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5. I THINK THE BACKGROUND TO THIS CHANGE IN ATTITUDE IS THAT SINCE MY BLUNT WARNING IN LEGISLATIVE COUNCIL ON 8 OCTOBER IMPLYING THE NEED FOR MORE TAXATION, AND MY STATEMENT THAT GREATLY INCREASED DEFENCE EXPENDITURE WAS INEVITABLE, THEY AND THE PUBLIC HAVE FOCUSED ON THE PROBLEM MORE CLOSELY. THE ISSUE HAS ALSO BEEN DRAMATISED BY THE ANNOUNCEMENT OF MR RODGERS' VISIT AND HIS SUBSEQUENT ARRIVAL: UNOFFICIALS HAVE ALSO BEEN SHAKEN BY THE INCREASE IN THE ESTIMATED COST OF THE GARRISON BY ABOUT 30% IN THE LAST YEAR. THEY FEAR AN OPEN-ENDED COMMITMENT THAT HONG KONG COULD NOT MEET. ALL THIS IS AGAINST THE BACKGROUND OF AN ECONOMY STILL BARELY OFF THE BOTTOM AFTER A VERY SEVERE RECESSION WITH THE PUBLIC STILL EDGEY AND EASY TO STIR UP.
6. DISCUSSIONS BETWEEN OUR EXPERTS HAVE MADE CLEAR THAT NO REALLY SIGNIFICANT REDUCTION IN THE COST OF THE GARRISON AS NOW CONCEIVED CAN BE MADE.
7, MR RODGERS HAS EMPHASISED TO ME H.M.G.'S VIEW THAT HONG KONG MUST PAY 75% IMMEDIATELY, AND HAS PRESSED ON ME THE DANGERS OF FAILURE ON OUR PART TO COMPLY. HOWEVER, AS YOU WILL UNDERSTAND, 1 HAVÍS TO HAVE CONSENT FROM THE PUBLIC FOR WHAT THIS GOVERNMENT. DOES, AND CONSTITUTIONALLY I AM OBLIGED TO OBTAIN THE AGREEMENT
WFFICIALS FOR IT.
8. I HAVE THEREFORE TOLD MR RODGERS THAT WHILE I AM SATISFIED THE PUBLIC AND UNOFFICIALS COULD BE PERSUADED TO ACCEPT A 50:50 SPLIT, I REALISE THAT THIS IS UNACCEPTABLE TO 11.M. G. BUT I AM. PREPARED TO RECOMMEND TO UNOFFICIALS:-
(A) A PROGRESSIVE CONTRIBUTION STARTING AT 50% IN '76/77, RISING TO 62.5% IN '77/78 AND REACHING 75% IN '78/79, AND THERE- AFTER REMAINING AT 75% FOR AN AGREEMENT TO BE AS LONG AS POSSIBLE, PREFERABLY 10 YEARS; BUT AT LEAST 7.
(B)
THE FOREGOING TO BE SUBJECT TO SATISFACTORY NEGOTIATION OF A TIME SCHEDULE FOR THE RELEASE OF MOD LAND (WITH
REPROVISIONING BY THE HONG KONG GOVERNMENT AS APPROPRIATE) WHICH WOULD FORM AN ANNEX TO THE AGREEMENT.
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