XN000022-1994-11-09 — Page 4

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WEDNESDAY, NOVEMBER 9, 1994

HE SAID: "THE RECORD SPEAKS FOR ITSELF. OVER THE PAST FIVE YEARS, WE HAVE SPENT $17 BILLION AND OVER THE NEXT FIVE YEARS, ANOTHER $30 BILLION ON NEW HIGHWAYS ARE ENVISAGED.

"BUT IRRESPECTIVE OF WHICH SIDE OF THE ARGUMENT ONE SUPPORTS, THE PLAIN FACT IS THAT WE DO NOT HAVE THE LUXURY OF TIME - WE NEED CONSTRAINT MEASURES NOW NEW ROADS REQUIRE A LEAD TIME OF ALMOST FOUR TO FIVE YEARS.

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"WHAT IS MORE THERE IS REALLY LITTLE SCOPE OF BUILDING FLYOVERS IN URBAN AREAS. THE DILEMMA OF MORE CARS RESULT IN MORE POLLUTION AND MORE NOISE ALSO NEEDS TO BE TAKEN INTO ACCOUNT. CANNOT JUST BUILD OUR WAY OUT OF CONGESTION."

WE

MR BARMA SAID THE PACKAGE OF PROPOSALS WAS DRAWN UP WITH THE PURPOSE OF RESTORING THE BALANCE BETWEEN PRIVATE CAR GROWTH AND TRAFFIC SPEEDS WHICH WERE NOW FALLING AT TWO KILOMETRES PER HOUR EACH YEAR.

COPIES OF THE WORKING GROUP REPORT AND A LEAFLET EXPLAINING THE PACKAGE OF MEASURES TO ADDRESS TRAFFIC CONGESTION ARE NOW AVAILABLE FOR COLLECTION FROM DISTRICT OFFICES, TRANSPORT DEPARTMENT'S LICENSING OFFICES AND THE GOVERNMENT PUBLICATIONS CENTRE.

REPORT ON RATES OF RETURN ACCEPTED

THE

GOVERNOR-IN-COUNCIL

HAS ACCEPTED THE ADMINISTRATION'S REPORT ON THE REVIEW OF THE TARGET RATES OF RETURN ON GOVERNMENT UTILITIES INCLUDING MARINE FERRY TERMINALS, TOLL-TUNNELS, WATERWORKS, THE AIRPORT AND THE POST OFFICE.

THE

THE REVIEW WAS UNDERTAKEN BY A WORKING PARTY CHAIRED BY SECRETARY FOR THE TREASURY, ON THE ADVICE OF THE LEGISLATIVE COUNCIL.

THE WORKING PARTY RECOMMENDED THAT THE GOVERNMENT SHOULD SET A TARGET RATE OF RETURN FOR ITS UTILITIES TO REFLECT THE COST OF CAPITAL EMPLOYED IN SETTING UP MAINTAINING AND ENHANCING THE SERVICES AND TO PROVIDE A TOOL FOR THE DEPARTMENTS CONCERNED TO MANAGE THE UTILITIES IN A PRUDENT AND EFFICIENT MANNER.

A GOVERNMENT SPOKESMAN SAID THERE WAS A NEED TO RATIONALISE THE BASIS OF SETTING THE TARGET RATES OF RETURN FOR GOVERNMENT UTILITY SERVICES WHICH WERE HIGHLY CAPITAL INTENSIVE.

"THE TARGET RETURNS REFLECT SIMPLY THE COST OF CAPITAL WHICH THE GOVERNMENT HAS EMPLOYED IN SETTING UP AND MAINTAINING THE CAPITAL FACILITIES OF THESE SERVICES. IT IS NOT A PROFIT, HE EMPHASISED.

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THE WORKING PARTY ALSO RECOMMENDED THAT THE GOVERNMENT SHOULD USE THE CAPITAL ASSET PRICING (CAP) APPROACH IN DETERMINING THE COST OF CAPITAL AND SHOULD MEASURE RETURN ON THE BASIS OF THE AVERAGE NET ASSETS (ANFA), WHICH REPRESENTED BROADLY THE LEVEL OF CAPITAL EMPLOYED BY THE UTILITIES.

THE PROPOSED RATES OF RETURN FOR MARINE FERRY TERMINALS AND

ARE 13 PER CENT AND 13.5 PER

GOVERNMENT TOLL-TUNNELS RESPECTIVELY.

CENT

/"THE PROPOSED