TNAG-0735-FCO40-939-Policy-objective-for-the-developing-of-Hong-Kong-in-the-1980-1978 — Page 129

46.

As I said in this year's budget speech (17), the

application of the no-subsidy principle to the waterworks has always been troublesome and we have not adhered to it in recent

years as strictly as pure theory dictates in respect either of domestic supplies or trade supplies. This is not to say that

water charges should not be updated and re-structured from time to time; and I have repeatedly warned honourable Members

that an updating and re-structuring exercise was inevitable.

I was very surprised, therefore, that Mr. Allen Lee mis-

interpreted His Excellency's reference to the implications

for the level of water charges of the new contract for water

supplies from China. It is true that the increased cost of these supplies from $1.26 per 1,000 gallons of untreated

water to $1.88 per 1,000 gallons is still less than the cost

of untreated water from our own catchment system and would not

in itself require increased charges to consumers for the

proportion of cheaper water in the supply system has increased.

But the need for conservation remains as strong as ever and a

deficit overall remains in the accounts and is projected to

persist. So we are now working on the final details of a and very carefully designed tariff which seeks to reconcile fiscal, social and economic considerations and which will be introduced, I hope, some time next year.

(17) B.S., 1978, paragraph 190.

25

/Conclusion