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WEDNESDAY, JULY 6, 1988
36
FINANCE COMMITTEE APPROVES FUNDS FOR DCA
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THE FINANCE COMMITTEE NOTED THE TERMS OF THE 1988 DEFENCE COSTS AGREEMENT (DCA) WITH THE UNITED KINGDOM GOVERNMENT AND APPROVED PROVISION OF $1,407 MILLION FOR PAYMENT OF THE HONG KONG GOVERNMENT'S CASH CONTRIBUTION TOWARDS THE COSTS OF THE GARRISON IN 1988-89.
OF
AT TODAY'S MEETING, THE COMMITTEE ALSO APPROVED THE PAYMENT $266 MILLION TO COVER VALUE ADDED TAX (VAT) AND SALARIES TAX ON ALLOWANCES INCURRED UNDER THE 1981 DEFENCE COSTS AGREEMENT.
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FOR
MEMBERS WERE TOLD THAT IN THE ABSENCE OF A FIRM TIME-TABLE THE WITHDRAWAL OF GARRISON UNITS BEFORE 1997, IT WAS NOT PRACTICABLE TO PROVIDE A DETAILED ESTIMATE OF THE EXPECTED SAVINGS FROM THIS SOURCE.
HOWEVER, FROM THE BROAD OUTLINE, IT WAS ANTICIPATED THAT THE REDUCTION IN FORCE LEVELS PRIOR TO 1997 WOULD RESULT IN SAVINGS TO THE HONG KONG GOVERNMENT OF APPROXIMATELY $5,800 MILLION OVER THE LIFE OF THE NEW AGREEMENT WHICH WOULD RUN FROM APRIL 1, 1988 TO JUNE 30, 1997.
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THIS COMPARED WITH AN ESTIMATED COST OF $2,000 MILLION OVER THE PERIOD OF THE NEW AGREEMENT FOR THE EXPANSION OF LOCAL SERVICES ΤΟ TAKE OVER THE ANTI-ILLEGAL IMMIGRATION ROLE AT PRESENT PERFORMED BY THE GARRISON.
A
IF THE FINANCIAL EFFECTS OF WITHDRAWAL, WHICH WERE DIRECT CONSEQUENCE OF THE IMPROVED TERMS AND
NOT CONDITIONS OF THE NEW DCA, WERE EXCLUDED FROM THE CALCULATIONS, IT WAS ESTIMATED THAT THE HONG KONG SHARE OF THE COSTS OF THE GARRISON WOULD HAVE BEEN MILLION HAD THE TERMS OF THE OLD AGREEMENT REMAINED IN FORCE.
UNDER THE NEW DCA, THE REDUCTION JN HONG KONG CONTRIBUTION ARISES FROM TWO SOURCES.
THE
$11,200
GOVERNMENT'S
THE FIRST IS THE EFFECT OF THE REDUCTION IN
APPORTIONMENT OF COSTS FROM 75:25 TO 65:35 WHICH CUT THE HONG KONG GOVERNMENT'S SHARE OF GARRISON COSTS BY A TOTAL OF $1,400 MILLION OVER THE LIFE THE NEW AGREEMENT.
OF
THE OTHER REDUCTION ARISES FROM ECONOMY MEASURES CONCERNING THE PROCUREMENT OF STORES AND SUPPLIES, AND THE MAINTENANCE AND CAPITAL WORKS PROGRAMMES FOR THE GARRISON,
DURING THE NEGOTIATIONS, THE HONG KONG GOVERNMENT AND THE MINISTRY OF DEFENCE (MOD) TEAMS SOUGHT TO IDENTIFY AND AGREE ON AREAS WHERE COST SAVINGS AND RATIONALIZATION MIGHT BE MADE.
/LARGELY AS