XN000022-1976-03-29 — Page 13

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announced in the 1971 Budget Speech. And when I raised charges for domestic

consumers only last year, I made it abundantly clear that the introduction of

a differential pricing system for water consumed by industry would be designed

with care.

But the plain fact is that the Water Undertaking, like all the

Government's public utility type undertakings, must be operated on at least a

quasi-commercial basis, given our benevolent tax system.

But on the foreign exchange market, and leaving aside the strengthening

of the Hong Kong dollar in the past few days, the outcome of which is far from

clear at the moment, I will say this: we must face up to the immediate reality

which is that the prospect of return to a general system of fixed exchange

rates remains remote. In these circumstances, all trade oriented economies -

and particularly Hong Kong's - must adapt, and adapt continuously, to an ever

shifting complex of exhcange rates and, in the medium and longer term, I imagine

no one would argue against a relatively strong Hong Kong dollar. This is not

to say,

that the Government, or rather the Exchange Fund, will stand by passively

in all circumstances. There are some movements which can be identified as quits

wayward and others which are unnecessarily erratic. Within limits, these we

shall seek to correct and in such a way as not to work against underlying market

forces, on the one hand, and not to provide speculators with an opportunity to

frustrate our efforts to their profit, on the other.

This speech, if it can be called that, has not been as short as I

intended. So I must bring it now abruptly to a close, but not before thanking

you all, most sincerely, for your hospitality and for this opportunity of a

frank exchange of views.