G.R.
1
When, however, the functions of the Municipality are increased to cover some of the major activities included in par.31 of Sir Mark Young's despatch of 27th October, 1946, the relation of revenue to expenditure will be considerably modified.
There are clearly (apart from certain fees, etc.) no revenues which are particularly appropriate to match expenditure on education and social welfare or public works or utilities. The same superficial examination of the Hong Kong estimates suggests that to undertake these expenditures, the Municipality might need a share out of the major items of Customs and Income Tax, which it would be clearly appropriate to transfer to them. In these circumstances, it seems likely that a grant-in-aid would be inevitable. We would however suggest that you should ask the Governor to consider the alternative (or perhaps complementary) course of grants for specific purposes, as is of course the practice in this country. The extent to which this course was advantageous, would depend on local considerations and facts of expenditure and revenue which we cannot prejudge here.
In any case it will clearly be necessary for the annual estimates of the Council to be submitted to the Central Government for approval, and for these estimates, either in connection with the grant-in-aid from the Colony or generally, to receive the same consideration in London as the Colonial estimates. It may be well to add a sentence after the third sentence of par.4 to make this latter point clear. The point about grants for particular purposes might be made by adding to the last sentence of the same sub-paragraph, the words "or by grant from the Central Government for a specific purpose".
As I said to you yesterday, I am not at all clear whether what you suggest really is a
/modification