HKSC 31 AUG 93 - GF(Pol)
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SPEAKING NOTE: THE DCA AND THE FINANCIAL RETENTION INCENTIVE SCHEME
1.
For those that do not know the purpose of the recent meeting in Hong Kong it was to attempt to negotiate a profile of payments with the HKG which could be met without reference to LEGCO Finance Committee other than at normal Estimates time. Their requirement is for a steadily reducing line of payments which seeks to clear any residual shortfalls before close FY 1996/97. The expenditure profile is not, of course, affected by such a
deal.
2.
Meeting went reasonably well.
Atmosphere good. Seemed to be an intent on their part to reach a settlement. They also made it clear that they did not wish to abandon the DCA or formally be seen to be in breach of it.
3. We discussed in broad terms likely payments profiles and mechanisms under which such phasing might be agreed. Their initial starting point suggested that the overhang year on year might be too large to accommodate before FY 1997/98 but later discussions demonstrated that there was some room for manoeuvre.
4.
Minor technical points clouded some of the discussion but we do not anticipate that they will stand in the way of an agreement.
no
we
5. In presenting our profile of anticipated expenditure we based the figures on a Garrison size of around 3,500 (although
at manpower figures were mentioned the meeting) and caveated our projected costs with 'Health Warnings' which suggested that they could move up or down depending on the finalisation of the various studies. We chose 3,500 for our profile since this figure formed the basis of the initial costing handed over last May.
6. It is clear that there will be a need for further meetings, the next one is planned for mid-November. We remain optimistic that we will secure an agreement before the turn of the year.
LEPS
Until manpower level and mix of Garrison agreed it is too early to proceed
proceed with a plan to
to implement a Financial Retention Incentive Scheme for LEPS.
In any case the financial implications of such a scheme are unhelpful in our current negotiations with the HKG since they bring forward expenditure into the difficult years. Only when numbers are clear, and evidence of anticipated shortfalls can be provided, should such a scheme proceed. If and when staffing of the present paper recommences it should be given a very wide circulation to ensure all interests are properly taken care of.
FEW4 (FEW2\STE1\LM)
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