C. 92622/32 [No. 5].
No.
PROOF.
SIR.
COLONIAL OFFICE to WAR OFFICE. [Answered by No. C. 92622/32 [No. 16].]
Downing Street, 19th August, 1932.
I AM directed to acknowledge the receipt of your letter of the 25th of April,* on the subject of the assessment of revenue for military contribution in Hong Kong, and to express appreciation of the concessions which the Army Council has indicated its readiness to make in paragraphs 2, 3, 4, 5, and 6.
2. As regards paragraph 7, it is regretted that the Army Council are unable to agree that the waterworks in the New Territories should be regarded as a new pro- ductive undertaking. It is felt that the Shing Mun waterworks in the New Territories are of such magnitude, both on their financial and engineering side, that it is quite inappropriate to regard them as a mere extension of the waterworks existing on Hong Kong Island and Kowloon in 1896. The first section of the Shing Mun waterworks, which has been under construction since 1924, is now estimated to cost more than $4,600,000. The second section, which has just been sanctioned and which will involve the construction of a masonry dam to impound water to a depth of about 200 feet, giving a storage capacity of approximately 3,000 million gallons, is estimated to cost $9,300,000. The dam will take five years to build and will exceed in height almost any existing dam in England. In order that the Army Council may appreciate the magnitude of the Shing Mun waterworks scheme, I am to enclose a copy of Hong Kong Sessional Paper, No. 4 of 1929.† Since the date of the Report in that paper consider- able modifications have been made in details, particularly as regards the second section. of the scheme.
3. In paragraph 13 of your letter under reference you point out that the memo- randum by Lord Haliburton of 8th June, 1899, from which a quotation was made in the Colonial Office letter of the 20th of November, 1931, was directed in the main to the treatment on the basis of net receipts of new industrial undertakings. It is felt strongly that it would definitely be in accordance with the policy suggested in the passage quoted, viz., that we "should meet the Colonies with every concession that is consistent with the preservation of the contributions," if the Army Council concede to Hong Kong the right to treat the Shing Mun waterworks on the net receipts basis. as a new productive undertaking.
4. As regards paragraph 8 of your letter, it is not desired, in view of your explanation of the origin of Section 3 of the Hong Kong Defence Contribution Ordinance No. 1 of 1901, to urge that the interpretation suggested by the Hong Kong Deputy Treasurer should be accepted.
5. As regards paragraph 9 of your letter, I am to state that any attempt to repeal Section 15 of Ordinance No. 14 of 1927 would meet with the strongest opposition in Hong Kong. A copy of your letter of 25th April was sent to the Hong Kong Govern- ment, and I am to enclose, for the information of the Army Council, a copy of a telegram received on the 30th of July.§ It will be observed that the Acting Governor refers to a new loan, and I am to furnish the following explanation of the develop- ment programme which Hong Kong proposes to finance from loan funds.
6. The Public Works Loan Ordinance No. 14 of 1927 made the following provision:-
1. Waterworks development
2. Aerodrome and harbour development
3. Other public works
$
3,500,000
1,000,000 500,000
$5,000,000
Item 1 was for the first section of the Shing Mun scheme, the revised estimate for which is now $4,631,815. The second item includes the contribution of the Colony towards the formation of an aerodrome which will be partly for military purposes and
No C. 82756/31 [No. 16].
* No. C. 92622/32 [No. 1].
Straits Defence Con.-Gp. 6.
† Not printed here.
§ No. C. 92622/32 [No. 3]. 131/2963.
24. 8/34. (18304) M. & S. Ltd.
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