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We are getting an increasing number of proposals for developments in the New Territories, and it seemed to me that the time had come for a review of the political con- siderations which must necessarily be taken in to account in considering such proposals. From this point of view, the historical note at No. 1 and Mr. Sidebotham's memorandum at No. 2 are very useful.
It seems to me that, unless we approach this matter from the fundamental assumption that the New Territories will not be handed back to China until the expiration of
the lease in 1998:- (a) there would be an almost overwhelming case against embarking upon developments, (b) that policy based on such an assumption would be in complete conflict with our doctrine of 'trusteeship".
My conclusion, therefore, is that, generally speaking, we should not be deterred from embarking on such develop- ments, even though there is an undeniable risk that circum- stances may compel us to give up the New Territories before that date, and even though there is a most extreme uncertainty about the kind of arrangements which we might be able to make with China as to the control of any public utility services which may be established in the New Territories.
I also agree with Mr. Sidebotham's conclusion that any such developments should be financed on the basis that the capital cost will be fully amortized before the end of the lease.
In view of the political and financial implications of such a policy, I also agree that we should now endeavour to carry the Treasury and the Foreign Office with us.
At the same time, it is, I think, quite clear that, within the framework of such a policy, we must examine each individual proposal very critically. As regards the present proposal for the construction of a new reservoir at Tai Lam Chung, it seems to me that the immediate and growing needs of Hong Kong Island clearly require that this develop- ment should be undertaken.
(sgd.) J.J. Paskin
12.10.1948.
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As regards the main issue raised in the preceding minutes, I cannot think that anyone would take the view that we would be justified in holding back on development in the new territories owing to the fact that they will have to be handed back to China in 1998 and that there is always a possibility of their being handed back earlier. In my view, such an attitude would not be politically possible.
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(sgd.) W.L. Gorell Barnes
14.10.1948.