463
PUBLIC RECORD OFFICE
Reference:
THEPHIC.O.882/11
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
C. 83303/31 [No. 3].
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No. 3.
THE GOVERNOR to THE SECRETARY OF STATE.
(Received 1.50 p.m., 25th May, 1931.) TELEGRAM,
Your telegram of 19th May, No. 99 No. 115. 25TH MAY. Confidential. Confidential. The proposed provision was suggested mainly because of dissolution of the Council. But since my authority to assent to the Bill is derived from revoked Order in Council and since these powers are not preserved by Article 3 of the new Order in Council it seemed desirable to remove doubts upon this point.
CIVIL SERVICE.
(1) Position under the New Constitution.
C. 73272/30 [No. 5].
No. 4.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 3rd November, 1930.)
(Confidential.)
[Answered by No. 5.]
MY LORD,
Queen's House, Colombo, 14th October, 1930. I HAVE the honour to invite reference to Mr. Bourdillon's Confidential despatch of 23rd June, 1930,† and to enclose herewith a memorandum by the Colonial Treasurer which sets forth two alternative schemes for giving effect to the recommendations of the Donoughmore Commission in regard to the granting to public servants holding posts the filling of which is subject to the approval of the Secretary of State the unqualified right to retire on proportionate pension, with compensation for loss of career, should they not desire to continue to serve under the altered conditions which will result from the introduction of the new Constitution.
2. In this context I would invite Your Lordship's attention to paragraph 22 of Mr. Bourdillon's Confidential despatch of 30th July, 1930,‡ on the subject of the new Order in Council. I agree with Mr. Bourdillon that the option of retiring should be a continuing one, as recommended by the Donoughmore Commission (and supported by me in the 59th paragraph of my published despatch of the 2nd June, 1929), § and that it should not be restricted to a period of ten years, as was suggested in the Colonial Office draft of the Order in Council.
3. I agree with Sir Wilfrid Woods that the terms proposed by the Civil Service Association in their memorandum are extravagant, and that the circumstances in which special terms were given to Irish Civil Servants are by no means analogous to those which we are now considering. While it is necessary that we should give reasonable compensation for loss of prospects to officers who feel that they cannot continue to serve under the new conditions, we must also be on our guard against the danger of making the amount of this compensation so great that it will induce to retire, officers who, if the alteration in conditions of service were the only considera- It is obviously no easy matter to draw the line tion, would be prepared to stay on. between the two extremes in the right place, but the proposals of the Civil Service Association err, in my opinion, on the side of generosity, and I can see no reason whatever why officers who have reached the retiring age of 55 should be given anything more than their normal pension. What we must aim at is, as Sir Wilfrid Woods says, the adoption of terms which will suffice for the average degree of injurious affection. 4. I accept the Colonial Treasurer's opinion that it would not be admissible to give any officer, whatever his age, anything less than the amount to which he would be entitled, under Section 7 of the Pension Minute, upon the abolition of his office. "' abolition terms are sufficient in the case of all officers. The question is whether
"
* No. 2. + C. 73272/30 [No. 3: not printed.
No. 131. § C. 63230/29 [No. 1]: not printed.
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There is no doubt that they are less favourable in the case of officers who elect to retire below the age of about 13 than in the case of officers retiring above that age, and while I consider that they are suflicient in the case of the latter class, it seems open to question whether, in the case of younger officers, they will provide to a sufficient degree that compensation for loss of career which the Donoughmore Com- mission envisaged. Scheme "B" has been devised with the object of providing slightly more generous compensation for younger officers. The enhanced compensa- tion provided under this scheme does not appear to me to be so unduly generous as to be likely to induce a large number of retirements, and, had the finances of the Island been in a really flourishing condition, I should have been disposed to recom. mend the acceptance of this scheme.
5. Unfortunately, however, such is far from being the case. The proportion of the taxable wealth of the Island derived directly or indirectly from its three main agricultural products, tea, rubber, and coconuts, cannot be estimated with any pretence to accuracy, but it is indisputably preponderant. The tea industry as a whole is in a state of moderate prosperity, but the coarser grades of tea grown in the low country now command prices which, already uncomfortably near the cost of production show a tendency to fall. The state of the rubber industry is such that those whose whole capital is locked up in it, and those dependent upon it for employment, are alike confronted with prospects which at present appear to be desperate. The cultivators of coconuts are getting prices for their produce which in most cases yield no more than a trifling profit. The state of the finances of the Government of the Island is what might be expected in these conditions of economic depression following upon a fairly prolonged period of good prices in all these industries. The greater part of the surplus funds accumulated in the past have disappeared into the initial stages of schemes of expenditure launched in the years of prosperity, and the Government is now confronted with a volume of expenditure swollen by later stages of these same schemes beyond the limits of the partly diminished revenue with which it must perforce be content until better times. By the severest curtailment of expenditure wherever curtailment is practicable, and with the aid of a substantial suni to be credited to revenue account from loan funds in hand in respect of past expenditure properly assignable to loan account, it is hoped that the Government will be able to tide over the current financial year, notwithstanding the fact that the estimate of revenue has already had to be drastically reduced. In 1981/32, however, the position will be extremely difficult unless the unexpected happens and some measure of prosperity has returned to the rubber and coconut industries. In any case substantial additional taxation will be unavoidable. The proposed introduction of an income tax payable in 1931/32 is meeting with such strong opposition from the entire European com- munity and from the most influential sections of other communities that it is by no means improbable that the Legislative Council will reject the third reading of the Income Tax Bill or amend the Bill in such a way that the date of imposition of the tax will be postponed beyond the financial year 1981/32. Increased import duties, which offer the only alternative means of raising the additional revenue which will be indispensable in 1931/32, would be a regrettable necessity adding to the cost of production in industries already in difficulties and adding to the cost of living of persons whose incomes and wages have already been, or are likely in the near future to be, seriously affected by the depressed state of these industries. In short, the responsibility of the Government for maintaining the financial stability of the Island forbids it to permit this new pension liability to exceed the requirements of the barest justice.
6. In these circumstances I feel that scheme "A" represents all that we can afford, and while, in more fortunate circumstances, I should have been disposed to recommend greater generosity, I do not feel that the compensation provided under this scheme can fairly be criticized as actually inadequate. I have, however, con- sidered it my duty to lay both schemes before Your Lordship, in case you should should be adopted. consider that, in spite of the financial position, scheme "B
I should be grateful if I could be favoured with Your Lordship's instructions at an early date, as I should be glad to be in a position to make the terms known as soon as possible.
I have, &c.,
H. J. STANLEY,
Governor.