CO129-553-9 Empire Air Mail Services- participation of Hong Kong in proposed development 11-3-1935 - 21-5-1935 — Page 42

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water to buildings (labour, material, &c.) the amount being recovered from the property owners later, sometimes several months later, dependent upon the develop- ment of the district. It is more practical and economical to lay the pipes for a greater length than is immediately required but which the Water Authority know will ultimately be required. When building takes place connexions are made and the owner pays. Some of the work undertaken by the Water Authority on payment is work which in other countries would ordinarily be done by private Water Engineers but owing to local circumstances has to be done by the Water Authority. The account which was as high as $30,000 in July, 1930, has been reduced, and by 31st December should be down to $5,000, whilst next year a profit is anticipated although the scheme is not being run as a money making concern. This method of accounting is not in accord with C.R. 289 and it would be preferable if the disbursements for any year were estimated and the amount inserted under an appropriate sub-head of the Public Works Recurrent expenditure schedule. The money would then be properly controlled by the Legislature and included in the Appropriation Law. Similarly all receipts would appear under a suitable sub-head of revenue.

It will be seen therefore that if the correct system of accounting is to be adopted in the future the Colony would have to pay 20 per cent. military contribution on what to all intents and purposes is a pure and simple reimbursement. The fact that this money is being expended in the manner shown increases the receipts in respect of water rates and thus helps to swell the general revenue on which military contribution is correctly levied. It is submitted therefore that the contribution be assessed only on the net receipts if any.

F. Overpayments in Previous Years.

It was decided some years ago that overpayments recovered in respect of previous years should be credited to revenue and not deducted from current expenditure. This rule bas been followed in all Colonies I have served in except Hong Kong. Its non- adoption locally may have been due to the fear that such credits would be assessable for military contribution. Anyhow, to obviate any doubt about it the credits were deducted from expenditure. It is bad accounting and should cease. Approval is required that any such credits should be exempt from military contribution as they are not true revenue. They will be shown in a distinct sub-head of revenue should they occur.

G. Waterworks Undertakings Built out of Revenue.

It is provided by Section 3 of the Defence Contribution Ordinance No. 1 of 1901 that after 1st January, 1911, in cases of productive undertakings the cost of the con- struction of which has been or hereafter may be defrayed out of the revenue of the Colony and not by means of a loan there shall be deducted annually from the gross receipts of such undertakings during a period of 50 years a sum equal to 4 per cent. on the capital expenditure incurred in their establishment. The Waterworks of Hong Kong and Kowloon have been constructed entirely from revenue up to the year 1923 after which date major works of a capital nature have been charged against loan funds, but small capital costs are still being met out of general revenue. No deduction has however been made from the gross receipts under this section as by law should have been the case.

At the end of 1910 over $5,200,000 had been laid out, this had increased to $8,000,00 by 1920 and the figure on the 31st December, 1929, was over $12,000,000. It will be seen therefore that if 4 per cent. on this sum of $5,200,000 increasing to $12,000,000 had been deducted annually from the gross revenue before the contri- bution of 20 per cent. was levied the annual reduction of the military contribution for the twenty years in question would have been amounts increasing from $41,600 in 1911 to $96.000 in 1930, a considerable sum of money.

It would thus appear that subsequent to 1910 deductions from the total revenue assessable for military contribution which should have been made have been over- looked. I am unable to assign the reason for this oversight, but I propose, with your permission (while making no recalculation on account of over-payments already made) to abide for the future by the terms of the Ordinance. This will involve the deduction of a total of 4 per cent. of $12,000,000 from the assessable revenue on account of 1931, and after 1931 onwards the deduction from the assessable revenue of an amount to be calculated in accordance with the Ordinance each year up to the expiry of 50 years from the time expenditure was incurred.

The revenue from Excess Water Account alone (which is payment per 1,000 gallons of water used in excess of a free allowance based on a calculation of the rated value of the premises, under Ordinance 16 of 1903) was in-

$

$

1911

1912

135,520 181,621

1918

188,383

1925

538,035

1919

217,183

1926

471,679

1913

161,595

1920

257,834

1927

634,222

1914

189,440

1921

314,068

1928

768,898

1915

169,448

1922

453,526

1929

615,458

1916

190,091

1923

490,284

1917

184,135

1924

540,533

EDWIN TAYLOR,

Borough Treasurer.

911 December, 1930.

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