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

The

three

Estimates

in (12) follows:

and

additional

copies of the

Memorandum

have been

referred to

disposed

of

އ

M Palmer

2 set

M- Serpell

Tart

Additional

(1)

havve

been

has

copy of

copies of the

similarly distributed

of its enclosures.

produced and

the despatch at

distributed. M Wallace

also

of (a) and

complete set

Blandford

(For the

So that the file won't have t

pers twice between the two buildings, I

de not pass through t Mr Sideltham, whe already knows what is happening and fuky

is indeed an

9

in the picture a am; But Mr Paskin i may case to have a word with him)

99.0

Mr. Gorell Barnes.

Mr. Paskin.

Sir S. Caine.

12/6

At No.9 is the despatch enclosing the 1948/49 Hong Kong estimates. Mr. Follows, the Financial Secretary, has just come home on leave, and with his help we are discussing the whole problem of Hong Kong's finances with the Treasury. The talks are going well, and I think we are making progress, particularly in breaking down the evident Treasury belief that everything which comes from Hong Kong is automatically suspect.

When our discussions have progressed further, considered views and drafts will be submitted. Meanwhile, there is one point on which guidance must be obtained at once. Last year, Hong Kong managed to build up a reserve of over $30 millions, but this year the Colony is only budgeting for an infinitesimal surplus and it is only on account of the arrears in the collection of last year's income tax that the budget is balanced at all. It is true that revenue has been estimated on a conservative basis, but this is obviously prudent in view of the somewhat unstable boom conditions through which, Hong Kong has been passing.

Given last years performance all this appears at first sight somewhat disappointing.no The expenditure is high, and there is/doubt that expenditure on personel emoluments represents a very large proportion of the total. The Governor fully recognises this and means to tackle the problem thoroughly with the help of the 0 and M expert who will arrive in Hong Kong about the end of the year. Meanwhile, he is already

doing/