TNAG-0310-FCO40-346-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 68

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Finally, there is to be a cash contribution.

This will be paid at an annual rate of £2.4 million over the five year period; and it is to be compared with the figure of £3.925 million payable in cash each year under the last agreement. So here there is a substantial reduction in the contribution.

Since five years is a long time it has been

accepted that we may seek consultations about the operation of this new Agreement if we in Hong Kong face severe economic difficulties arising from, for example, a decline in our export earnings. In addition, consultations will take

place at any time if the permanent garrison is increased or reduced by more than one major unit.

It is not easy to pull these figures together and give a straightforward answer to the simple question: by how much is the contribution to be increased? It will amount to a contribution of 240 million over the five years of which £28 million will be in kind and £12 million in cash.

This gives an average of £8 million a year, but I must stress that this figure too is a mere average. The actual budgetary cost in any one year will always vary from this figure. A total contribution of £40 million spread probably rather unevenly over five years from 1971-72 to 1975-76 compares with £20 million spread evenly over the four years 1967-68 to 1970-71.

That at least two-thirds of the contribution will be spent on the construction of new buildings, and on keeping them under proper maintenance, is important and should be underlined; for Her Majesty's Government has agreed that all capital works paid for by Hong Kong will revert to Hong Kong if no longer required by the Armed Forces stationed here. Thus we have a reversionary interest in the property developed as a result of the contribution. Because we have a reversionary interest in these assets we have a continuing interest in keeping them under proper maintenance.

But there will also be a substantial offset against this expenditure in both financial and social terms. The building programme, by modernising existing structures which use up an extravagant amount of land, allows the Armed Services to return lands free to public use. As a result of the 1966 negotiations we got back 160 acres of land to

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