TNAG-1029-FCO40-1279-Visits-by-FCO-officials-to-Hong-Kong-1981 — Page 26

38

BUS FARE INCREASE

Position

Also at. Akic meth

Ed,

172

28012 34011

341

24313

3608

Line To Take

:

Briefing Note (as at 20.5.81)

تے

#

Registry

•Prease file Separately rate.

Mas 5

ñ

On April 10 the Government announced average increases of 40 per cent for KMB and 30 per cent for CMB, as well as a $40 million payment to KMB for delaying the decision on its application, and approval for an improved student travel subsidy scheme. The reaction was strong and mostly unfavourable. The new fares themselves were not considered unreasonable. However, the Government was strongly criticised for using public funds to bail out a company whose accounts were already suspect, thereby setting a dangerous precedent vis a vis other public utilities. There was widespread displeasure with the Government's warning about a substantial rise the next time round, and renewed calls were made for an independent study of the bus companies' operations. The travelling public were most concerned that a promise of an improvement in services was not a condition of the fare increase. When CMB announced an interim profit of $8.6 million, representing an increase of 169 per cent, the Government was criticised for allowing the company to make its full permitted return.

The $40 million was a one-off payment, aimed specifically at reducing hardship of travelling public rather than subsidising KMB. The fare increase was only an interim one, as recommended by TAC. Improvements in real terms have been made in the past year re: increase in services and reduction in waiting times. A Government review is underway to identify potential for further improvement in cost-effectiveness and efficiency. Bus operations are huge and complex and major improvements cannot be made overnight. Public will be kept informed of progress of review and will have opportunity to comment on desired level of services. Bus companies, like any other commercial operation, must be allowed to earn reasonable profits.

WATER

Position

: On April 10 the Government warned about the low storage in

reservoirs and announced that the desalter was being put into a state of readiness. Because of the particularly low level of water in HK reservoirs, it was stated that restrictions could be introduced on the Island and outlying islands at the end of that month, with three days notice. An appeal was made for the public to save water. The crucial decision was postponed twice, until mid-June, after China agreed to extend its water supply to the end of August and because of heavy rains in mid-May. The Government was criticised for not anticipating and providing for the problem on the Island.

..2/