THURSDAY, MARCH 30, 1978
LO WARNS
MTR MAY NOT BE VIABLE ****
THE HON. T.S. LO HAS ASKED THE GOVERNMENT TO FORESTALL THE POSSIBILITY THAT THE MASS TRANSIT RAILWAY MAY NOT BE VIABLE, AT LEAST IN ITS EARLY YEARS.
MR. LO SAID IN THE RESUMED BUDGET DEBATE TODAY HE KNEW THIS PESSIMISM IS SHARED BY A CONSIDERABLE BODY OF OPINION BOTH INSIDE AND OUTSIDE GOVERNMENT. IT IS NOW TIME TO TAKE STOCK AND TO SEE WHETHER WE OUGHT NOT TO MAKE SOME CONTINGENCY PLANS.+
HE REFERRED TO THE ILLUSORY+ FISCAL RESERVES OF $4,890 MILLION HONG KONG WILL HAVE BY THE END OF THIS FINANCIAL YEAR, AGAINST A CONTINGENT LIABILITY OF $6,400 MILLION, RISING TO $9,500 MILLION BY 1982.
TO HAVE ONE THIRD OF HONG KONG'S LIABILITIES COVERED BY FISCAL RESERVES, WITHIN THE GUIDELINES SET BY THE FINANCIAL SECRETARY, WOULD SEEM PERFECTLY SOUND IF THEY HAVE A BETTER THAN 3 TO 1 CHANCE OF NEVER BEING CALLED.
IN HIS VIEW HOWEVER, SUBSTANTIAL PORTION OF THEM WILL IN ALL PROBABILITY BECOME ACTUAL LIABILITIES BECAUSE MUCH MORE THAN HALF OF THEM RESULT FROM GUARANTEES COVERING M.T.R. LOANS.
MR. LO STATED THAT HE WAS OPPOSED TO GOVERNMENT USING ARTIFICIAL METHODS TO IMPROVE THE M.T.R.'S VIABILITY IN THE EARLY YEARS BY IMPROVING ITS COMPETITION FOR PASSENGERS SUCH AS BY REROUTING PUBLIC TRANSPORT OR BY BUS COMPANIES INCREASING THEIR FARES BY 5 TO 6 TIMES. +...... TO INCREASE FARES DRASTICALLY AT A TIME WHEN THEY ARE MAKING BUMPER PROFITS WOULD SEEM NOT ONLY GROSSLY UNFAIR BUT ALSO UNLIKELY,+ HE SAID.
THE SOLUTION HE SUGGESTED IS FOR THE GOVERNMENT TO PAY IN FURTHER CAPITAL SUMS OUT OF ITS RESERVES TO THE M.T.R. TO REDUCE ITS DEBT SERVICING CHARGES.
THIS WILL ENABLE THE M.T.R. TO PAY OFF AN EQUIVALENT AMOUNT OF ITS LIABILITIES OR TO DELAY FURTHER BORROWINGS, AND WILL HAVE THE ANCILLARY ADVANTAGE OF CORRECTING A FALSE IMPRESSION OF OUR WEALTH CREATED BY THE RESERVES AND REDUCE UNWARRANTED JEALOUSY OR DISCRIMINATION AGAINST US OVERSEAS.
FINANCIAL AND ECONOMIC EFFECTS OF BILLS
MR. LO STRESSED THE +UNDERPINNING FACT+ THAT HONG KONG CANNOT SURVIVE WITHOUT BEING ECONOMICALLY VIABLE, AND URGED THAT WHEN NEW BILLS ARE PRESENTED FOR DEBATE, THE GOVERNMENT SHOULD EXPLAIN BOTH THE FINANCIAL AND ECONOMIC AS WELL AS THE SOCIAL IMPLICATIONS INVOLVED.
/HE KNEW