HONG KONG LEGISLATIVE COUNCIL.
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Full details of how these figures are arrived at are given in the Treasurer's Report. I would, however, mention some of the reasons in a general way. First, there is the fall in exchange; the opening rate on the 2nd of January, 1930, was 1/7 9/16 and the closing rate on the 31st of December was 1/1%, the average rate throughout the year being 1/4.3598. This was the principal factor in all business dealings during 1930 and accounts for considerably more than the excess over the original estimates which were based on an exchange of 1/10d. Secondly, there was the adoption of the Salaries Commission Report which I estimate cost, apart from the fall in ex- change, approximately $1,000,000 for dollar and sterling salaries com- bined. Thirdly, a special grant of $300,000 to the University and contributions of $300,000 towards the construction of a vertical sea- wall at North Point and $105,000 towards the Kowloon Tong Building Scheme.
A glance at the table of revenue for the year will show how well this was maintained. It is true that tobacco duties and postal rates were increased during the year and a new duty of 15 cents per gallon was levied on motor spirit, but the extra revenue derived from these sources did not account for more than $350,000. Revenue from direct taxation amounted to $16,498,580 of which the Assessment Tax contributed $4,208,277.
In view of the heavy fall in exchange the Government took steps to reduce expenditure wherever possible and naturally turned first to Public Works Extraordinary, the Kowloon-Canton Railway Extraordinary expenditure, and Public Works Recurrent. The under- expenditure on these three heads amounted to $1,622,257. Perhaps the brightest picture, however, is shown in the Government's efforts under "Other Charges" items where a total saving of $979,792 was made on the innumerable sub-heads practically throughout the whole of the Estimates, as is shown in the detailed statement of expenditure attached to the Bill.
It will be seen that the Colony finished the year 1930 in a much more favourable position than was anticipated when the estimates for 1931 were introduced in October last. In the Treasurer's memorandum which was laid on the table with the Estimates for 1931, the revised estimate of revenue was $24,066,000 whereas the actual revenue was $27,818,473. The revised estimate of expenditure was $28,303,500 and the actual expenditure was $28,119,646. The estimated deficit on the year's working was $4,237,500 and the actual deficit $301,173. The estimated balance of assets over liabilities was $5,425,352 while the actual balance has proved to be $9,361,679.
It may perhaps be thought that the Government was unduly pessimistic in October last. But the position at that time was far from clear and in dealing with public funds it is the duty of the Gov- ernment to avoid undue optimism lest the Colony be lulled into a false sense of financial security. Had the picture been painted in
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