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Fourth, the Democrats seek more competition. This ignores the real constraints facing ferry operations. HYF's ferry services as I've said are heavily loss-making because patronage has declined drastically as a result of increased competition from MTR and cross harbour buses. This is a hard fact which any new operator will, if any, will have to face. If we are to throw open the market and tender out the whole HYF ferry network, who would be interested in operating such a business? Without good prospects and an assurance of its ability to increase fares to cover increase in operation costs, how could a newcomer, bearing in mind the huge capital outlay that is necessary, secure the necessary finances to start off the ferry operations? We cannot simply extract the profitable routes, give them to a new operator, and leave the loss- making ones to HYF. This would be a recipe for disaster.
For these reasons, and in answer to several comments that the Administration does not consider other parties have any interest in bidding for the development package I should say that this had been considered.
Mr President, fare increases are never popular. But costs do increase and it is only reasonable to give franchised operators a reasonable return for their investment. It must be clearly understood that in HYF's case, even with the fare increase now sought, the Company will suffer a substantial loss.
HYF's application for a 13.96% increase in fares is totally justified. We have carefully analysed their operating costs and projected income and expenditure. The submission in turn has been scrutinised by the Transport Advisory Committee and endorsed by the Executive Council. Moreover there has been a great deal of support by the media as evidenced by editorials in both the Chinese and English press. Even the Islands District Board has accepted the need for a fare increase although they have sought a slightly lower level.
To support the Honourable Lee Wing-tat's motion would be to totally ignore the realities of HYF's dilemma and the need to safeguard the current level of ferry services. Given the many occasions in this Chamber when the Democrats have demanded improved ferry services, for example, to Northwest New Territories, is it not now contradictory for them to do an about face by seeking to torpedo HYF when it comes to providing what is no more than a helping hand to tie the Company over their present predicament?
Mr President, we need to consider HYF's fare increase application rationally and pragmatically. If we do this, the solution then becomes obvious. A fare increase of 13.96% must be approved if we are to maintain essential ferry services and safeguard the public interest. There is in fact no choice but to vote down the Hon Lee Wing-tat's motion. I urge Members to do this.
Thank you, Mr President.
End