(2) Paragraph 3(i) refers to the necessity for applying to the Municipal finances that measure of external control which has to be exercised over the Colony's finances whilst it is still under Treasury control; to the necessity for the Municipal Council carrying out the Colonial Government's responsibility in respect of any C.D. & W. scheme with which it may become concerned; and to the authority which the Municipality can be allowed in regard to taxation.
You have also considered, in your minute of 14th April above, the principles raised in paragraph 42 of Sir M. Young's despatch relating to the general question of external control over the Municipal Council.
5. One factor which must be borne in mind is that Sir M. Young's despatch has been published. Consequently it may be politically difficult now to be rather less liberal on this subject than Sir Mark Young's original recommendations. For this reason it would be better for us now to put our views to the Governor as views on which we want his comments, rather than as final decisions which are not subject to further discussion. We ought also to justify our views to some extent by reference to current practice in other colonies and in the U.K.: this was the main reason for asking the Ministry of Health to prepare the memorandum at No. 115.
6. With the above background in view Mr. Mayle, Mr. Wallace and I discussed this question this afternoon. Our conclusions were as follows:-
3 years
(a) Financial control. For as long as Hong Kong
remains under Treasury control (this is likely to be throughout most if not all the period of the first Council) we do not see how we can avoid some general control over the Municipal finances. In fact however this may be something of a blessing in disguise during the initial period of the Council, until we can see how the experiment is going to work.
The
We also considered the general lines along which this control might be exercised in practice, and feel that, for as long as Treasury control continues, it must mean that the Municipal Council will have to prepare annual estimates which will be subject to the Governor's general approval. estimates would take account of the revenue which the Council may expect to get from rates and fees (which are to be left to the discretion of the Council), and the resultant deficit would have to be met by a grant-in-aid from the Central Governmt. We feel that the definite grant-in-aid would be preferable to allotting to the Council the proceeds of certain specified taxes (to which we said in paragraph 3 (i) of our despatch at No. 86 there would be no objection) since the latter may be subject to considerable
variation