TNAG-0003-FCO40-39-Commission-of-Enquiry-into-the-Kowloon-disturbances-addition-1968 — Page 23

PART II THE STAR FERRY FARE ISSUE

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justified; that if the Committee found them to be justified, they would be unable to refuse applications from other public transport companies for fare increases; and that any fare increase would have a serious inflationary effect on the economy. The majority report tried to allay public fears regarding the direct and indirect effects of an increase by pointing out that expenditure on Star Ferry fares con- stituted only .075% of average household expenditure (3.2% for all transport expenditure) and therefore any increase would have a scarcely perceptible effect on consumer prices and the economy as a whole. It also tried to counter the argument that price increases weighed most heavily on the poorer sections of the community by recommending that increases be restricted to first class fares only. Finally, it pointed out that the public would have a chance to comment on the recommendations before a decision was made by Government. Public reaction to these arguments will be considered below.

67. The Committee did not however accept entirely the Company's proposed fare structure nor the level of 'fair remuneration' proposed by the Company. Furthermore, the Committee strongly recommended amendment of the legislation to introduce a range within which profits should be allowed to vary and outside which fares should be varied. This was designed to obviate the difficulty presented by the existing statutory arrangements under which, according to the legal opinion given to the Committee, past profits could not be considered.

68. The Committee also mentioned the possibility of reducing royalties but did not recommend this course because the low pier rents paid by the Company amount to a subsidy roughly commensurate with royalty payments.

69. Finally, the Committee stated that its terms of reference and the relevant legislation provided a legal framework within which its recommendations had to be made but this attracted very little attention.

Minority Report

70. In Mrs. ELLIOTT's minority report, no mention was made of the statutory provisions within which the Committee was required to work nor, in particular, of the legal opinion referred to in paragraph 82 of the majority report that 'in acting to vary fares the Governor-in-Council should look to the future . . . .' Mrs. ELLIOTT's report simply states, 'I strongly disagree with the Committee's view that past high profits (very much higher than now recommended) should not be taken into account when considering the need to raise the fares now'.

71. Although her report is critical of the forecasts of passenger traffic revenue and operating costs etc. made by the Company and the Committee, she avoided making any forecasts of her own or any statement as to what she con- sidered a reasonable return or what substantial cost savings could be achieved without impairing the service.