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Sir M. Young's view was that the reference to policy control by the Central Government over certain subjects which are to be within the defined functions of the Municipal Council would cause a general feeling in Hong Kong that that body is to have the shadow only, and not the substance, of power. In this connection he referred also to the final sub-paragraph of paragraph 3(m) of the draft despatch at No.63, and said that in his view the process of handing over power to the Municipal Council ought properly to be described as transfer rather than delegation. Mr. Seel pointed out that precedents exist in this country for local authorities to exercise their functions in conformity with general policy direction from the central authority, and cited as an instance the arrangements provided for in the U.K. Education Act. Sir M. Young maintained that the essential difference between Hong Kong and the U.K. in this respect is that Parliament here is elected whilst the Hong Kong Legislative Council will be only partly and indirectly elected. We indicated to Sir M. Young, on the lines of the first six paragraphs of Mr. Roberts- Wray's minute of 14th April, why we were of the opinion that we should use the term "delegation" rather than "transfer", and why we felt some degree of policy control by the Central Government to be necessary, adding also in regard to the latter point the consideration that the Municipal Council's jurisdiction will be confined to the urban areas of the Colony, and that proper co-ordination, of all activities of the Administration as between/urban area and the rural area (which will be administered by the Central Government) can only be achieved by the subordinating the activities of the Municipal Council in matters of common concern to both areas to the general policy direction of the Central Legislature. We also pointed out to Sir M. Young that both these points had been presented to him in our savingram at No.30 (see paragraphs 8(XI) and (XII) of No.30), and that, in the absence of any comments on these points in his reply at No.49, we had assumed he had no objection.
After further discussion Sir M. Young finally said he did not wish to press his objection, especially since it would involve fresh delay, and expressed his agreement with the re-draft of the first sentence of paragraph 3(e) now proposed.
(4) Paragraph 3(g)
The second sub-paragraph to read:
"As regards the question of the powers of the Municipal Council in the matter of taxation, whilst there is no objection to the Municipality acting as agents of the Central Government for the collection of specified taxes, or to the proceeds of specified taxes being assigned to the Municipality to meet expenditure, nor to the Municipality being empowered to levy rates and to fix the fees payable in respect of licences, etc., issued by it. I desire to make it clear, to avoid any possible misunderstanding, that it would
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