TNAG-0937-FCO40-1156-Visits-of-Sir-Murray-MacLehose--Governor-of-Hong-Kong--to-th-1980 — Page 226

CONFIDENTIAL

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Public Finances

4.

Revenue collections so far this year have exceeded expectations.

However, the increased revenue will be absorbed in meeting increased

expenditure stemming from the 1979 civil service salary awards,

higher public assistance rates, increased payments under the Defence

Costs Agreement following pay awards to the Armed Services and

increased expenditure on illegal immigration from China and refugees

from Vietnam.

Public Works Programme

5. The Governor has stressed that, notwithstanding the need to cut

back demand and relieve pressure on the building industry, priority

will still be given to the public housing programme. However there

has been criticism of the Government's decision, announced in the

1979 budget, to reduce the annual public housing target from 40,000

to 35,000 new units of accommodation. The housing programme is

particularly sensitive at the moment because of the increasing

pressure on accommodation caused by the massive influx of immigrants

from China. The criticism takes little account of the fact that even

at 35,000 units, the programme is still nearly double the size it

has been any any time in the past.

6. The Governor may wish to outline how he expects the measures in

the 1980 budget to affect the public works programme, and what the

public reaction is likely to be.

Hong Kong and General Department

CONFIDENTIAL