The Financial Monitoring Unit (FMU) of the Economic Services Branch has made an evaluation of CMB's fare application and a summary of its analysis is at Annex H. It assumes a fare increase from 1st February 1979 and is based on passenger forecasts prepared by the Transport Department. It indicates that CMB will make a profit in 1979-80 but that it will have to draw on the Development Fund to make up the permitted level of return. Subsequently, the Development Fund would build up to $38.7 million in 1980-81 but would fall to $26.1 million in 1981-82. The FMU concluded that the fare increases proposed by CMB are acceptable for implementation before the end of January.
19
CMB is facing a serious shortage of drivers which is currently keeping 70 roadworthy buses out of service daily. To retain existing drivers and encourage recruitment, the company has promised a wage increase before Chinese New Year. This wage increase is undoubtedly necessary to maintain and improve existing services. CMB has recently had to borrow to cover its operating commitments and to pay its dividend and it is not prepared to consider further borrowing to meet wage increases. However, if the wage increase is not introduced, it is certain that many drivers will leave CMB on receipt of their Chinese New Year bonus. This would cause a substantial deterioration in services which could well lead to a public outcry. Denial of the fare increase would there- fore constitute a punitive measure, the effects of which would be felt more by the public than by the Company.
20
Bearing all these considerations in mind, it is recommended
that:
(a)
CMB should be granted the fare increases for
(b)
which it has applied and which are set out in Annex G; and
These fare increases should be introduced before the end of January,
I
G.S. 166
Memorandum of Understanding with CMB
22
Of the five areas referred to in paragraph 1(a) above, agreement has been reached with CMB regarding bus ordering to mid- 1981. This agreement is at Annex I. Discussions have also been conducted with CMB regarding maintenance, the provision of depots, and drivers' and mechanics' working conditions, but the negotiations have not yet reached the stage of consolidation in a draft memorandum of understanding. Improvements in maintenance and working conditions
CONFIDENTIAL
機密