TNAG-0478-FCO40-543-Strength-of-garrison-in-Hong-Kong-1974 — Page 125

OR 49% OF TOTAL ESTIMATED EXPENDITURE IN 1974-75 (A DETERIORATION AS COMPARED WITH DOLLARS 3,000 MILLION

AT 1ST APRIL 1972 OR 70% OF TOTAL ACTUAL EXPENDITURE IN 1972- 731

IT IS PROBABLE THAT WE SHALL INCUR A DEFICIT OF DOLLARS 250 300 MILLION THIS YEAR AND THUS OUR FISCAL RESERVES WILL FALL FURTHER BOTH ABSOLUTELY AND IN RELATION TO OUR EXPENDITURE COMMITMENTS I

(J) OUR FORECAST OF CAPITAL EXPENDITURE (AT 1974 PRICES) OVER THE

NEXT THREE YEARS 1975-76 TO 1977-78 EXCEEDS THE RESOURCES ASSUMED TO BE AVAILABLE (1.E. FROM THE SURPLUS ON RECURRENT ACCOUNT, WHICH IN TURN IS BASED ON AN ASSUMPTION THAT THE ECONOMY WILL ENJOY A 7% REAL GROWTH RATE, AND CAPITAL REVENUE) BY ABOUT DOLLARS 3,500 MILLION. AT LEAST HALF OF THIS EXCESS WILL HAVE TO BE POSTPONED FOR THERE ARE LIMITS TO ADDITIONAL TAXATION AND AVAILABLE LOAN FINANCE:

(K) OUR CAPITAL PROGRAMMES OVER THESE THREE YEARS WILL COST US DOLLARS 7,480 MILLION BROKEN DOWN VERY ROUGHLY AS FOLLOWS:

HOUSING AND NEW TOWNS

EDUCATION AND MEDICAL SERVICES

DOLLARS MILLION

3,300

900

RO ADS

900

WATER

1,109

AIRPORT

160

URBAN AMENITIES

500

LAW AND ORDER (INCL. DEFENCE AT

PRESENT D.C.A. RATE)

360

OTHER

180

(84)

ita (L) DEFENCE EXPENDITURE AT £8.5 MILLION A YEAR (DOLLARS 132

MILLION) FOR BOTH RECURRENT AND CAPITAL ITEMS EQUALS 0.37% OF THE GDP AT CURRENT MARKET PRICES IN 1973: AND (M) DEFENCE EXPENDITURE ABSORBED 2.3% OF TUTAL EXPENDITURE IN

1973-74 (BUT LAW AND ORDER AS A WHOLE ABSORBED 11%): (N) EXPENDITURE IN HONG KONG OF, SAY, £25 MILLION A YEAR '8

SUBSTANTIALLY OVERSTATES THE SERVICES' CONTRIBUTION TO THE GDP AS THE IMPORT CONTENT OF FINAL CONSUMPTION EXPENDITURE IS ONLY 58%:

74

theus

(about 600m

(0) FINALLY, THE PHRASE 'FREE OF CHARGE'' OVERLOOKS THE FACT THAT

LAND IS ONLY HELD BY THE SERVICES ON A TEMPORARY BASIS AND REMAINS THE PROPERTY OF THE CROWN IN HONG KONG.

3. I TRUST THAT YOU WILL BE ABLE TO PERSUADE ALL CONCERNED TO AGREE THAT ALL THIS CAN ONLY LEAD TO THE CONCLUSION THAT THE SHARING OF THE COSTS OF THE GARRISON PROPOSED IN MY TELEGRAM NUMBER 853 IS GENEROUS LOOKED AT FROM HONG KONG'S POINT OF VIEW.

ROBERTS

13

78