13.
52
how many are these omissions and how great the sacrifices made. I think there is general agreement as to the details now included.
It is the problem of how to finance the expenditure for next year which finds us divided, not Unofficials from Officials, but even Hon. Unofficial Members among themselves.
War and Surplus
In spite of what I stated in connec- tion with the general reserve balance, or so-called surplus balances at the last meeting of this Council, the Hon. that we proposes Mr Li Tse-fong should have recourse to this balance to finance war expenditure next year, and he adds the interesting theore- tical argument that a balance is a medieval survival which a modern state has no need to keep. It may be possible in a totalitarian economy to dispense with a balance as it is with normal possible to dispense
backing for currency, but this Colony does not possess a self-contained eco- nomy and is largely an entrepot for China and its prosperity depends to on the a large extent, I submit, soundness and orthodoxy of its finances and the confidence they in- spire both locally and in China.
I stated at the last meeting that our real balance was about $7 million dollars. I exaggerated.
The reserve balance of this Colony as I have informed Hon. Members on a previous occasion is impressed with a trust in so far as the compulsory contributions of Government officers to the Widows' and Orphans' Pen- sions Scheme have been paid to re- venue and no fund has been estab- lished to meet the outgoings which Government has undertaken to pay.
Position Unsatisfactory
So far, income in this connection has exceeded expenditure, but the position is not satisfactory though it cannot be said without actuarial in- vestigation how many million dollars should be earmarked for this fund, but I am afraid the position is that the reserves with which the Hon. Mr Li Tse-fong wishes to meet next year's extraordinary commitments do not morally exist, though they can to a certain extent be made available in an emergency.
an emer-
The
I agree with him that balances may properly be used to meet an emergency, but only a financial emer- gency and there is none such at pre- next sent, and I decline to treat year's budget, though including large defence expenditure, as gency and not mainly a normal bud- get. But if we have no balance to draw on to meet unforeseen expendi- ture how are we to carry on? experience of the recent loan is a warning that we cannot borrow at least at a reasonable rate of interest. Incidentally, the Hon. Mr Tam has misinterpreted my remarks in that connection. I deplored nothing. stated that Government took up so much. In fact, it decided on that amount before the issue, as the prospectus indicates and was not left with that amount in its hands; but the fact remains that there was little public response.
I
Prosperity Unsteady
In my experience this Colony never enjoys a prolonged period of financial normality with a steady and reason- ably predictable income. It is either enjoying a boom or suffering from a depression. At present I submit it is having a boom, and in spite of the high cost of living a great number of people in this Colony are enjoying unprecedented prosperity. Even the large local expenditure on defence has served to pump consumers' pur- chasing power into the pockets of Jf many and has stimulated trade. at any time this Colony is able to meet its expenditure, even swollen by our defence requirements, it is now, and that expenditure should be met so far as possible, and I submit that means entirely, from current revenue.
The revenue calculations for next year are based on the continuation of the present prosperity of the Colony and in the present world situation I a certain submit that represents degree of optimism. Several Members have reminded us that of recent years actual
the revenue has exceeded estimate and,
therefore, should continue to do so, and that we should be satisfied with thinking that all will be well and that everything from the revenue point of view will automatically turn out satisfactory.
One Member has gone so far as to accuse me of conservatism, caution and pessimism. If by pessimism he means endeavouring to foresee and obviate difficulties, I confess I am pessimistic, and nothing that I have heard in the speeches of Hon. Members to-day has relieved my pessimism. It is said that I have sought to build up hidden reserves and have written off expenditure in- ! curred on food reserves. I only wish I had more hidden reserves to con- fess to.
reserves
Food Reserves
on food re- The expenditure
been written off, serves has not though it is not possible to estimate how much of it will be recovered, and we are at present dealing with the If these expenditure for next year.
have to be maintained throughout the year there is bound to be a loss in turnover and replace- ment whatever eventual sum may And to find its way to revenue. charge the cost to expenditure in- stead of opening a suspense account is the proper way to maintain con- trol in the hands of the legislature. It has been alleged that by these of an devices and on the pretext unbalanced budget I have raised the bogey of Income Tax. I do not pro- pose to discuss that matter, which can well be left to the reconstituted War Revenue Committee, but it is my duty to point out, as the Hon. this Mr Dodwell has stated, that Colony is ridiculously lightly taxed in comparison with Home, and in my opinion it must have balances, and adequate balances, not only to meet an emergency but to even out the fat and the lean years if any planned development is to be undertaken.
In this connection I would state that Sir Geoffry Northcote, shortly before he departed on leave, instruct- ed me to prepare a programme for this Colony in connection with the Colonial Development and Welfare Scheme, which I have failed to do. I have spent considerable time on the problems and the more I investigated ¦ the greater they appeared and the necessity for elaborate planning em- bracing harbour development, town planning and slum clearance, agri- culture and fisheries, health and education became increasingly ap- parent.
Fisheries and Agriculture
All that we have been able to do has been to include with the ap- proval of all Members of this Coun- cil, provision for the Fisheries Re- search Station and the Experimental Agricultural Station in the New Territories in next year's estimates to be met from Colonial funds. That is only a small proportion of what is required.
It may be said that such develop- ment is not practical politics at the present time. That may be so but the budget was framed as I stated already to make due provision for defence and social services.
There is no oppressive taxation in Hongkong at this time, and I submit that none of the new taxation pro- posed is oppressive and that this Colony ought to be able to provide from its current revenue all the ex- penditure included in these estimates and even additional expenditure if necessary. I appeal to Hon. Mem- bers not to spend the meagre re- serves inherited from the past nor to seek an overdraft on the future, but to endeavour to meet current expen- diture from current revenue, bearing in mind that the purpose of that ex- penditure is largely defence and social services, or, if I may otherwise express it, the preservation and pro- motion of our civilisation. (Ap- plause).
DEBATE ENDED
IMMIGRATION OFFICE
ENQUIRY
ACTIVE SCRUTINY OF FOOD CONTROL
FIREWOOD PRICE
Winding
the the Debate, up Hon. Mr Smith
Gentle- said: listened with great men,-I have interest to the speeches of Honour- able
both Unofficial Members on the subject of the 1941-42 Budget: and on other subjects which are of general concern to the community and which are very properly raised
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