islation
Finance
Revenue and Expenditure
SECRET
38. On the legislative side there has been a great deal of recent activity to up-date and amplify existing legislation. The Hong Kong Government has on hand a programme of comprehensive labour legislation (comprising some twenty thirty items) which it proposes to introduce. The programme includes provision for conciliation, joint consultation, welfare, redundancy and holidays.
PUBLIC FINANCE
39. Hong Kong receives virtually no financial aid from Her Majesty's Government. Since the end of the last war, with the exception of one or two years, it has run a substantial
surplus on the recurrent budget, from which it has financed
its own development expenditure which has been on a massive
scale. It is a sore point in Hong Kong that since allocating £11⁄2 million to the Colony in 1945 we have not given any other assistance from Colonial Development and Welfare funds, with the exception of small grants from the higher education
allocation to the two universities and for technical education.
Our reason is that they are able to manage without: if they
run short of development finance, they should in our view raise local loans (the public debt is very low) or increase taxation. But since we provide no aid, we cannot, in practice, exercise control over their financial policies:
the ultimate responsibility of the Secretary of State is in
practice purely formal and Hong Kong is to all intents and purposes financially autonomous.
40.
Annual revenue and expenditure have approximately doubled over the past five years and now run at the level of some £120m. There was a budget deficit in 1959/60 (£2.8m) and in 1965/66 (£8.6m) but in all other years since 1947 surpluses have been realised. Moreover, in spite of the difficulties of 1967, that year showed a surplus instead of the budgeted deficit. But it is anticipated that Hong Kong is now
entering a period of deficit financing. Provided that
communist confrontation does not lead to economic recession and reduced Government revenues (of which there is as yet no sign whatever) or to any substantial expenditure on special measures, their general reserves (which are substantial) are
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