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Following is a speech by the Secretary for Transport, Mr Nicholas Ng, in moving a resolution under section 5(3)(b) of the Public Bus Services Ordinance (Cap. 230) in the Legislative Council today (Wednesday):

Madam President,

I move the Resolution standing in my name on the Agenda.

Unless disapplied by resolution of this Council, sections 26 to 32 of the Public Bus Services Ordinance specify the provisions for allowing a franchised bus company to earn a permitted return in an accounting year, calculated with reference to the percentage per annum specified in its franchise of its average net fixed assets in that accounting year.

Our current policy for processing fare increase applications from bus franchisees is to balance the interests of commuters and bus companies. In examining fare increase applications, the Administration takes various factors into account, including, without limitation, the bus companies' representations, operating costs and performance, and public acceptability. Given this approach, there are no provisions for a permitted return in any existing bus franchises. In negotiating new franchises, we also make it clear that the arrangements for a permitted return will not be included in the new franchises.

Accordingly, it is the Administration's intention that the new franchise granted by the Chief Executive in Council on 31 March 1998 to New World First Bus Services Limited (New World) commencing on 1 September 1998, should not be subject to the same arrangements.

According to section 5(3)(b) of the Public Bus Services Ordinance, except where the Legislative Council by resolution excludes the application of all or any of the provisions under sections 26 to 32, a franchise shall be subject to the provisions of these sections. We therefore need to disapply sections 27, 28, 29 and 31 to the franchise of New World, whilst retaining -

(a) section 26 which defines terms used in the following sections;

(b) section 26A which specifies that financial penalties levied against a bus company shall not be taken into account in ascertaining the operating cost or service related expenditure of the company for any purpose related to the Ordinance or the franchise;

(c) section 30 which enables depreciation rates in respect of fixed assets used or kept by a bus company for the purpose of or in connection with its franchise to be specified by Government in the franchise; and

(d) section 32 which requires a bus company to produce accounts and other information in relation to the public bus service operation as the Financial Secretary may require.

With these remarks, I move the Resolution which will give effect to these arrangements. Thank you, Madam President.

End/Wednesday, July 22, 1998

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