TNAG-0669-FCO40-818-Policy-on-housing-and-resettlement-in-Hong-Kong-1977 — Page 97

C.S. 166

CONFIDENTIAL

For discussion

on 7th December 1976

機密

ANNEX A TO XCC(77)11

XCC(76)85 Copy No ...

of 80

MEMORANDUM FOR EXECUTIVE COUNCIL

REVIEW OF FINANCIAL ARRANGEMENTS BETWEEN THE GOVERNMENT AND THE HOUSING AUTHORITY

Introduction

On 6th October 1976, when considering memorandum XCC(76)66, Honourable Members were advised that discussions were proceeding within the Government on the possibility of revising the terms on which the Government provides land and construction funds to the Housing Authority for the housing programme, with a view to rationalising and simplifying these terms and enabling the Authority to introduce a comprehensive and more flexible rent policy. This exercise, which has been completed, involves:

(a) a re-examination of the Authority's capital structure;

and

(b)

a re-examination of the Authority's cash flow arrangements.

The Housing Authority's capital structure

2

Before the present Authority came into being on 1st April 1973, public housing was provided partly by the Government, in the form of resettlement and Government low-cost housing estates which were funded through the Public Works Programme, and partly by the old Housing Authority, which built estates for those households in need of housing but who were ineligible for resettlement or Government low-cost housing accommodation. By and large, the old Housing Authority took the initiative in building its new estates with land granted, on request and when available, at a concessionary premium. These estates were financed partly by the old Housing Authority through its surpluses on recurrent account, and partly through interest-bearing loans made from the Development Loan Fund. The old Housing Authority was not required to repay these loans, but its rents included an element for their recovery over a 40-year period, and the amounts recovered were used to finance new estates. Thus, the old Housing Authority's cash liability to the Government was only in respect of interest on the total amount of the loans which stood at appro- ximately $250 million at 31st March 1973.

3

The relations between the Government and the old Housing Authority were not unlike those which now exist between a voluntary

CONFIDENTIAL ##