CO129-615-4 Harbour craft used by Hong Kong Government- financial arrangements 30-1-1948 - 12-1-1949 — Page 49

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HONG KONG STATEMENT

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1. In October 1942 a declaration was made on behalf of His Majesty's Government to the effect that it would be the general aim of His Majesty's Government after the war that, with a view to the well-being of the people and the resumption of productive activity, property and goods destroyed or damage in the Colonial Empire should be replaced or repaired to such extent and over such a period of time as resources might permi It was added that, if the resources of any part of the Colonial Empire were insufficient to enable this purpose to be achieved without aid, His Majesty's Government would be ready to give what assistance they could in conjunction with such common fund or organization as might be established for post-war reconstruction.

2. In the light of above declaration Government of Hong Kong appointed a Commissioner to make an export examination into the problem of war damage compensation. As a result of his findings, Government is satisfied that even were the United Kingdom in a position to pay part of cost, introduction of a compensation scheme would inflict an altogether crippling weight of taxation upon local community. In the circumstances, and in view of the fact that Colony did not participate in a war damage insurance scheme prior to outbreak of Pacific war and of the fact that rehabilitation of industry and commerce does not appear to be hampered to any material extent by lack of financial resources Government of Hong Kong has recommended that no compensation from public funds should be paid for war damage.

3. His Majesty's Government after most careful considera- tion have decided to accept this recommendation by the Government of Hong Kong. Nevertheless, they are anxious to give practical assistance to the Colony as evidence of goodwill. The extent of such assistance must necessarily be determined by the ability of His Majesty's Government to help having regard to conditions in the United Kingdom following the crippling losses entailed by the war and the heavy burden of taxation falling on the United Kingdom taxpayer. In spite of these factors, they have felt able to offer substantial assistance to the Colony, and have accordingly agreed to ask Parliament for the necessary authority to implement the following decisions.

4. As regards expenditure arising out of the war it has been agreed that

(ε) In the first place, His Majesty's Government will not seek any contribution from Hong Kong towards the cost of the military cdministration; and

(b)

(c)

His Majesty's Government will treat as free grants the advances made prior to and after the establishment of civil government in Hong Kong, emounting to £3,250,000 in all, except insofar as that sum has been used for the purchase of stores for re-sale which has resulted in cash receipts by the Hong Kong Government.

His Majesty's Government will give a further free grant of £1,000,000 to assist the Colony in resolving problems arising out of expenditure connected with the

war.

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