intentions to improve its services, even if fare increases were approved. It was suggested that the difficult negotiations with the Company indicated that it was not acting in good faith. Fears were expressed that, if increases in fares were awarded, then further negotiations with the Company on the memorandum of understanding would drag on to no conclusion. TAC were told that CMB had linked future wage increases to the Government's approval of increased fares and some members expressed concern that this was tantamount to the Company blackmailing the Government. The Committee was informed, however, that CMB needed an early fare increase in order to maintain its present level of services and that, in the absence of approval of an increase well before Chinese New Year, levels of service could well deteriorate rapidly. The travelling public would have to suffer this deterioration because the preparation of contingency plans would not by then be sufficiently advanced for the Government to be in a position to confront the Company.
Some TAC members queried whether CMB would refuse to pay the promised wage increase in the absence of a fare increase. The Chairman indicated that, whilst this was a matter for judgement, he, as the Secretary for the Environment and the Transport Department, firmly believed that CMB would not finance a wage increase from increased borrowing and would therefore not increase wages. would lead to a sharp decline in services,
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The Committee concluded that fare increases for both companies should be linked directly to the negotiations on memoranda of understanding. These should be sufficiently detailed and negotiations on them should have reached a sufficiently advanced stage for them to be considered as providing a satisfactory assurance that services would be improved. The Committee advised that the memoranda of understanding should be in a form which would assist the future monitoring of the com- panies' performances. They also considered that the memoranda should be submitted to the Executive Council together with the companies' applications for fare increases.
CONFIDENTIAL ##
機密