394
PECORD OFFICE
Reference --
111C.O.882/12
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C. 93105/32 [No. 9].
No. 10.
THE SECRETARY OF STATE to THE GOVERNOR.
(Sent 1 p.m., 17th August, 1932.)
TELEGRAM.
[Answered by No. 11.]
No. 175. CONFIDENTIAL. Your telegram No. 170.* I agree generally with your views on each of the Ministers' proposals and approve of your taking the necessary steps to prevent the adoption of the first three proposals. You should make it clear to Ministers that, under the Constitution, public officers have certain guarantees and the Secretary of State and the Governor are the guardians of their rights. This position must be strictly maintained. My policy has been that where emergency taxation has been rendered necessary by financial stress, it is right that public servants should be subjected to special emergency imposts. Effect has already been given to that policy in Ceylon and I cannot agree that present financial difficulties justify further encroach- ment on the conditions of service of public servants. In any case the suspension of right to partial commutation of pension would be an interference with the guaranteed conditions of service and on a different plane from temporary measures such as levy on salaries. I do not consider that to allow it would be consistent with my duty under the Constitution. As regards proposed reductions of levy on passage and holiday warrants, I would also point out that such reductions, while imposing serious hardship on Government officers, would make insignificant contribution towards amount required to balance the Budget. While appreciating your views as to the unwisdom of fourth and fifth proposals, I do not feel justified in opposing their adoption if Ministers persist. ---HAMILTON.
C. 93105/32 [No. 14].
No. 11.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 11.21 a.m., 5th September, 1932.) TELEGRAM.
[Answered by No. 12.]
5TH SEPTEMBER. No. 192, Confidential. I .communicated to my Ministers contents of your telegram of 17th August, No. 175, Confidential.† In reply they have expressed deep regret and concern at your refusal to assent to three of their proposals and now submit following fresh proposals. First proposal is to utilize estimated balance of current loan funds left after making provision for expenditure on loan works in 1932/1933 to form nucleus of a fund for payment of commuted pensions. Second proposal is that privilege of partial commutation of pensions should not be allowed to future entrants to public service. Third proposal is that recent amendment of pension minute allowing exercise of option of commutation at time of retirement should be rescinded. See your despatch of 21st July last, No. 387, relative to this amendment. I have informed Ministers that I am not disposed to raise any objection to second proposal, but that your prior sanction must be obtained before effect could be given to it. I have refused to entertain third proposal, but I have informed Ministers that I am prepared to place before you any representations on that matter which they may wish to make. With regard to first proposal, I have replied that, after consulting with Financial Secretary, I have no objection in principle to use of borrowed money for commutation of pensions, but that your prior approval would be necessary for use of existing loan funds for that purpose in view of terms of prospectus issued when those funds were raised. I also informed them that it would be necessary as a condition of my acceptance of any such proposal to ensure that my existing powers to issue warrant for payment of pensions, retiring allowances, and gratuities without obtaining vote of money from Legislature would not be in any way affected by adoption of proposal and that such warrant(s) would continue after its adoption to be as fully effective and authori- tative as they are now, see Section No. 2 of Ordinance No. 6 of 1905 and Article 61 of Order in Council. These fresh proposals have a purely political motive. I do not
C. 91657/32 [No. 8]: not printed.
* No. 3.
+ No. 10.
think first proposal will result in anything more than transfer to aid of current revenue of sums of about Rupees 1,500,000 from loan funds. This sum could probably be diverted from loan funds without rendering nugatory expenditure already incurred from those funds. In the ordinary circumstances this diversion loan fund would be objectionable because such funds ought to be reserved for development purposes, but works of development are out of the question at the present time. The diversion would be lawful under Section 6 of Ordinance No. 26 of 1929. The proposal is of course ineffective as a substitute for taxation as it will not add to Government liquid resources. It is merely pretence of balancing the Budget while actually budgeting for a deficit. I believe Ministers fully realize this and know quite well that further taxation is inevitable during the course of the next financial year, but they want to postpone it until their intransigeant attitude in regard to their carlier proposals has been forgotten by the public. One of the most influential of them went perilessly near to committing himself in a public utterance to resignation if those earlier proposals were rejected. They are now attempting to cover their retreat by an elementary manœuvre.
While
I appreciate danger of postponement of further taxation I am anxious as far as possible to help Ministers to save their faces. If you see no serious objection on the ground of possible damage to Ceylon's credit, I suggest that you might authorize me to say that you are prepared to agree to the first proposal subject to stipulation indicated by me and that you agree to right of partial commutation of pension being restricted to officers now in the service. If Ministers follow up their third proposal with detailed representations my comments on that proposal will be sent by despatch. The actual terms of the third proposal do not include amendment to Sub-section 2 of Section 4 of Special Regulations under Article 88 of Order in Council recommended in my Con- fidential despatch of 19th December, 1931,* on the subject of those Regulations and approved by your telegram of 21st January, 1932, Confidential, No. 17,† but Ministers probably intend that proposal should apply to that amendment also.
C. 93105/32 [No. 15].
No. 12.
THE SECRETARY OF STATE to THE GOVERNOR
(Sent 5.30 p.m.. 16th September, 1932.) ́
TELEGRAM.
CONFIDENTIAL. No..195. Your telegram No. 192. I approve of acceptance
of first proposal as to utilization of balance of loan funds subject to conditions which you suggest. I approve also of withdrawal from future entrants to public service of privilege of commutation of pensions, but I shall be glad if you will consider whether it is possible to make any exception in favour of officers transferred from I shall await further communica- other Colonies where right of commutation exists.
tion as to third proposal, but as at present advised, I should not be prepared to accept any withdrawal of privileges as to commutation enjoyed by existing officers, particularly as effect of any such proposals on the Budget would be quite insignificant. -HAMILTON.
C. 92994/32 [No. 5].
(3) Temporary Levy on Salaries.
No. 13.
THE GOVERNOR to THE SECRETARY OF STATE. (Received 2.34 p.m., 29th January, 1932.)
29TH JANUARY.
TELEGRAM.
[Answered by No 15.]
No. 23. Secret. Your telegram of the 17th November,
No. 214.§ Enabling Bill introduced into the State Council with the consent of the
* C. 83242/31 [No. 20]: not printed. † C. 83242/31 [No. 23]: not printed.
No. 47 in Eastern No. 154.
‡ No. 11.
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