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of the renewal is perhaps not very important if the lessees knew that the policy to be adopted was as indicated herein. A period of ten, or perhaps twenty, years with the option of further renewal at the end of the term, might be regarded as sufficient to give them security.
I should like also to emphasize that it would seem desirable that every future lease should stipulate that the lessee is to use the pier only for the purposes of his own business, which must be connected with shipping and that under no circumstances will sub-letting be allowed. I understand that some lessees have sub-let their piers at a profit rental which increases the charge the sub-tenant levies on ships using the pier. This is highly undesirable.
A provision that the lessees must properly maintain their piers should also be inserted.
C
It is, of course, not impossible that, in the course of time, conditions might change considerably and private enterprise fail to function satisfactorily, in which event another problem would arise, the solution of which might involve some form of operating" by the Harbour Trust, but that is looking at a remote contingency. I should not now give the Trust power or authority to operate". If the necessity should ever arise, the Trust would have to seek the necessary power or authority from the Government.
C
Before leaving the question of the policy with regard to the leasing of piers and of allowing private enterprise to do the operating, I would like to mention that it has been put to me that there is legislation in various parts of the world, such as Australia, whereby the Authorities can prevent new enterprises being formed for putting steamers on runs when the particular run is sufficiently well-served, thereby preventing suicidal com- petition and waste, etc. This aspect of the matter has not been lost sight of by me. I can easily imagine a similar case arising apart from any special steamer service.
It is quite conceivable, for example, that a rival concern, more or less financially sound, might be formed to compete with, say, the Hong Kong & Kowloon Wharf & Godown Company. The new concern would require a wharf or wharves and would have to approach the Harbour Trust for the necessary lease, but the Trust would be right in refusing to grant any lease for such a purpose unless it were proved that the existing facilities were inadequate. The same thing would apply if a pier were re- quired for an unnecessary steamer service. Competition may be good in certain circumstances, but it is the generally accepted doctrine now, that unbridled or unnecessary_com- petition is bad and wasteful. In stating this, of course, I need hardly say that I hold no brief for any of the Hong Kong existing concerns, but, in the best interests of the Port, they would be entitled to protection if such a state of affairs as I have mentioned, arose.
(k) A statement of the receipts and expenditure of the Trust to be published
annually.
NOTE. It is very desirable that this should be done, as until it is done, it is hardly possible to deal adequately with the question of finance.
(1) During the experimental period of three years, any surplus of revenue over receipts to be paid over to the Government and any shortage to be recouped by the Government.
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NOTE. I imagine that there should be a surplus. I suggest this pro- vision for the experimental period of three years, as it would, in effect, practically leave finances as they are.
Should the accounts show a surplus, it would become a matter for consideration. In most of the Ports of the United Kingdom the Harbours were, in the early days, owned by the respective municipalities and the harbour revenues were re- ceived by the municipal Treasury and lost in the expenditure on municipal services, with the result that complaints were made that the shipping using the ports paid far too much compared with the services and accommodation it received,-in other words the shipping was subsidizing the town. The Public Trust system altered this. How far this analogy applies at Hong Kong will be best known by the Government.
The principle underlying the Public Trust system of Port control is that shipping should only be taxed to the extent neces sary to provide the accommodation and facilities it needs.
It is important to bear this in mind in Hong Kong. In a country or place which has to import goods for use or con- sumption within its borders, the argument may be used that the direct charges on shipping do not much affect the position. It is the goods that have to bear the cost of transport and it is the consumer who eventually pays all the costs incurred by the goods. Higher charges mean higher priced goods. This may start the usual vicious circle but that is another matter. What is of vital consequence is that in a place such as Hong Kong where the bulk of the trade is entrepôt in character, high charges on shipping would not affect the price of the goods to the consumer. Most of the goods are not consumed there and if charges were too high the goods would simply not come, which would be to the serious detriment of the trade and prosperity of the Colony.
(m) At the end of the experimental period of three years, if the Trust is found to function satisfactorily, it should be established on a permanent basis, with the same constitution and duties, subject to any modification that may be deemed to be desirable in the light of the experience gained. NOTE. It is hardly possible for me now to go closely into the question of finance which would arise. After the experimental period of three years the position should be clearer. The idea would be to make the Trust self-supporting and, from calculations which I have made on figures of expenditure, etc., supplied to me, I should not think that there would be any difficulty in this. The matter would require careful and sympathetic treatment at the hands of the Government, bearing in mind the vital part the Harbour plays in the economic structure of the Colony.
With respect to any capital expenditure for the construc- tion of piers, the Government could borrow on behalf of the Trust and the rent of the piers so constructed would be sufficient to cover interest on capital, maintenance, etc. In fact, the Trust should not embark on any work involving capital expen- diture unless the work would become self-supporting.
The question of the staff for the working of the Trust would also require careful consideration. One way would be to regard the personnel as still in the Civil Service, but their remuneration would be recouped to the Government out of the revenue of the Trust.
84. I have thus outlined my conception of the Trust which, after careful con- sideration, I recommend should be established as the solution of the problem of
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