CO129-597-2 Estimates 1949 1-3-1948 - 14-7-1949 — Page 223

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29. Loan expenditure during 1948/49 is estimated at $45,915,555. As has been stated earlier in this despatch, loan funds have been earmarked for the reconstruction of King's College and certain other educational institutions. Work on Government quarters to replace those destroyed during the war will continue to be financed from this source, and this work is being pressed forward as rapidly as possible. Unsatisfactory housing conditions are having an increasingly adverse effect on the morale of expatriate officers and there is also the consideration that the provision of additional accommodation for Government officials will help to relieve the general housing shortage. The construction of new Police stations to replace those destroyed during the war, which are now housed in requisitioned buildings, will also be an urgent item in the loan programme. This includes a divisional headquarters at Kowloon City and stations at Bay View, Hung Hom and Shaukiwan. Five new stations are also being constructed in the New Territories to replace demolished buildings, and work is about to be commenced on a new Police Training School.

30. The sum of $4,000,000 has been provided to enable work to be started on the new airfield as soon as a final decision is reached in regard to the site. If more than $4,000,000 is required during the present financial year for the initial work on the new aerodrome, a further sum of the same amount, which has been earmarked for the purpose, will be made available, and any balance will be met from the interest free loan which His Majesty's Government has kindly placed at the disposal of this Government for this purpose.

31. The loan programme also provides for the work on the rehabilitation of the water supply to be continued, and for further repair works on roads, drains, sea-walls and the restoration of street lighting. There is provision to enable the Railway to continue repairs to buildings and the permanent way and for the purchase of further rolling stock. Work on the restoration of lighthouses and moorings will also be

continued.

32.

So far, it has been possible to finance loan expenditure on a public issue of $50,000,000 supplemented by the floating balances available on the various trading accounts. The position has also been eased by the surplus of $35,000,000 resulting from last year's working. Considerable sums in interest have thus been saved but it may be necessary to make a further public issue towards the end of 1948. In any case, loan funds will be largely exhausted by the end of the financial year 1950/51 and the fact must be faced that from then onwards it will be necessary to meet all Special Expenditure from current revenue. On the other hand, I trust that it may prove possible to effect some material reduction in the present rate of expenditure which I cannot help feeling is too high for a Colony of this size. There are several directions in which I have hopes of achieving substantial economies, and on the arrival of the efficiency expert, I propose to review carefully the whole field of Government expenditure. I have also warned Unofficial Members of Legislative Council that it may be necessary to consider further taxation in connection with next year's budget.