1941, was £423,757 which was reduced to £412,896 as at the 30th April, 1946, by the deficit of £10,861 on the transactions recorded in the London books during that period.
General Revenue Balance......
44,393,295
26. It will be seen that the General Revenue Balance as at the 25th December, 1941, is estimated at some $23,500,000. All assets in the form of reserve foodstuffs, cash and investments, other than those marked (a), however, were liquidated or otherwise appropriated by the enemy. The remaining liquid assets and liabilities were incorporated
in the Colony's accounts for 1946/47 as indicated in the Statement of Assets & Liabilities at Appendix 7 and, as explained in the footnotes, the opportunity was taken at the same time to restore, in large measure, the Currency Note Security Funds which represent the cover for the Government notes in issue; the 1941 balances having been among the funds confiscated by the Japanese. The net effect of restoring these Funds and incorporating the other balances mentioned was to reduce the General Revenue Balance by a further $2,000.
As also explained in the Statement, there are further contingent assets estimated at some $4,500,000 in respect of advances which may be recovered, and contingent liabilities of a similar sum on account of confiscated deposits for which Government, as at present advised, assumes no liability. In the circumstances and in view of the uncertainty of recovering the advances, these contingent assets and liabilities have not been taken to the Colony's books.
1946/47
27. As indicated in paragraph 24, the General Revenue Balance held in London as at the 30th April, 1946, amounted to £412,896 ($6,606,336). As part of the financial arrangements laid down in London relating to the period of British Military Administration, this Colony was left with the liability in respect of deposit balances which accrued during that period, totalling $2,636,066. This procedure has been strongly contested by this Government but meanwhile the liability had to be brought forward in the Colony's books, thus bringing the Revenue Balance down to $3,970,270, which is the amount recorded in the Colony's accounts as at the 1st May, 1946. The transactions for the eleven months from that date resulted in a deficit of $3,482,835, thereby further reducing the General Revenue Balance to $487,435 as at the 31st March, 1947.
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