TNAG-1415-FCO40-1896-Public-finance-in-Hong-Kong-1985 — Page 106

GPS 500

CONFIDENTIAL

FM HONG KONG

TO IMMEDIATE FCO

TELNO 2467

OF 12034OZ NOVEMBER 85

CONFIDENTIAL

DIRECTOR OF AUDIT'S REPORT.

Mir tak

DISCUSSIONS GOVERNOR/GALSWORTHY AND GALSWORTHY/SCOTT REFER.

THE DIRECTOR OF AUDIT ON 31ST OCTOBER SUBMITTED TO THE GOVERNOR AS PRESIDENT OF THE LEGISLATIVE COUNCIL, HIS ANNUAL REPORT.

2. IN ADDITION TO COMMENTING ON MATTERS WHICH FALL WITHIN THE AMBIT OF SECTION 13 OF THE AUDIT ORDINANCE (CHAPTER 122) THE DIRECTOR HAS IN HIS REPORT CRITICISED CERTAIN POLICY DECISIONS, INCLUDING SOME

MADE BY THE GOVERNOR IN COUNCIL, THE ROLE OF PUBLIC OFFICERS IN RELATION TO THE FORMULATION OF POLICY (SUCH AS THE ADVICE GIVEN TO THE EXECUTIVE COUNCIL BY A BRANCH SECRETARY), AND THE DECISIONS OF SUBVENTED ORGANISATIONS UPON THE APPROPRIATION OF MONEY IN THEIR CONTROL. PUBLICATION OF THE REPORT IS THEREFORE LIKELY TO LEAD TO RATHER MORE THAN THE USUAL CONTROVERSY.

3. THE ATTORNEY GENERAL HAS ADVISED THAT THE DIRECTOR HAS EXCEEDED THE POWERS CONFERRED ON HIM BY THE ORDINANCE. ANY ATTEMPT IN PRESENT CIRCUMSTANCES TO FRUSTRATE THE NORMAL PROCESS LEADING TO TABLING OF THE REPORT IN LEGCO, EVEN IN RELATION TO ACTS WHICH ARE (NEXT TWO WORDS UNDERLINED) ULTRA VIRES, WOULD BACKFIRE WITH DAMAGING EFFECT. WE SHALL THEREFORE PROCEED WITH THE USUAL ARRANGEMENTS FOR TABLING AND PUBLISHING. A COPY OF THE REPORT WAS SENT TO YOU BY BAG LEAVING ON 5 NOVEMBER, IN ADVANCE OF THE FORMAL SUBMISSION TO THE SECRETARY OF STATE REQUIRED BY SECTION 12

OF THE AUDIT ORDINANCE.

4. AFTER DISCUSSIONS WITH AND THE AGREEMENT OF THE CHAIRMAN PUBLIC ACCOUNTS COMMITTEE, WE SHALL PROCEED AS FOLLOWS. ON THE 20TH NOVEMBER SITTING WHEN THE AUDIT REPORT IS TABLED IN LEGISLATIVE COUNCIL, A GOVERNMENT PAPER WILL ALSO BE TABLED CONTAINING FULL STATEMENTS BY THE RESPONSIBLE POLICY SECRETARIES UPON THOSE PARTS OF THE REPORT WHICH COMMENT UPON OR CRITICISE POLICY DECISIONS AND POLICY ISSUES. THE CHIEF SECRETARY WILL MAKE A STATEMENT IN COUNCIL AT THE SAME SITTING, EXPLAINING THAT THE GOVERNMENT CONSIDERS THAT POLICY MATTERS FALL MORE APPROPRIATELY TO BE DEALT WITH IN COUNCIL, AS THE GOVERNMENT IS RESPONSIBLE TO THE COUNCIL FOR POLICIES RATHER THAN TO

CONFIDENTIAL

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