CO537-3703 — Page 57

54345/4/48

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$

Colonial office,

Church House,

Great Smith Street,

$..1.

23rd March, 1948.

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Hong Kong Lunicipality

Thank you very much for your letter of the 18th March and for your comments on our draft despatch.

It is the case that the general policy is to make the Municipality the main instrument for constitutional advance in Hong Kong. This policy implies that the Municipality will eventually be given some of the powers and functions which are normally retained by the Central Government, and, as you indicate, will thus create an unusual situation. Fortunately we shall have an opportunity of judging how the new Municipality is working before the time comes to transfer to it powers and responsibilities normally outside the province of Municipalities.

I appreciate your objection to the grant in aid system, but I am afraid that the alternative you mention of dividing out functions and revenue as between the Central Government and the a&unicipality is not a practical proposition, apurt from the variations which are likely from year to year in returns from specific revenue items, to which reference is made in ourṛ draft despatch.

To meet the other points raised in your letter I suggest the insertion of a passage on the following

D. 3. PITBLADO, ES✨.

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