CONFIDENTIAL
BUS FARE INCREASE
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Briefing Note (as at 4.9.81)
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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. When CMB announced an interim profit of $8.6 million on April 13, representing an increase of 169 per cent, the Government was criticised for allowing the company to make its full permitted return. In mid-May, Commissioner for Transport at a public function mentioned that another round of fares increase for KMB was inevitable. This attracted scathing criticism from the Chinese press which attacked him/the government for protecting KMB's interest and neglecting the public's. Following announce- ment of the work of a government bus operation review group, there were demands, mainly by the Coalition Against Bus Fare Increases, for public representatives in the review. Deputy Secretary for the Environment, who heads the review group, has had a series of meetings with groups opposing the bus fares increase, to listen to their views. Special meetings were arranged with District Boards, Area Committees and other local bodies to discuss improvements to bus services. Ten members of the public (half the number professionals and half people from district boards and area committees) were invited to join the five sub-groups in the review. The final report is expected to go to the Transport Advisory Committee in October and then to the Executive Council. On July 22 Athlone Ltd made an offer for CMB shares in an effort to take over the company.
In a press conference, Athlone chairman, Bill Wyllie promised bus services would be improved. CMB Ngan family enlisted support of Hsin Chong Properties and stood firm. Coalition chairman commented that the interest in CMB confirmed it was highly profitable. Athlone had admitted failure in the bid.
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. On July 2 KMB officially opened a new Maintenance and Research Centre which can handle some 100 buses a month. A Government review is underway to identify potential for further improvement in cost-effectiveness and efficiency. Improvements when identified would be implemented as the review progresses. Unofficial TAC members and members of the public are participating in the review. Public are being kept informed of the progress and have opportunity to comment on desired level of services. Bus companies, like any other commercial operation, must be allowed to earn reasonable profits.
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