TNAG-0734-FCO40-938-Reports-of-Standing-Committee-on-the-Planning-Progress-of-Ho-1978 — Page 84

CODE 18 - 77

Reference

HKK 013)

FIFTH MEETING OF THE STANDING COMMITTEE TO MONITOR THE HONG KONG PLANNING PAPER: 23 FEBRUARY 1978 AT 3.30 PM.

*K OF IC.

MATTERS ARISING FROM PREVIOUS MEETING

No

a) The Budget

with

1. The budget for 1978/79 forecasts a very small surplus for a 26% increase in total public expenditure. This will be achieved with no significant change in revenue earning methods. It had originally been planned to increase corporation tax from 17% to 171% but revised revenue estimates make it clear that such extra measures are not needed to achieve the improvements in social conditions which had been agreed. It is fortuitous, from Hong Kong's point of view, that their economy is so buoyant that natural growth is sufficient to fund significant social improvements. In fairness it must be said that expenditure on social services will rise by 35% and will go up from an estimated 41.8% in this year to 42.6% of total expenditure.

not

2. What has been achieved is a redistribution of wealth by fiscal means. All attempts to achieve this in the past have met with failure but this is now perhaps the single most important objective

for the future.

b)

Cuilique to Hurly.

Report of the 3rd Inland Revenue Ordinance Review Committee

3. As agreed at the last meeting the Special Economic Adviser has been consulted. Mr Stewart is generally critical of Hong Kong's entire approach to fiscal policy and feels there is room for a significant increase in the level of taxation and for the introduction of a much larger element of progressivity. His views generally conform with our own and with those expressed in the World Bank Report.

c) The Turner Report

4.

Professor Turner now expects to visit Hong Kong in April/May and to submit a final report in the Summer. The total field of labour relations together with related subjects such as minimum wage cannot be fully discussed until this final report has been submitted. It is therefore important that we should try to prevent any further delay.

d)

ILO Convention

ammal

5. The only report from Hong Kong has been received and is being submitted to Lord Goronwy Roberts. Hong Kong applied or improved their modification on five conventions in 1977 and have plans for a further six this year. The OLA is satisfied with this progress and pleased that by the end of 1979 or in 1980 we shall have achieved our objectives in this area. We will there fore no longer be able to ask for such high annual figures.

/e)