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Giving an example, the spokesman said that, in the case of
equipment, it has been agreed that the Hong Kong Consumer Price Index
should be used to measure changes in cost. This applies even to
equipment manufactured in the United Kingdom, where inflation could
continue at a higher rate than in Hong Kong.
"In this Way," the spokesman stressed, "there is no question
of Hong Kong paying more, in respect of the cost as a whole, simply
because there is a high rate of inflation in Britain."
Commenting on the budgetary implications of the agreement,
the Deputy Financial Secretary, Mr. David Jeaffreson, said:
"Although
the actual amounts of our contributions over the next seven years are
substantial, they represent small percentages of the likely total
government expenditure during the period,"
"Under the existing agreement, which expires in March 1976,
our contribution represented 3.3 per cent of total expenditure in 1971-72.
It then fell to 1.7 per cent in 1975-76, largely because the agreement
contained virtually no provision for adjusting the size of the
contribution as costs increased.
"In 1976-77 the contribution of $225 million is likely to
represent no more than three per cent of estimated total expenditure.
This expenditure is likely to rise to 3.8 per cent by the third year
of the agreement," the Deputy Financial Secretary explained.
Putting the contributions under the new agreement into
perspective, Mr. Jeaffreson added: "These percentages compare with
18 per cent of total government expenditure which has been set aside
for education during 1975-76, eight per cent on medical services and
11 per cent on Housing.
The
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