TNAG-0570-FCO40-703-Planning-paper-on-Hong-Kong-1976 — Page 186

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growth in the economy or greatly increased Government resources

from the existing economy, and probably both. The growing

sophistication of Hong Kong industry and the needs of the

population over the next decade require an increase, and

improvement, in secondary and technical education and the

extension of compulsion to secondary as well as primary

education as soon as the necessary places are available, (see paragraph 4 et seq of Annex D).

9.

Assuming the money is available, the obvious scope

for expansion lies in the fields in which the Government is

already doing much: housing, education and health, together

with the administrative apparatus necessary to support the

greater public expenditure required. In some sectors, e.g.,

education and health, nearly all of the cost would presumably

be borne on current account; but in some fields changes in the system of financing could make a considerable contribution. The housing programme, for instance, has been remarkable by any standards but in our view the degree of subsidisation has been unnecessarily high and the rates of amortisation

unnecessarily long; the rents of the old estates were as low

as 6% of market levels. We therefore welcome the new policy

of the Housing Authority, begun in December 1974, of increasing rents with the ultimate aim of achieving 50% of market rents. Abrupt action would provoke civil disturbances, and it is accepted that the process must be gradual, but it is essential that steady progress should be made in realising further resources by raising both domestic and commercial rents to realistic levels.

Use can be made of the existing machinery to ensure that where

the means of individual tenants are not equal to increased rents

special assistance should be provided. We also think that

borrowing could make a contribution, and note that the Hong Kong

Government is at present negotiating a loan of approximately

HK$300 million from the Asian Development Bank for this purpose. We also support the policy announced by the Financial Secretary in February of encouraging better-off tenants to buy flats

through a home purchase scheme.

Such a scheme is at present being

prepared.

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