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Paragraph 5.To state that seniority has been the sole qualification for the posts of Inspectors of English Schools is incorrect. The senior of the two present Inspectors was not the most senior master in the department at the time of his appointment, and there is a master senior to the present second Inspector. Seniority is one of the factors to be taken into account when considering competing claims for promotion. To fill these appointments from England would be expensive, and, in Government's opinion, to appoint a man from England with no experience or understanding of the peculiar and part- icular problems of Hong Kong would hardy be likely to prove a success. The strictures on the masters contained in the last sentence are unjustified..

Paragraph 6. The greater part of the time of the Inspectors is taken up with visiting schools and the Government accepts the view of the Director of Education that the work of inspection requires two officers. The appointment of a further officer as a Secretary is not at present necessary.

Paragraph 7-A good suggestion, but unfortunately not one which it will be possible to adopt in the immediate future.

Paragraph 8.-This had already been acted upon before the Report of the Re- trenchment Commission was received, though the existing rights of sterling salaried

officers cannot be diminished.

Paragraph 9.-The question of raising the fees at Government secondary schools is being considered by the Director of Education and by the Board of Education.

Paragraph 10.-Government proposes to introduce flat rate grants of $40 and $35 per capita for boys and girls respectively in Anglo Chinese Schools and $12 per capita in Vernacular Schools in 1932. The proposal of the Commissioners, so far as Anglo- Chinese Schools are concerned, would have resulted in an increased cost in the current year of a little over $7,000-though two schools, St. Joseph's and the Diocesan Boys' School would have suffered decreases. The rates to be put in force next year would, had they been adopted this year, have led to an increase of approximately $47,000. Government is satisfied that the grants are well earned. Its only regret is that the present financial situation prevents it from increasing the grants still further.

Paragraph 12. (a) At present Government, in addition to paying the examination fees of pupils, also makes a grant in respect of the number presented. The amounts paid out in grants are considerably larger than the amounts paid out for fees. The Commissioners have recommended that payment of the latter should cease. Govern- ment prefers to abolish the grants, and to continue to pay the fees. This will be done next year.

(b) It is hoped to institute next year a school leaving certificate examination. The Matriculation and Senior Local will then cease to be school examinations; whether the Junior Local examination will also be abolished has yet to be decided. The Board

of Education proposes, and Government concurs, that on the inception of the school leaving certificate examination, Government should pay the fee for each entrant from Grant-in-Aid schools once only.

(c) Dealt with under paragraph 21.

Paragraph 13.—The 1929 figure of $100,000 for subsidies to elementary verna- cular schools which was reduced to $95,000 in 1930 and to $80,000 in 1931, has been restored in the Estimates for 1932.

Paragraph 14.-The proposals contained in the sub-paragraphs (a) (b) (c) were all referred to the Treasurer. The amount of work thrown on the heads of schools is small, since it is divided up amongst many, whereas to concentrate it all on the head office would be to over-burden that office. The probable result of carrying out the Com- missioner's recommendations would be an increase in the Head Office staff without any corresponding decrease in the staffs of the schools.