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the question of language whether it be a matter of the use of Chinese in public business or the status of the language or culture or making languages official languages even though there is no official language here yet.
The difficulties lie in turning this thinking into practical action and this is what the Committee is attempting.
Mr. RAFEEK thought we should all agree that this had been a year in which the cost of living had risen out of all proportion to normal income. Well it hasn't. Prices have indeed gone up. The modified consumer price index, that is the index for the poorer half of the population, for the six months ending September 1970 was 7% higher than for the same period a year earlier. But incomes have gone up even more. Money wages, including fringe benefits, of ordinary industrial workers went up by 17% over the same period. As money wages went up faster than prices this meant that real wages over the same period, that is the purchasing power of the take-home pay, increased by 9% and even these figures do not tell the story of the increased leisure that workers are now getting.
But we do not need to look at such detailed figures to see what is happening nor do we need to be financial wizards to understand it. Hong Kong lives by manufacturing. We buy raw materials, process them and sell the goods. The prices of imports are not affected by our home prices because we need only a small portion of the world's supply. If we do well in exporting, the manufacturers get bigger orders and bid up the price of labour to fulfill them. Factory workers earn more so employers in the service industries have to pay more to keep their workers and have to charge more for their services. Prices go up but the rate at which they go up is limited by the rate at which we can sell manufactures abroad and so prices cannot go up faster than the general level of wages. This is the extremely fortunate situation we have in Hong Kong today and one we should be thankful for. Such a general statement does not cover all the detailed variations in such a complex economy as ours but it gives a much more accurate picture than the gloomy talk which seemed to suggest that while the Hong Kong economy was booming, practically everyone involved in the economy was starving. The Financial Secretary dealt with somewhat similar criticisms in Legislative Council on 9th October when he gave a lucid and simply worded analysis of this question of prices, wages and profits in the Hong Kong context. He pointed out that the choice is not between growth with inflation and growth without inflation but between growth and stagnation. He put it all much better than I can and it is worth reading his remarks again.
Two Members again dragged out the old libel that the Government soaks the people to carry off their wealth to England. They seem to think that Hong Kong is owned like a company by some shareholders
HONG KONG URBAN COUNCIL
353
in England. The undertaking, they imply, is run at a profit and each year the profits-called "surpluses"-are sent off to these happy shareholders. Of course, nothing of the sort happens. The surpluses still belong to Hong Kong. They are our savings. They now amount to about 6 months' revenue at current rates and are called the General Revenue Balance. Our savings are banked in good safe places where they can easily be recalled-most of the money is in fact in Hong Kong. Hong Kong is too small a territory to live by printing money and we must have a reasonable savings account with real money in it so that when we want to spend money on houses, schools, hospitals, roads and all the rest of it the money is there. Savings are meant to be a safeguard for the future but in the meantime, we put them in the bank or buy some readily marketable investments. We were told again that all this money should be spent or invested in things like low-cost housing. But even if the buildings could be put up fast enough to absorb the money this would be unwise. Savings are meant to be available to spend. When the bills for the Kai Tak runway extension or the High Island reservoir or the Kowloon stadium come in we may well need to call on these savings. It will be no good then offering a Resettlement Estate or two for sale. Who would buy them and go on looking after the people inside? Hong Kong's sterling balances in London are owned partly by the Government and partly by the people themselves. When a worker calls to deposit a few dollars in a savings bank on pay day some of this money too finds its way through the banking system to the sterling reserves. When the worker wants it back he wants money and he can get it. He would soon get cross with the bank manager who had all the worker's savings tied up in reservoirs or factory buildings. In running our homes we esteem the careful housekeeper who saves a little for a rainy day. There is nothing sinister or complicated about the Government being equally prudent in its housekeeping for the people of Hong Kong. The Government has savings and because we have savings we can plan confidently for the future knowing that even if, for reasons beyond our control, the present boom were to ease off it would not be necessary to cut back on programmes of social importance.
Mrs. ELLIOTT asked how much money we had in London and what interest it was earning. These details are found in the Accountant General's Annual Report. On 31st March, 1970, we had $23 millions in cash with the Crown Agents, $65 millions on fixed deposit in London and owned sterling investments worth $572 millions. The investments held on that day were in 62 different stocks, all of which are listed in the Accountant General's Report and the interest can be worked out by anyone with enough patience. Much more of our money assets were in Hong Kong where cash, and money on fixed deposit in Hong Kong banks, amounted to one and a half times the amount of money we had in London.
Page 186 of 241
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Page 186 of 241
352
HONG KONG URBAN COUNCIL
the question of language whether it be a matter of the use of Chinese in public business or the status of the language or culture or making languages official languages even though there is no official language here yet.
The difficulties lie in turning this thinking into practical action and this is what the Committee is attempting.
Mr. RAFEEK thought we should all agree that this had been a year in which the cost of living had risen out of all proportion to normal income. Well it hasn't. Prices have indeed gone up. The modified consumer price index, that is the index for the poorer half of the population, for the six months ending September 1970 was 7% higher than for the same period a year earlier. But incomes have gone up even more. Money wages, including fringe benefits, of ordinary industrial workers went up by 17% over the same period. As money wages went up faster than prices this meant that real wages over the same period, that is the purchasing power of the take home pay, increased by 9% and even these figures do not tell the story of the increased leisure that workers are now getting.
But we do not need to look at such detailed figures to see what is happening nor do we need to be financial wizards to understand it. Hong Kong lives by manufacturing. We buy raw materials, process them and sell the goods. The prices of imports are not affected by our home prices because we need only a small portion of the world's supply. If we do well in exporting, the manufacturers get bigger orders and bid up the price of labour to fulfill them. Factory workers earn more so employers in the service industries have to pay more to keep their workers and have to charge more for their services. Prices go up but the rate at which they go up is limited by the rate at which we can sell manufactures abroad and so prices cannot go up faster than the general level of wages. This is the extremely fortunate situation we have in Hong Kong today and one we should be thankful for. Such a general statement does not cover all the detailed variations in such a complex economy as ours but it gives a much more accurate picture than the gloomy talk which seemed to suggest that while the Hong Kong economy was booming, practically everyone involved in the economy was starving. The Financial Secretary dealt with somewhat similar criticisms in Legislative Council on 9th October when he gave a lucid and simply worded analysis of this question of prices, wages and profits in the Hong Kong context. He pointed out that the choice is not between growth with inflation and growth without inflation but between growth and stagnation. He put it all much better than I can and it is worth reading his remarks again.
Two Members again dragged out the old libel that the Government soaks the people to carry off their wealth to England. They seem to think that Hong Kong is owned like a company by some shareholders
HONG KONG URBAN COUNCIL
353
in England. The undertaking, they imply, is run at a profit and each year the profits-called "surpluses"-are sent off to these happy share- holders. Of course nothing of the sort happens. The surpluses still belong to Hong Kong. They are our savings. They now amount to about 6 months revenue at current rates and are called the General Revenue Balance. Our savings are banked in good safe places where they can easily be recalled-most of the money is in fact in Hong Kong. Hong Kong is too small a territory to live by printing money and we must have a reasonable savings account with real money in it so that when we want to spend money on houses, schools, hospitals, roads and all the rest of it the money is there. Savings are meant to be a safeguard for the future but in the meantime we put them in the bank or buy some readily marketable investments. We were told again that all this money should be spent or invested in things like low cost housing. But even if the buildings could be put up fast enough to absorb the money this would be unwise. Savings are meant to be available to spend. When the bills for the Kai Tak runway extension or the High Island reservoir or the Kowloon stadium come in we may well need to call on these savings. It will be no good then offering a Resettlement Estate or two for sale. Who would buy them and go on looking after the people inside? Hong Kong's sterling balances in London are owned partly by the Government and partly by the people themselves. When a worker calls to deposit a few dollars in a savings bank on pay day some of this money too finds its way through the banking system to the sterling reserves. When the worker wants it back he wants money and he can get it. He would soon get cross with the bank manager who had all the worker's savings tied up in reservoirs or factory buildings. In running our homes we esteem the careful housekeeper who saves a little for a rainy day. There is nothing sinister or complicated about the Government being equally prudent in its housekeeping for the people of Hong Kong. The Government has savings and because we have savings we can plan confidently for the future knowing that even if, for reasons beyond our control, the present boom were to ease off it would not be necessary to cut back on pro- grammes of social importance.
Mrs. ELLIOTT asked how much money we had in London and what interest it was earning. These details are found in the Accountant General's Annual Report. On 31st March, 1970, we had $23 millions in cash with the Crown Agents, $65 millions on fixed deposit in London and owned sterling investments worth $572 millions. The investments held on that day were in 62 different stocks, all of which are listed in the Accountant General's Report and the interest can be worked out by anyone with enough patience. Much more of our money assets were in Hong Kong where cash, and money on fixed deposit in Hong Kong banks, amounted to one and a half time's the amount of money we had in London.
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