Philip Haddon-Cave

Sir Charles Philip Haddon-Cave, (6 July 1925 – 27 September 1999) was a British colonial administrator.

He joined the British Colonial Service in 1952 was assigned to Kenya, British East Africa.

In 1961, he was appointed Financial Secretary in the Seychelles.

In 1963, he was transferred to work in the Hong Kong government, working in the Department of Trade and Industry.

In 1965, he became the Director of Trade and Industry and was promoted Deputy Secretary of Economy.

In 1969, he was appointed Deputy Financial Secretary.

However, the floating exchange caused the serious problem of inflation in the 1970s in an annual rate of 9.5%.

He followed Cowperthwaite line to insist the colony did not need active monetary policies because of the economy's automatic adjustment mechanism although he later came close to admit that the era of automatic adjustment was over.

During his tenure of Financial Secretary, Haddon-Cave was concerned about the massive growth of government spending under MacLehose administration.

The government projected a three years substantial government deficits, in which Haddon-Cave described as "clearly quite unacceptable".

He proposed several tax reforms to increase the government income and change the lack of progressivity in the system.

He was the Financial Secretary of Hong Kong from 1971 to 1981 and the Chief Secretary of Hong Kong from 1981 to 1985.

During his tenure of Financial Secretary, he famously coined the term "positive non-interventionism" as its chief principle, which has long-lasting effect on Hong Kong and world's economic philosophy.

Haddon-Cave was born in Hobart, Tasmania, Australia, son of Francis MacNamara Haddon-Cave.

He had a brother, David, and sister, Pamela.

He was educated at the University of Tasmania and King's College, Cambridge.

He became the Financial Secretary of Hong Kong in 1971, succeeding Sir John Cowperthwaite.

Contrast to his predecessor, he was known to be willing to discuss budgetary and monetary policies.

He recognised a broader responsibility for the government in economy.

He noted that the Hong Kong government's attitude to the economy "is frequently but inadequately described as laissez-faire."

In 1972, the Hong Kong dollar slumped to the bottom of its band against the US dollar but Hong Kong did not have US dollar reserves to defend the rate.

The government was forced to sell sterling for US dollars to then buy Hong Kong dollar to support the rate.

In July 1973, the Hong Kong dollar was dragged down against sterling due to the continued devaluation of the US dollar as a result of the outflow of capital from Hong Kong.

In August 1973, Governor Murray MacLehose and Haddon-Cave attempted to end the historic commitment to sterling reserves but the idea was rejected by London.

The British government offered a unilateral agreement in return to guarantee sterling balances at a new slightly higher rate.

In his 1973 Budget Speech, Haddon-Cave announced his intention to "restore" the profits tax as he deemed that "Court decisions have shown that a business Hong Kong doing exactly what it was set up to do in Hong Kong and nowhere else can have business income derived from outside Hong Kong, coming from no conduct of business outside Hong Kong, and escaping charge."

For his services, he was awarded Commander of the Order of St Michael and St George (CMG) in 1973 and knighted with the Order of the British Empire (KBE) in 1980.

In July 1974 the price of US$1 fell below HK$5.05 which force Haddon-Cave to announce the Hong Kong dollar to float free from its link to the US dollar on 27 November.

He repeated his intention in the 1974 and 1975 Budget Speeches although no policies were implemented, which was thought to face the opposition from the business interests.

Haddon-Cave also proposed tax on dividends, following Cowperthwaite had proposed a decade earlier.

A Third Inland Revenue Ordinance Review Committee was set up to investigate over the matter in 1976.

Although Haddon-Cave endorsed the Report to the Commissioner of Inland Revenue, the Committee's proposal to tax dividends was eventually abandoned, due to the opposition of the unofficial members of the Legislative Council.

Only the recommendation of increased rate of profits tax for corporations was adopted, which left the geographical scope of profits tax remained narrow.

He preferred to describe its stance as one of the "positive non-interventionism" in his Budget Speech in 1980, in which the government should not "plan the allocation of resources available to the private sector and to frustrate the operation of market forces", the private sector should accept and bear the costs of its own mistake; and the government had certain specific obligations.

First it recognised its budgetary and fiscal policies would affect the entire economy and that it had a responsibility to intervene in a limited fashion.

Second the government should be prepared to exercise guidance and impose restraints on banking and securities.

Third, it was responsible for establishing advisory bodies where private interest could be maximised and public interest secured.

Fourth, the government should provide law and order, defence, preventative health measures, fire services, sanitation and a basic network of roads and drainage and fund the services of housing, education, medical and health services and social welfare.

Haddon-Cave was appointed Chief Secretary of Hong Kong in 1981.

In his tenure, he oversaw the massive district administration reform under the District Administration Scheme.