WATER charges, tunnel tolls and ferry terminal fees may increase at a rate higher than inflation under the revised target rates of returns endorsed by the Executive Council. Principal Assistant Secretary for the Treasury Leslie Wong Chui Yue-chue said it was possible that the fees of the three government utilities would go up at a rate faster than inflation. 'Every investor wants its investment to yield a higher-than-inflation return,' she said. Deputy Secretary for the Treasury Michael Rowse yesterday announced the findings of a review on the target rates of return on net fixed assets for five government utilities. The review, which started in April 1993, was prompted by legislators' claims that the profit level of these risk-free utilities was set in an arbitrary fashion and was too high. Legislators voted down a $1 toll increase for the Aberdeen Tunnel earlier that year. The study did not recommend changes for the target rate for the Post Office and Kai Tak airport because the former was moving to trading fund status and the latter only had 21/2-year life expectancy. According to the latest proposals, the target for the Water Supplies Department will be set at eight per cent, against the present seven per cent. The target for two marine ferry terminals and four government tunnels will be reduced from 15 per cent to 13 per cent and 13.5 per cent respectively. Mr Rowse said the targets were not the sole or overriding criterion in determining charges. Nor did the Government intend to attain them immediately. 'We'll move gradually to implement the report.' He said the revised targets would translate to a $1 increase for Shing Mun and Tseung Kwan O tunnels in 1996-97 and an 8.5 per cent rise for water charges next year - which meant less than $5 a month for an average family - and 10 per cent annually thereafter. The impact of these increases on the Government's total revenue would be negligible, Mr Rowse said. The contribution from the five utilities in 1993-94 was 5.8 per cent. Mr Rowse said these rates of return were meant to provide an objective ground for the Government to set its charges for the various utilities.