HONG KONG LEGISLATIVE COUNCIL.
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Government must accept complete responsibility. The Committee does not deal with the creation of new posts or with salaries. These matters the Government is obliged by the Constitution to refer to the Legislative Council. It does so refer them and the Legislative Council after receiving such information as it may consider necessary to justify the proposals must share with the Government the responsibility for the creation of new posts and for any changes of salary scales. The Government feels that the Honourable Member's proposal would not prove satisfactory either to this Council or to the Government.
The mover refers briefly and the seconder at some length to the failure of the Government to fix exchange forward for the whole of its sterling commitments for 1936 at the time when the budget för 1936 was under consideration. Even supposing such a course had been possible the Government could not properly have taken it. The matter was very fully discussed at the time. The Government was in possession of exclusive information as to the probable course of exchange in the near future. To use that information to meet a possible budgetary difficulty at an extremely critical moment for the Colony's currency when a transaction such as that suggested might have precipitated a crisis, and have caused detriment to others appeared to the Officer then administering the Government and to his advisers to be little short of immoral.
The Government, Sir, is now engaged in the difficult task of keeping its Expenditure within its means. Its expenditure happens at the moment to be inflated by commitments on large public works which cannot economically be curtailed and some of its revenue pro- ducing assets are at the moment unrealizable. The sudden drop in exchange has disturbed
disturbed the equilibrium between revenue and expenditure but there is no reason for panic or for uneconomic retrenchment. Our major commitments should be completed by this time next year, certain of our assets which do not appear in the balance sheet should be realizable as soon as commercial prosperity revives, and a cautious policy in the future should quickly restore the equilibrium.
Meanwhile the Government is obliged to take unusual and I hope temporary measures to reduce the deficit in its budget and these measures include a temporary levy on salaries and retrenchment in staff and work where this can be accomplished without undue loss together with an in-road into the surplus balances which have been built up to meet just such an emergency as has now come upon
us.
The Government agrees with the resolution standing in the name of the Honourable Member only in so far as it refers to present circumstances. It cannot accept all the arguments advanced by Mr. Lo in support of his motion and it hopes that the Honourable Member
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