XN000022-1987-02-02 — Page 2

MONDAY, FEBRUARY 2, 1987

REASONABLY PRICED TRANSPORT SYSTEM THE AIM

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THE PUBLIC WAS TODAY (MONDAY) ASSURED THAT A FARE INCREASE BY THE FRANCHISED BUS COMPANIES WOULD NOT BE APPROVED UNNECESSARILY AND WOULD ONLY BE GRANTED WHEN IT WAS ABSOLUTELY ESSENTIAL.

SPEAKING AT A LUNCH MEETING OF THE ROTARY CLUB OF TSIM SHA TSUI EAST, THE DEPUTY SECRETARY FOR TRANSPORT (TRANSPORT SERVICES), MR DAVID LAN, ALSO REMINDED THE PUBLIC THAT IT WAS GOVERNMENT POLICY TO MAINTAIN A REASONABLY PRICED PUBLIC TRANSPORT SYSTEM THAT WAS EFFICIENT AND GENERALLY OF A HIGH STANDARD.

MR LAN SAID THAT WHEN AN APPLICATION FOR A FARE INCREASE WAS RECEIVED, THE DETAILED FINANCIAL AND OTHER SUPPORTING DATA SUBMITTED BY THE COMPANY WERE SUBJECTED TO CLOSE SCRUTINY AND ANALYSIS BY THE ADMINISTRATION.

+ ALL POSSIBLE COST-CUTTING MEASURES ARE EXPLORED TO SEE IF ANY REDUCTIONS CAN BE MADE WHICH WOULD NOT RESULT IN A DETERIORATION IN SERVICE OR IMPEDE NECESSARY IMPROVEMENTS.

+THEREAFTER THE APPLICATION AND SUPPORTING DATA ARE CONSIDERED IN DETAIL BY THE TRANSPORT ADVISORY COMMITTEE WHO WILL BE CHECKING, FOR EXAMPLE, THAT THE PROPOSED FARE SCALES ARE FAIR AND APPROPRIATE.

+T HEREAFTER THEIR ADVICE WILL BE SUBMITTED TO THE EXECUTIVE COUNCIL FOR DECISION, HE SAID.

MR LAN SAID THE TWO BUS COMPANIES WERE REGULATED UNDER THE TERMS OF THE PUBLIC BUS SERVICES ORDINANCE AND THEIR FRANCHISES.

COMMENCING IN 1985, MR LAN SAID, THE FRANCHISED COMPANIES WERE REQUIRED EACH YEAR TO DRAW UP THEIR OWN FIVE-YEAR FORWARD PLANNING PROGRAMME WHICH REQUIRED THE GOVERNMENT'S APPROVAL.

+ THE ANNUAL PREPARATION OF THESE PROGRAMMES ENABLES GOVERNMENT TO ENSURE THAT A COMPANY EXPANDS OR ADJUSTS ITS LEVELS OF SERVICE, EQUIPMENT AND FACILITIES IN ACCORDANCE WITH CHANGING TRAVEL PATTERNS.

+ IT ALSO ENSURES, FOR EXAMPLE, THAT A COMPANY CANNOT OVER- INVEST IN ORDER TO BOOST ITS ASSET BASE, HE SAID.

WITH REGARD TO THE FINANCES OF THE BUS OPERATORS, MR LAN SAID BOTH THE KOWLOON MOTOR BUS COMPANY AND THE CHINA MOTOR BUS COMPANY WERE GOVERNED BY A SCHEME OF CONTROL UNDER WHICH THE TWO COMPANIES WERE PERMITTED RESPECTIVELY A 16 PER CENT AND 15 PER CENT RETURN ON AVERAGE NET FIXED ASSETS.

HE SAID THE PERMITTED RATES WERE CONSIDERED APPROPRIATE IN PROVIDING THE COMPANIES WITH THE FINANCIAL STABILITY AND ENCOURAGEMENT FOR INVESTMENT, ADDING THAT THERE WAS PROVISION FOR THE OPERATION OF THE PROFIT CONTROL SCHEME TO BE REVIEWED EVERY TWO YEARS.

/+IN FACT,