Sessional_Paper_1938 — Page 197

193

I

MEMORANDUM BY FINANCIAL SECRETARY.

I. Separation of Water Department.

Two things are involved in this, the setting up of a Water Department more or less independent of the Public Works Department and the showing of Water Revenue separately in the Colony's Accounts. The latter can be done without establishing an entirely separate Water Department. The Economic Commission of 1934-35 recommended in paragraph 35 of their Report that "the Water Supply of this Colony should be reorganized as a separate Municipal undertaking under Government control and should be kept entirely separate from the Public Works Department or any other Government Department". The question of municipali- zation of certain services is wide and difficult but it would appear possible to achieve the practical advantages of separation of the water finances without establishing the Water Department as a municipal" undertaking. At present no municipality exists and unless it is desired to place the Water undertaking under the super- vision of the Urban Council, a separate Water Department must either be wholly independent or remain under the general control of the Public Works Department. Having regard to the great importance of water to the Colony it appears desir- able that the final responsibility for it should rest with the Director of Public Works as the senior engineering officer in the Government Service. The Water Department should therefore be organized as a separate branch of the Public Works Department, the head of which would be responsible directly to the Director of Public Works.

2.

I recommend:

(i) The establishment of the Water Department as a Branch of the Public Works Department, the head of which would be remunerated on the scale of an Assistant Director of Public Works.

(ii) The showing in future of Water Revenue and Expenditure in separate heads of the Colonial Estimates and the printing in those Estimates of a separate statement of the water accounts. General revenues would remain ultimately responsible for any deficit but ordinarily water revenue would exceed expenditure, representing a credit to general revenues to meet charges properly attributable to the Water Department as explained below (paragraphs 4-6). Expenditure on water would continue to be voted by the Legislative Council and subject to ordinary financial control as at present.

(iii) It should be the aim to charge for water sufficient to pay all expenses including capital charges and charges met in the first place from general revenue but applicable to the Water Department; but whether revenue in excess of such cost should be collected by taxation is a matter of policy. There is something to be said for charging fairly heavily for water as the Colony's supplies are limited and water here is now very cheap. The con- sumers are however very poor and the expressed policy of Government in the past, as stated by the Economic Commission, has been that water. should not be made a source of revenue. On balance it would appear that general revenues might expect some compensation for past capital expenditure made from revenue but no more.