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IV. Fiscal
The Planning Paper (paragraph 18) argues in favour of a planned and gradual rise of public expenditure in Hong Kong to 25% of GDP. The Governor believes that the figure could go as high as about 221% by 1979/80. The Financial Secretary's recent Budget speech gives comfort to those in Hong Kong who believe the proportion should not rise above 20% in the foreseeable future.
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Fiscal
The Planning Paper (Annex C, paragraphs 5-7, 10 and 11) suggests that consideration should be given to other methods of raising money for public purposes and a different approach to fiscal and monetary management. The Governor argues that resort to borrowing has already begun both to finance current account deficits and for contingent liabilities e.g. the Government's guarantee in respect of the Mass Transit Railway. However, in his recent Budget speech the Financial Secretary stated his intention to return to an overall balanced Budget by 1978/79.
VI. Social Security
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The Planning Paper (paragraph 24) proposes the development of a contributory social security scheme. Governor does not believe that contributory social security is practicable in Hong Kong for a variety of reasons including the long term political uncertainty. The Planning Paper (Annex C, paragraph 11), however, argues that some social security benefits are in fact more immediate in effect than retirement pensions and may become more important to the stability of Hong Kong if world trading conditions are more volatile in the future than in the post-war period. The matter is being looked at again in Hong Kong. There is no evidence that outside advice is being sought.
SECRET
/VII.
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