XN000022-1986-03-14 — Page 7

FRIDAY, MARCH 14, 1986

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THE PROFIT OF THE KOWLOON MOTOR BUS COMPANY IS RESTRICTED TO 16 PER CENT AND THE CHINA MOTOR BUS COMPANY TO 15 PER CENT.

MR SO SAID THAT THE PERCENTAGES ADOPTED WERE DEEMED REASONABLE, TAKING INTO CONSIDERATION THE FACT THAT THIS LEVEL OF RETURN WAS FIXED, WHETHER IN GOOD YEARS OR BAD, AND THAT LONG-TERM FINANCIAL STABILITY HAD TO BE ENJOYED BY THE COMPANIES BEFORE SHAREHOLDERS COULD BE ENCOURAGED TO INVEST FURTHER IN BUS OPERATIONS.

WHEN A BUS COMPANY MADE A BIGGER PROFIT THAN ALLOWED, THE SURPLUS WOULD HAVE TO GO TO A DEVELOPMENT FUND, IN A LEAN YEAR WHEN PROFITS WERE LOWER THAN ALLOWED, THE BUS COMPANY COULD DRAW FROM THIS FUND TO BRING ITS PROF ITS UP TO PERMITTED LEVEL.

THE DEVELOPMENT FUND DID NOT FORM PART OF THE SHAREHOLDERS' FUND AND COULD ONLY BE USED FOR OPERATING BUS SERVICES. INDEED. NO BUS FARE INCREASE WOULD BE CONSIDERED BY THE GOVERNMENT UNTIL THIS FUND HAD BEEN EXHAUSTED, MR SO SAID.

THE BUS COMPANIES' ACCOUNTS WERE SUBJECT TO CLOSE EXAMINATION BY THE GOVERNMENT'S FINANCIAL MONITORING UNIT. MOREOVER, THE TWO GOVERNMENT OFFICERS APPOINTED TO SIT ON THE BOARD OF DIRECTORS OF EACH BUS COMPANY WOULD SEE TO IT THAT AN EFFICIENT AND PROPER SERVICE TO THE PUBLIC WOULD CONTINUE TO BE PROVIDED.

TO CHECK AGAINST POSSIBLE, DELIBERATE ATTEMPTS BY THE BUS COMPANIES TO OVER-INVEST TO BOOST THE IR PROFITS IN REAL TERMS. A MONITORING SYSTEM SPELT OUT IN THE PUBLIC BUS SERVICES ORDINANCE REQUIRED EACH FRANCHISED BUS OPERATOR TO DRAW UP A FIVE-YEAR DEVELOPMENT PLAN BY JUNE OF EACH YEAR FOR GOVERNMENT APPROVAL, MR SO SAID.

THE FIVE-YEAR PLAN FEATURED A ROUTE DEVELOPMENT PROGRAMME AND AN ESTIMATE OF THE NUMBER AND TYPES OF BUSES REQUIRED TO IMPLEMENT IT, PROGRAMMES FOR SCRAPPING AND PURCHASING BUSES, DEPOT FACILITIES AND BUS MAINTENANCE AS WELL AS A FORECAST OF THE FINANCIAL IMPLICATIONS IN IMPLEMENTING THESE PROGRAMMES.

THIS PLAN ENABLED THE GOVERNMENT TO ENSURE THAT THE BUS COMPANIES EXPAND OR ADJUST THEIR LEVEL OF SERVICE IN ACCORDANCE WITH CHANGING TRAVEL PATTERNS AND DEMAND AND THAT THEIR BUS FLEETS MET MAINTENANCE AND SAFETY STANDARDS.

+IT ALSO ENSURES THAT ANY ADJUSTMENT OF FARES NECESSITATED BY IMPROVEMENTS TO SERVICE IS GRADUAL AND NOT DRAMATIC,+ MR SO SAID.

HE SAID THAT THE PRESENT MONITORING SYSTEM ALREADY PROVIDED MEMBERS OF THE PUBLIC WITH A PART TO PLAY. THIS WAS BECAUSE THE ROUTE DEVELOPMENT PROGRAMME, WHICH HAD GREAT IMPLICATIONS ON THE BUS COMPANIES FINANCES. WERE FINALISED ONLY AFTER CONSULTATIONS WITH DISTRICT BOARDS AND THEIR VIEWS HAD BEEN TAKEN INTO ACCOUNT.

/MR SO