POLICE officers are up in arms over what they call a morale-hitting proposal to cut the number of flats reserved for civil servants. The quota for the current financial year will shrink by 42 per cent from last year's 1,300 units to 750, according to a Housing Authority proposal. About one-third are reserved for police officers. The authority says the adjustment is due to an expected drop in the supply of rented housing in the next few years. To compensate, the authority has proposed to increase housing loans and Home Ownership Scheme flats. The chairman of the Junior Police Officers' Association, Station Sergeant Cheung Shu-tsang, who led representatives to meet authority members yesterday, said: 'The authority should not try to save a few hundred flats at our expense. 'Police play a very important role in society, particularly in the run-up to 1997. The proposal will hit our morale.' He urged the authority to scrap the plan and keep the quota size. Authority management and operations committee chairman Chan Kam-man promised to reconsider the plan when members meet to discuss the issue on October 28. Junior civil servants can apply for public housing units, Home Ownership Scheme flats, or home purchase loans from the authority under the Civil Service Public Housing Quota. Married junior officers due to retire within 10 years and junior staff on or below Master Pay Scale 21 ($22,035 a month) are eligible. There are about 140,000 junior civil servants of which 20,000 are from the police force. According to the authority, rental units will drop to 31,000 in the next two years - compared with the average annual production of 40,000 - because of the Government's delay in granting suitable land. Production of the flats is not expected to bounce back until the turn of the century. Sergeant Cheung said the association welcomed plans offering junior civil servants housing loans to buy property in China. Priority should be given to junior staff because of Hong Kong's high housing costs.