CONFIDENTIAL
The Governor now proposed that Hong Kong should pay for the whole of this capital programme over seven years on the understanding that the works would remain the property of the Hong Kong Government and would revert to them when no longer required by the Services. He had averaged the figure out at £2.8 million per annum, but there could if desired be virement as between years in capital expenditure so that the programme could go forward as most convenient. he did not consider that it would be possible to have
In addition virement between capital and recurrent expenditure on a yearly basis in addition.
However
If the price of capital works were to increase or decrease by more than 50 per cent on the April 1970
price, then there should be a review; but in the Governor's view prices of capital works in Hong Kong were more likely to drop than to rise during the period of the agreement. They were already beginning to level out after their recent rise. He saw no reason
why Hong Kong should be expected to pay for the results of cost inflation in the United Kingdom.
The cost of all capital works over the first five
years was £17 million, ie £3.4 million per annum.
This, when added to the maintenance and minor works
figure of £2.2 million per annum left a balance of
£2.9 million per annum for the recurrent cash
contribution to make the total annual contribution of
£8.5 million Under the Governor's new proposals the average annual cash contribution would be £2.5 million over seven years (ie only the £ million less than as in the above programme) and Hong Kong would be paying for the entire cost of the capital works programme. His proposals also allowed for an increase of £.5 million in the Hong Kong contribution over the figure of
£7 million which the Unofficial Members had already
said they were prepared to recommend as a voluntary
token contribution.
/PROCEDURE TO IMPOSE A
CONTRIBUTION
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CONFIDENTIAL
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