25
Whilst the proposal will obviously reduce the profitability of KMB and CMB it should be borne in mind that both companies have, in the past, made profits in excess of their permitted return and it could be argued that part of the balance in the Development Fund is as a result of the receipt of student fare subsidy. It must, however, be pointed out that the effect of the proposal would, inevitably, be to bring forward the dates for applications for fare increases by the companies concerned. As can be seen at Annex E, the student subsidy at present, paid by Government represents about 5% and 7. 5% of CMB's and KMB's revenue respectively, but about 25% and 45% of their profits before tax. These figures, adjusted to the level of revenue loss detailed in paragraph 22 for the 12 - 15th birthday group, become 3.2% and 4.6% of revenue and 15% and 27% of pre-tax profits.
26
Because of the different form of franchise, it is as noted in paragraphs 29 and 31, not certain whether the requirement to grant student con- cession can be imposed on HKT. As can be seen from Annex E, the subsidy paid by Government is about 2.3% of its total transport services revenue and 7.5% of pre-tax profits (1977 returns ). These figures, adjusted to the level of revenue loss detailed in paragraph 22 for the 12- 15th birthday group, become 1.6% of revenue and 5.4% of pre-tax profits.
27
It is difficult to obtain exact figures for NLB, but the greater proportion of its revenue is generated by tourists at weekends. It is considered that this proposal will have little effect on NLB revenue.
MTRC
28
The intention will be to implement this policy on the MTR, but there are difficulties. First, fares are determined by the Corporation and are not subject to the control or consent of the Governor in Council. Second, it will not in any event be possible for practical reasons to operate a student concessionary scheme until at least six months after initial opening of the modified initial system. It is hoped that agreement on student concessions can be reached with the Corporation on a voluntary commercial basis. Otherwise it will be necessary to decide whether or not legislation is required and desirable, TAC has recommended that the Corporation should provide concessionary fares by September 1980 at the latest.
The legal position
29
As indicated in paragraph 17 above, with exception of the HKT and the MTRC, the Governor in Council may determine or change the fare structure of all the public transport concerns. In the case of the HKT, changes to the fare schedule may be made by the company and require only the consent of Governor in Council.
CONFIDENTIAL
機密
G.S. 166