XN000022-1996-01-24 — Page 33

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But, Mr President, I must question the views pertaining to transport fares expressed by the Honourable Chan Yuen-han and the Honourable Yum Sin-ling. One has to be realistic. If franchised operators are not permitted to make a modest return on their investment why should they continue in the business? It becomes quite ludicrous when, for example by comparison, individuals can earn a better return on their saving deposits, than can, say, a ferry company on its huge capital outlay. If transport operators lose money and go bankrupt, what would happen? If public transport comes to a halt Hong Kong would become paralysed. Do the critics expect the Government to subsidise public transport? Worse still, would Government have to take over? The full implications and consequences of freezing transport fares must be fully understood. This is unquestionably illustrated by the fact that the operating costs of our franchised bus and ferry companies totalled $5 billion in 1995. If the private sector withdrew, and the Government was forced into running buses and ferries, funding would then have to come from the public purse and my guess is that this would have to be at the expense of other programme areas.

It would be totally wrong to think that applications for increases in transport fares are endorsed by the Administration simply to boost the coffers of transport operators. It may help if I outline again the criteria which the Administration takes into account. These are -

the increase in operating costs since the last adjustment;

(a)

(b)

efforts made to reduce costs and increase revenue, e.g. economy measures and other sources of revenue such as advertising;

(c)

the availability and quality of service provided having regard to passenger demand and feedback:

(d)

future development plans and service improvement programmes;

(e)

forecast of future costs, revenue and return;

(f)

public affordability and acceptability including the impact on livelihood.

Having very carefully weighed all these factors, the Administration will then form a view as to whether an increase is justified and if so, the level of increase that is warranted. And of course it is not just the Administration that looks at the facts and figures. The LegCo Transport Panel is fully briefed indeed the bus and ferry companies and other transport operators present their case to LegCo. The proposals are scrutinised by the Transport Advisory Committee and recommendations are submitted to Executive Council for endorsement.