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3. As to the method of cost sharing it was generally agreed that while percentages were a useful guide in establishing a level of cash contribution, the eventual agreement would be much better expressed in cash terms with provision for increases arising from inflation. A broad formula was much to be preferred to detailed annual scrutiny of actual expenditure. A note, by the Hong Kong Government, suggesting how inflation might be handled was circulated for subsequent comment and discussion.
14. On timing it was agreed that final decisions should be reached as soon as possible and to this end DUS(P) agreed that a team of OD officials, possibly accompanied by a Treasury representative, should visit Hong Kong in early January to explain, in detail, the cost and composition of the proposed garrison. The team would also be able to examine the implications of any further changes which might be proposed and to make an assessment of the sort of force which might be accommodated within an expenditure limit of about 230m.
5.
The team would not have any power to settle matters but would be able to explore all means of bridging the gap between what Hong Kong could afford and what the proposed garrison would cost. As part of this the Treasury representative would wish to discuss Hong Kong budget problems.
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