WEDNESDAY, JUNE 22, 1994
TREASURY SECRETARY IN MTR MOTION DEBATE
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FOLLOWING IS THE SPEECH BY THE SECRETARY FOR THE TREASURY, MR DONALD TSANG, IN THE LEGCO MOTION DEBATE ON RATE OF RETURN OF THE MASS TRANSIT RAILWAY CORPORATION:
MR PRESIDENT,
I PROPOSE, WITH YOUR CONSENT, TO SHARE THE DUTY OF REPLYING TO THIS MOTION ON BEHALF OF THE GOVERNMENT WITH MY COLLEAGUE, THE SECRETARY FOR TRANSPORT.
[ WISH TO DISCUSS WITH MEMBERS WHY IT IS IMPORTANT TO ACCEPT THE CONCEPT OF A RETURN ON THE PUBLIC'S INVESTMENT IN THE MTRC. IN THAT CONTEXT, I SHALL EXPLAIN WHY THE INTEREST OF PASSENGERS ARE BETTER SERVED NOT ONLY BY LOW FARES, BUT ALSO BY QUALITY OF SERVICE, BY REGULAR RENEWAL OF THE EXISTING RAILWAY SYSTEM AS IT AGES, AND EXPANSION TO MEET NEW DEMANDS.
BY
AS A MATTER OF POLICY, WE SEEK TO ACHIEVE A RETURN ON THE PUBLIC'S INVESTMENT IN THE MTR SYSTEM, BECAUSE WE SHOULD GAIN THE RESOURCES FROM WITHIN THE REVENUES OF THE EXISTING SYSTEM TO ALLOW US, AT TODAY'S PRICES, TO MAINTAIN, UPGRADE AND EXPAND THE SYSTEM.
J
REGARDLESS
OF
IT IS IMPORTANT TO LOOK FORWARD TO THE FUTURE. PROVIDED THAT MTR FARES CAN AT LEAST BE MAINTAINED IN REAL TERMS TOGETHER WITH A MODEST RETURN, WE SHALL HAVE AVAILABLE MORE OR LESS THE GOVERNMENT'S FINANCIAL POSITION IN THE FUTURE KEEP THE SYSTEM CLEAN, EFFICIENT, SAFE AND GROWING SERVICE NEEDS,
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TO
THE RESOURCES
ΤΟ MEET FUTURE
A
IN
IF WE LET FARES FALL IN REAL TERMS, AND IF WE FAIL TO OBTAIN RETURN, THEN THE GOVERNMENT OF THE FUTURE WILL BE FACED WITH PUMPING IN FUNDS FOR THE RENEWAL AND DEVELOPMENT SYSTEM WHEN IT WOULD PREFER TO USE THE MONEY FOR SOMETHING ELSE OR IT MIGHT SIMPLY NOT BE ABLE ΤΟ AFFORD TO DO SO. ANOTHER IMPORTANT REASON FOR MAINTAINING PARES REAL TERMS AND OBTAINING A RETURN IS THAT THE HONG KONG PUBLIC BENEFIT ENORMOUSLY FROM THE MTRC'S ABILITY TO BORROW MONEY AT RATES OF INTEREST. WHAT MONEY THE MTRC CANNOT BORROW TO FUND RAILWAY DEVELOPMENTS HAS EITHER GOT TO BE MADE UP IN HIGHER FARES, OR IN MORE MONEY OR CONCESSIONS FROM THE OWNERS THE HONG KONG PUBLIC.
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CAN
LOW
NEW
I AM SURE MEMBERS WILL REALISE THAT A BUSINESS CANNOT BORROW MONEY EFFECTIVELY AND CHEAPLY IF IT CANNOT EVEN MAINTAIN ITS REVENUE IN REAL TERMS. WHAT IS MORE: LENDERS LOOK FOR A SAFETY MARGIN IN THE BORROWER'S PROFITABILITY REPRESENTED BY THE RATE OF RETURN TO THE OWNER. THEY CAN RELY ON THIS SAFETY MARGIN IN CASE THE ECONOMICS OF THE BUSINESS DETERIORATES, AND THEY REFLECT THAT EXTRA DEGREE OF COMFORT IN LOWER INTEREST RATES.
MOST MEMBERS ARE WELL TRAVELLED. ANY RAILWAY SYSTEM WHICH IS ALLOWED TO DEGENERATE IS MORE THAN JUST A SOURCE OF DISSATISFACTION TO PASSENGERS : IT GRADUALLY BECOMES A REAL THREAT IN TERMS OF SAFETY, SECURITY AND STABILITY OF FARES.
/THE POSITION