XN000022-1976-03-29 — Page 2

MONDAY, MARCH 29, 1976.

GOVERNMENT'S FISCAL AND ECONOMIC POLICIES EXPLAINED *****

THE FINANCIAL SECRETARY, MR. PHILIP HADDON-CAVE, TODAY STRONGLY STRESSED THAT THE GOVERNMENT'S FISCAL AND ECONOMIC POLICIES WERE DESIGNED TO SECURE THE HIGHEST POSSIBLE

GROWTH RATE OF THE ECONOMY AS A WHOLE.

+TO THIS END, HE ADDED +OUR FOCUS IS ON THE RATE OF INVESTMENT GENERALLY IRRESPECTIVE OF ITS SOURCE.+

MR. HADDON-CAVE WAS ADDRESSING A LUNCHEON MEETING OF THE

HONG KONG COTTON SPINNERS ASSOCIATION.

IN RESPONSE TO INTRODUCTORY REMARKS MADE BY THE CHAIRMAN OF THE ASSOCIATION, THE FINANCIAL SECRETARY SAID HE ACCEPTED THAT THE PRICES AT WHICH IMPORTED YARNS WERE OFFERED BY OVERSEAS SUPPLIERS WERE HIGHLY COMPETITIVE.

BUT HE DID NOT THINK THAT HONG KONG SHOULD ABANDON ITS FREE TRADE POLICY IN THE FACE OF SUCH COMPETITIVE PRICES AND AT THE EXPENSE OF THE EXTERNAL COMPETITIVE POSITION OF ITS PIECEGOODS AND GARMENTS,

MR. HADDON-CAVE ALSO DID NOT BELIEVE THAT THE HONG KONG SPINNING INDUSTRY WITH ITS WELL PROVEN CAPACITY FOR SURVIVAL WOULD NOT REACT POSITIVELY TO SUCH COMPETITION BY PIONEERING NEW COST EFFECTIVE PRODUCTION TECHNIQUES.

REFERRING TO THE FACTORS WHICH THE CHAIRMAN DESCRIBED AS HAVING +AN ADVERSE IMPACT ON INDUSTRY,+ THE FINANCIAL SECRETARY SAID HE WAS DISAPPOINTED THAT THE CHAIRMAN DID NOT BALANCE HIS ANALYSIS OF THE FACTORS WITH AN ANALYSIS OF THE MANY FAVOURABLE FACTORS PRESENT HERE OF WHICH THE GOVERNMENT'S 1976 BUDGET IS ONLY ONE.+

HE SAID HE COULD NOT ACCEPT THAT THEY WERE ALL THAT ADVERSE.

CITING ELECTRICITY CHARGES FOR EXAMPLE, THE FINANCIAL SECRETARY SAID THAT FOR MEDIUM SIZE INDUSTRIAL/COMMERCIAL UNDERTAKINGS ALTHOUGH THE CHARGES WERE LOWER IN MALAYSIA THAN IN HONG KONG, THEY WERE HIGHER IN SINGAPORE, AUSTRALIA AND THE UNITED KINGDOM,

+AND, WHILST FOR LARGE SIZE UNDERTAKINGS, ELECTRICITY CHARGES ARE ALSO LOWER IN MALAYSIA THAN IN HONG KONG, THEY ARE ABOUT THE SAME IN HONG KONG AS IN SINGAPORE AND IN THE UNITED KINGDOM AND ARE LOWER HERE THAN IN AUSTRALIA.+

TURNING TO A CLAIM BY THE CHAIRMAN THAT WATER CHARGES WERE +ESCALATING,+ MR. HADDON-CAVE SAID THEY HAD NOT BEEN RAISED SINCE THE TWO-STAGE INCREASE TO $4 PER 1,000 GALLONS ANNOUNCED IN THE 1971 BUDGET SPEECH.