TNAG-0310-FCO40-346-Contributions-of-Hong-Kong-for-costs-of-maintaining-military-1971 — Page 80

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Wednesday, October 6, 1971

Mr. C.P. Haddon-Cave went on to say that it had been estimated that

the direct economic benefit to Hong Kong of having the Services stationed

here was of the order of £8 million per year. "This in a sense makes the

agreement neutral in its effect since the defence contribution will be offset

by the value to the Hong Kong Government of the military presence in the Colony

and surely we ought not to expect to make a profit as it were from having a

Garrison," he said.

Comparing the new defence contribution with the 1966 contribution

a Government spokesman said:

"In 1966 the total cost to Her Majesty's Government of maintaining

the Garrison in Hong Kong was estimated at about £17 million a year compared

to the present estimate of £28 million a year. Under the old agreement Hong

Kong agreed to pay £20 million over the four-year period with 75 per cent of

this total made up by the cash contribution. In the new agreement the cash

contribution of £12 million represents only 30 per cent of the total defence

contribution," he added.

Percentage Of Revenue

In his speech today the Financial Secretary said that the percentage

of Hong Kong's annual revenue spent on the defence contribution has slightly

decreased since 1966. Under the old agreement 3.9 per cent of the annual

revenue was spent on the defence contribution and under the new arrangement the

figure is 3.7 per cent.

Describing the negotiations leading to the defence contribution

agreement as "difficult and complex", the Financial Secretary said that the

present arrangements had been reached only "after much anxious consideration

in London" and that H.M.G. had originally expected Hong Kong to pay £60 million

over the five-year period.

/Mr. Haddon-Cave also