1938-10-13 — Page 15

THE HONGKONG TELEGRAPH, THURSDAY, OCTOBER

13, 1938.

The Budget Debate

WARNING AGAINST FUTURE OPTIMISM Financial Secretary Dissects Next Year's Record Budget $40,000,000 Seen As Near Budget

IN ONE OF the most comprehensive Budget surveys ever given in Legislative Council, the Financial Secretary, Hon. Mr. S. Caine, warned against excessive optimism in the future during the Budget debate this morning.

The present system of Military Contributions were criticised. Although a small surplus for 1938 was indicated, the Financial Secretary pointed out that this was illusory, since the Hongkong Government would still owe the Imperial Government a million dollars on account of the current year,

Mr. Caine forecast that it would not be long before Hongkong's Treasury Department would be preparing $40,000,000 budgets.

The Hon. Mr. S. Calne said:

figures of both revenue and expendi

"In moving the Resolution standing ture most strongly is their magni- in my name, I want, without re-tude. peating the detailed figures and ex-

by bringing oul the

features

"They are

substantially higher planations which have already been than in any previous year and the circulated to Honourable Members, question must arise whether that is to amplify the general remarks you a temporary phenomenon or whether have

these figures are likely to be continu- on the financial made

led in future years. It is with that ||

that 1 propose question in mind of our financial outlook.

Members have had to discuss the position. "Honourable

"The increase on the revenue side, the Estimates themselves and the ac-

over nearly all the companying explanatory memoranda witch is spread

to the for nearly a fortnight and have main heads, is due primarily to no doubt have examined them in larger population of the Colony.

"So far as one can distinguish be Perhaps the first thing that time. which will have struck them will between the two it is the magnitude of in form, the population rather than the ex- of tent and profitability of business ac- various changes in the manner tivity which most influences our res

#

certain unfamiliarily

presentation having been made.

of

so happens that a number of venue, affected as it is principally by the consumption of liquor and 10- re-arrangement the extent departmental

which rated pro-i which the one most prominent in theerties are occupied or not and the public eye is the rearrangement of Ber the Water Department, have coin-extent to which the transport com- cided with changes of in nccounting pantes, the cinema theatres and the nature introduced by the direction of race tracks, all of which contribute the Secretary of State: but I hope their quota to the revenue, are used that the unfamiliar form has not by the public. proved too inconvenient and eventually the changes will be found to have been advantageous.

ILLUSORY SURPLUS

that

Two particulur items of revenue, the Post Office and the Railway are affected by other special considera- lions to which Your Excellency has] already referred, that is the develop- "Looking at the figures of revenuement of airmail and the opening of and expenditure, they show a small the Canton-Hankow line. anticipated surplus for the current year, before allowing for certain ac- counting adjustments. That surplus Is, however, illusory because at the end of the year we shall be owing! nearly a million dollars of military contribution which must be paid next year.

DEPENDS ON WAR

"Assuming therefore that popu-i lation is the major factor in own revenue it would seem that we!

largely dependent very

on the course of events in China, to

disturbances in the

which

the recent Increase in population here

are

HIGHLIGHTS

FROM SPEECH THE SMALL ANTICIPATED

1938 surplus is an illusory une, due to the fact that almost $1,000,000 is still owing to the Imperial Government for Milit- ary Contributions;

Revenue is vilti coming In well, but money is going out even faster than earlier in the year;

Those who are Inclined 10 take a rosy view because of the large nominal surplus shown in maithly accounts are warned of future prospects;

The probable deficit next year will be something over $2,800.- 000;

Revenuto and expenditure aro records. The increase in ro- venue is due primarily to the Colony's farger population, while there is little hope that expenditure will be decreased;

Main Increases in coula are shown under pensions, defence, including milliary contributions, police, medical, charitable worki and publis works:

Heavy Costs Of Public Works

THOSE PENSIONS

prepare

the head

acad "Pensions."

1

an

is the defence contribution. Apart from the possible change in the whole not with-

"Other defence expenditure is legally at least within the discreilon but for all practical purposes we are compelled to an increase in it this by forces beyond control of Colony.

the

"Under other heads of expendi5ystem, that xpenditure

in our contr ture I fear thai far from expecting reductions we must

for further increRBEI. "There will for example be

and undvoldable increase automatic under

"Our expenditure is truly for de- memorandum circulated with the es- fence purposes and is designed solely

any meeting

possible timates show an increase of some 30 to help in

attack, but it is rendered imperative per cent. between 1930 and 1938.

"Comparisons before that year by the fear of war which, ghastly as are villated by exchange Duetua-it seems to all intelligent people, tions but taking sterling payments overhangs and darkens

The figurea given In

the

more to-day.

world alone the. than double bit has

since 1930.

"The comparatively small heads of "There is no sign that the increase the Volunteer Defence Corps and the is yet coming to an end. It must be Naval Volunteer Force are increasing remembered that the pension bill is in cost as a result.

the main

governed by the tablishment and the salary scales in existence ten or twenty years ago and im- little can be done to reduce it

Government is to mediately unless 1936

default on its obligations

No reductions can be expected under these heads in 1939;

Increases in Pensions' under the present system are unavold-

since able. Increases amount to 30 per cent. and there are no signs that increases end. Some are coming to an attempt has been made to ziem the fide;

Criifcism is made of the pre- nent system of Defence Con- tributions to the Imperial Gov- ernment. Increases under all heads of Defence must increase Jour as the dictates of poller require increases in the number of volunteers, etc, and more aud more expensive equipment;

30

Air Raid Precautions are the major concern. It has bocOMLE Imperative that substantial in- creases be made in votes under this heading:

The war on disease must be pursued with Increasing vigour, and increases proposed next year for the Medical Department are not the end of the story;

It is possible that many people who have become a charge on the Colony as a result of the Sino-Japanese hostilities will re- main permanently in Hongkong: being Il refugee camps now opened are required for tho whole of next year the sum set aside for their upkeep will be insuficient.

Military Expenses

In

C5-

"Some attempt has been made to alem the tide of increase in the more distant future by the recent adoption

"Those Increases must continue so long as the dictates of polley require increases in the numbers of

supply those forces and the

to them of more and more expensive equipment in order to keep pace with modern military requirements,

AIR RAID PRECAUTIONS The principal increase in defence

in all the senior grades of the ser-expenditure for which we must allow

vice of new scales of salary which is, however, in the sphere of air raid provide lower ments.

pensionable emolu- precautions,

"In the 1938 estimates a figure of

"A similar increase takes place $50,000 was inserted, admittedly as a annually

in Widows' and Orphans token vote.

"I regret to say that it has been pensions. Here, as Honourable Mem- necessary to exceed that figure very

have pointed out on previous substantially and bers

a supplementary In "Government la the accasions,

vote will in due course be placed be- position of having accepted contri- fore Council for approval: butions from officers and, while there

BUI

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The additional expenditure

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La no foundation for the mischievous decided upon after the printed Es- statements that Government makes a timates before you were prepared and profit out of those contributions, it instead of the figure appearing has incurred liability to pay pen- them the revised estimate for 1930 sions in the future which will have must now be put at $120,000. In to be met in due course,

1939 the head shows a further large "It is impossible to state without expansion to a total of $330,005.

actuarial valuation what that Even that, however, is providing for " Arst instalment only of what ablity is.

"Those members who have pre-the Air Raid Precautions Offeer con- viously taken an interest in this siders necessary for the protection subject will however be pleased to of the civil population against air learn that it has been decided in attack.

"I may say that his original es- pelnciple, with the approval of the

expenditure timates provided for Secretary of State, to recast the whole system

next year of many times the sum and Orphans' of Widows'

to establish pensions and

now in the estimates and there can be no doubt that large further dependent Fund into which will the representing

additions to equipment and stores) be paid a

will be necessary In subsequent present liability of Government on

Years this account and annual sums for the

"Decisions Government's

not yet been) representing future contribution towards the pensions of taken as to the exact supplies of, for the widows and orphans of public example, gas masks which should be

provided and most of this Head is Eat at officers. The

compiling of the Information contained in the single sub-hend of for the necessary actuarial valuation $250,000 for all kinds of equipment under the title of Mobilization Stores, has already been started but it is n

the actual stantially supplemented even during Bay whea possible to

1930. change will take place. It will not,

"In addition to the expenditure NO REDUCTION IN COSTS muy ndd, reduce the benefits to shown under the Air Raid Precaution

"When we turn, however, to expenditure I fear that there is less which officers are entitled under the Head, provision is being made under

existing Scheme.

Public Works Extraordinary for the prospect of reduction in future "We hope, of course, that when

erection of certain stores and other ACCUMULATED LIABILITY

bulldings in connection with air raid peace is restored normal trade will

"The main luereases. are shown

"The effects of the change on precaution work at an estimated cost gain recover and that some of the manufacturing developments which under pensions; defence, including have taken place in the Colony of military contribution; police; medical; Government accounts will be, hest, of $200,000. Here again it may be recent months will not be merely charitable services; and public works, that we shall have to provide a sum, necessary to come to Council later.

(Continued on Page 4) temporary:

the would hardly be but

under probably "As to next year, the Ealimutes fans to resume that we can continue once and Railway which are higher dollars, representing the accumulated show a probable deficit of $2,400,000 to receive from the existing sources running costs likely to be offset by ability, necessitating a further sub- which will reduce our avaliable sur-of taxation so large a revenue as is higher receipts. plus to $11,000,000 but if the various expected for the current year or even

The only head under which we al diminution in our nominal|

balance; and secondly that Items of additional

expenditure so much is the lesser sum estimated can reasonably expect any substantial each year thereafter we shall have to

reduction after 1839 is that of mBi-

in which Your Excellency has

represnting the true amount of shadowed are included, the defielt will be over $2,800,000.

we are proposing to sel against next as already explained, we are provide the Government assistance given to "I imagine, however, that what year's expenditure a non-recurrenting in 1839 for large payment on the turid, while losing the receipts on must strike anybody examining the item, the $830,000 withdrawn from account of 1938.

"Revenue is still coming in well but money is going out even faster then early in the year.

Is due. "It must be the wish of everybody that a satisfactory end should be

"We are having to incur a great brought to the Sino-Japanese hostill- the Government House and City slow business and it is quite im-which may well have to be

deal of expenditure of an emergency ties and once that end is reached 1 nature and the true outcome of the thnk

must be expected there will

year is likely to be a small deficit be some decline in the population rather than a small surplus. The short and therefore in the revenue of this payment of military contribution Coluny ought to be kept very prominently in mind by all those who are inclined to take a rosy view because of the large nominal surplus shown in qur monthly accounts.

$2,400,000 DEFICIT

fore- for next year.

Development Fund.

years.

اد

"It must also be remembered that lary contribution and that because (bution to the esumates a contri-|

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The

revenue side representing the

oficers' contributions.

"I am sure that Honourable Mem- bers will agree that it will be better to face our liabilities in this

way Instead of deferting them to an In- definite future but no far as future extimates ure concerned it will mean an increase in the expenditure.

PUBLIC DEBT CHARGES "Another head which may be ex- pected in a few years to show an automatic increase is that of public debt charges.

"We have been charging to loan account considerable capital expendi- ture on waterworks and other items but much of the setual money has so far been found from advances made out of our surplus balances.

"That cannot go on for ever and some day a loan must be raised to these, advances. The amount

repared at the end of the current

year is expected to be something over $12,000,000 and debt charges on that, at the same rale ឆន ura now {being paid on the part of the luun already ralsed would amount tú about SDU0,000 a year.

"Next there are a number of licaus expenditure in which Increases

of

{are

sense of.

not automatic in the arising out of legal comunitments but are unavoidable unless substantial changes in government polley are {made. These are defence services f and the large group of social services, particularly health and education.

DEFENCE EXPENDITURE "Under the head of defence in the catimates very much the largest tein

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