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statistics for all members to see just how expensive our EMSD maintenance was in 1987 and how many days our vehicles were off the road. This means that we have to buy considerable numbers of extra vehicles just to keep our service going. As you know we make constant comparisons with other operators all over the world and our vehicle deployment is now as efficient as any Municipal operator, yet we carry more than double the fleet reserves of those other efficient operators.
There are, of course, easy and simple alternatives to using EMSD. We could run maintenance depots ourselves for all routine maintenance. We could arrange leasing contracts including maintenance with our suppliers. We could let vehicle maintenance contracts by competitive tenders for a term of years, or we could try combinations of these. Overseas efficient municipal operators use these methods. The Department has efficient Transport Managers whose training includes running such systems. There is no reason to doubt that they could run such systems effectively. The reason they can't is because the MAA won't let us and this is costing the Council and the ratepayer a fortune. It is, incidentally, also costing the taxpayer a fortune because obviously the same sort of inefficiencies apply to the maintenance of the rest of the Government fleet. So at the very least I must now ask our Chairman to go to the Chief Secretary to ask him to allow us to get out from under the EMSD. But really this terribly old-fashioned and outdated part of the MAA must be changed.
The principle behind the MAA was to give the Urban Council complete financial autonomy. In fact, of course, we have very limited financial autonomy because we are entirely dependent on the rates, and these are controlled by the Central Government who therefore holds our purse strings and thereby controls us very tightly, and thus limits our financial autonomy, which is even less than the limited political autonomy the SAR will have after 1997!
I have already in my budget speech last month stated it is time that we, as the senior Municipal Council, receive all the rates in the same way as does the junior Municipal Council, so that we can really control our finances and not be bound hand and foot as at present.
However, we must go further: Municipal Councils all over the world who have real financial autonomy also have real avenues of raising finance other than from just the rates. They have control over their own licence fees, which we do not have since we are bound to only recover costs and cannot cross-subsidize, i.e. as you all know, we have a huge deficit on hawkers but for obvious reasons can't raise the hawker licence fees sufficiently to make up the deficits. But some of our other licence fees are relatively very low, and in many ways inequitable, when a large hotel, for instance, pays the same amount for a liquor licence for half a dozen bars in its building that a small restaurant has to pay for just the right to sell alcohol, and the same applies to restaurant, billiard and swimming pool licences, all of which are so low that they could very easily be raised to give us more income to pay for the loss we have on hawker licensing.
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But we are not allowed to do that. We are also not allowed to properly invest our surplus funds, we are bound to remain in Hong Kong dollars and are entirely subject to the Hong Kong dollar market when quite often it would be very advantageous for us to keep our cash in another currency where interest rates are higher or where there is a possibility of the currency appreciating.
But most important, we are not allowed to raise loans, and, in any case, we are very credit-worthy, banks and the public would probably prefer us to have some kind of security, but, as you know, we do not own our own land or buildings, they are all Central Government property and are simply managed by us. That, I think, is all wrong. Like everywhere else in the world, this Municipal Council should own its land and buildings and should be able to use this land and buildings as a backing for municipal bonds. If we were allowed to run our own finances and have control of the rate income I believe we would, by judicious financing, become much more cost-effective and thus in the medium to long term save the ratepayer a great deal of money.
To obtain this real financial autonomy needs, of course, considerable alterations in the MAA.
What this all boils down to is that we will this year have losses of HK$224 million in hawker control, some of which we could make up by raising licence fees across the board, which we cannot do because of the MAA. We will this year have a loss of HK$76 million in our abattoir operations. We have been trying to privatise this operation for over two years now and have not been able to do so because of impediments put into our way by Civil Service regulations which arise directly out of the MAA, and although we have not been able to quantify the loss we have in the maintenance of our vehicles, I, personally, conservatively estimate this at well over HK$10 million per annum because the excessive downtime of our vehicles forces us to purchase extra vehicles which in turn need garage space and maintenance. In other words, in just these three instances the MAA is costing our ratepayers well over HK$100 million a year, and I am reasonably sure that considerably more savings in other areas could be affected if the MAA allowed us to more effectively manage our funds.
Mr. Chairman, I think I have made the case that we must now sit down with the Government and renegotiate the Memorandum of Administrative Arrangements for the Urban Council, and I trust that you will now take the initiative and do so.
With these words I support the motion.
To be Tabled at the Annual Debate on the 10 January 1989
Appendix A
The attached statistics supplied by the USD cover four categories of vehicles only and show those vehicles with above-average maintenance costs, and/or for 40 days or more off-road during 1987. The time off-road is given in shifts, but where the vehicle is operating one shift a day the shifts off-road equal the days