CO129-623-9 Estimates of Expenditure- includes a report for the year ending March 1952 1-2-1951 - 30-11-1951 — Page 37

head is likely to show a large increase in the secon of the year.

6.

37

Loan expenditure on 30th September 1951 totall、. £77,886,558 of which $27,886,558 was met from an advance account. I am now considering the possibilities of charging off to expenditure up to $25,000,000 of the advance and I shall address you separately on this subject at a later date. With reference to paragraph 6 of my summary for last quarter I have now issued instructions that no new items of expenditure are to be financed from loan funds. It is proposed to allow all existing commitments to stand as a charge against the loan, but it is possible that, when final details are available, about $10,000,000 allocated under the loan schedule can be allowed to lapse. In conjunction with my other proposal referred to above, expenditure chargeable to loan funds may eventually be reduced to about $65,000,000 of which $50,000,000 will be covered by the public issue.

7.

(a)

Arising out of points in my last summary

Increases in the establishment of the Inland Revenue Department have now been authorised. Difficulty is being experienced in recruiting suitable candidates and the effect of the extra staff on revenue will not be immediate.

(b) The draft Bill for introduction of the Business

Registration Tax has now been received from the Legal Department, but preliminary examination has shown that extensive changes will be necessary if it is to be administered successfully. The necessary discussions are now in train, but it seems unlikely that any revenue from this source can be expected this year.

(c) The local Air Force authorities have now made it clear

that Spitfires would be provided free of charge if this Government agreed to accept the annual cost of recurrent maintenance which is expected to be $500,000 in the first year and $350,000 in subsequent years. No final decision

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8.

(a)

has been reached pending examination of your despatch No.54 of the 27th October, 1951, regarding the contribution towards the cost of reinforcing the garrison.

Legislation introducing compulsory service has now been passed by Legislative Council. It is too early to know whether the estimate of $1,000,000 for annually recurrent expenditure is accurate, but already supplementary provisions of $296,500 and $76,820 have been approved for the Special Constabulary and the Auxiliary Air Force respectively. Further provisions for the Royal Hong Kong Defence Force, the Essential Services Corps, the Auxiliary Medical Service and the Auxiliary Fire Service are expected. It should be possible to give a better indication of the total commitments, which I expect will be heavy, in the next summary.

Expenditure on printing and binding for the first nine months of the present financial year has now been estimated at £2,000,000 compared with the provision of $1,250,000 for the full twelve months. A supplementary provision of $750,000 has been authorised and further provision will be required for the fourth quarter to cover the operations of a new Government Printing Department. This arises from the abrogation of an agreement between this Government and the firm of Noronha & Co., Ltd., made in 1940, under which this firm was granted a very remunerative monopoly of Government printing for twenty years. The abrogation of the agreement after prolonged negotiations necessitated surrender to the Company of Government's shares in the undertaking and

/cash payments