-
· 10
In approving tariffs adjustment, the Government seeks to strike that delicate balance between the interests of consumers and shareholders. On the one hand, consumers require affordability of tariffs but at the same time every member of the public expect certainty that the demand on electricity supply will be met without the brownouts and blackouts to which other parts of the region are subject. As regard shareholders, they need that reasonable rate of return on their investment and a climate of investment to enable them to meet the expectation of the general public on the certainty, the certainly of power supply.
When we look at tariff adjustment we seek to ensure that any increase in tariff is the minimum, the minimum necessary to allow the company, in return for meeting its obligations to receive a reasonable level of profits. On a year to year bases, the actual tariff charged to consumers may even be below that then the level approved for that year. For instance, the most recent tariff increase for the Hong Kong Electric Company in January was well below the prevailing inflation rate and the level which had been approved under the company's Financial Plan.
This system of applying the Scheme of Control Agreements on our power companies has served Hong Kong well. We have a reliable supply of electrical power to our homes, our factories, offices, efficiently generated and sufficient to meet all our demands. The average tariff level of the two power companies has only increased by 35 per cent since 1983, compared to a 172 per cent increase in the consumer price index for the same period. In real terms, the cost of electricity has fallen over 49 per cent during the past twelve years.
Telecommunications
I would now like to turn to telecommunications. Telecommunications services play a vital role in supporting our economic development. That these services are reliable, efficient and advanced gives Hong Kong a vital competitive edge in supporting our domestic business and industrial sectors. We in Hong Kong are proud, and indeed fortunate, to have one of the most advanced and sophisticated telecommunications networks in the world. This is one of our main competitive strengths, one we must develop if Hong Kong is to retain successful and competitive into the Information Age of the 21st Century.
+
-
Our present enviable situation has arisen through the foresight and substantial investment of the telecommunications industry. This is being enhanced through the introduction of competition in our local networks. The future investment of telecommunications companies and they are committed to investments in excess of $32 billion over the next 10 years depends on having a reasonable rate of return and a favourable investment climate in which to raise funds. Market forces in the highly competitive areas of telecommunications industry are more than sufficient to keep tariffs down. Where competition has only recently been introduced, we have to ensure that there is no predatory pricing. Any freeze on tariff levels as suggested by the motion therefore made no sense. When market forces already operate to the full the least governmental interference the better.