Press Release



LC : Speech by Secretary for Transport


Following is the speech by Secretary for Transport, Mr Nicholas Ng, on the Appropriation Bill 1999 in the Legislative Council today(Wednesday):

Madam Chairman,

Members have expressed their views on a number of transport related issues in the 1999/2000 budget debate. Today I will respond to Members' views regarding the increase in transport-related fees, the transport infrastructure programme, the monitoring of public transport services and the privatization of Mass Transit Railway Corporation (MTRC).

Increase of Transport-Related Fees

It is the Administration's assessment that the additional revenue arising from the Financial Secretary's (FS) proposal to increase tunnel tolls, the charges for on-street parking meters and transport related fixed penalty is about $510 million. As you are aware, under the current economic climate, the FS has proposed a budget deficit of $36.5 billion for the 1999/2000 financial year. In comparison to the anticipated budget deficit, the additional revenue to be generated by the transport related revenue proposals is only a small amount. Given the need to increase new avenues for income and to achieve savings, we have to carefully consider acceptable ways to increase Government revenue. It should also be noted that the additional revenue only makes up a small part of Government's expenditure on the transport front. The total transport related expenditure earmarked in 1999/2000 is about $7.3 billion, representing an increase of about 8% over last year. This is much higher than the increase of 3.5% in the Government's total spending.

Spending on Transport Infrastructure

Let me briefly outline the earmarked spending on transport infrastructure. We are implementing a number of major road projects according to the planned transport programme. These include Route 9 (section between Tsing Yi and Cheung Sha Wan, and section from Shatin to West Kowloon), Route 7 (section between Kennedy Town and Aberdeen), and Route 10 (section between North Lantau and Yuen Long). The spending on these projects will not reach the peak level in the 1999/2000 financial year. Expenditure will increase significantly in coming years when the construction of these projects commences.

I wish to point out that Government's budgeted expenditure does not include the massive investment made by the two railway corporations in expanding the rail network. Five new projects (West Rail Phase I, MTR Tseung Kwan O Extension, Ma On Sha Rail Link, KCR Tsim Sha Tsui Extension and Sheung Shui to Lok Ma Chau Spur Line) will be completed in the coming five years, with a total investment of over $120 billion. The construction works of West Rail Phase I and MTR Tseung Kwan O Extension have already started at the end of 1998. The Ma On Shan Rail Link, KCR Tsim Sha Tsui Extension and the Sheung Shui to Lok Ma Chau Spur Line are at the final stage of planning.

It is therefore clear that Government and the two railway corporations are committed to continued investment in transport infrastructure. This fully reflects the importance attached by Government to the transport network. In fact, transport infrastructure is a kind of long term investment, which will help to facilitate Hong Kong's future economic development. It will also generate numerous employment opportunities.

Revenue Proposals

In view of the budget deficit, we have to give careful consideration to possible ways to increase Government revenue. This is consistent with the cardinal principle of prudent budgetary practices. In view of the current economic situation, the proposal to increase any tax item is a painful but unavoidable decision to make. The FS has given careful consideration after detailed analysis before making these revenue proposals. It is Government's intention to minimize the impact of these proposals on the public and the business community. As for the new measures on transport front, we fully understand and are concerned about the difficulties and pressure faced by the transport trade. Government has therefore proposed to extend the relief measure of reducing diesel tax by one year, until 31 March 2000. In addition, the increase in the tolls for Cross Harbour Tunnel is restricted to private vehicles and motorcycles, so as to minimize the impact on the transport trade.

To increase the tolls for the Cross Harbour Tunnel is a practical measure to increase Government revenue in the current tight budgetary situation. The proposal can also facilitate the streaming of cross harbour traffic to other cross harbour tunnels, so as to reduce the traffic congestion at the Cross Harbour Tunnel. As we all know, the traffic volume at the Cross Harbour Tunnel has reached capacity. The tunnel is catering for some 120,000 vehicle trips everyday. Since its opening in 1972, tolls have not been increased, except for the $5 passage tax introduced in 1984. If we take into account the inflation over the years, the current proposal is not an unreasonable one. This adjustment is justified on both budgetary and transport grounds.

As for the Lion Rock Tunnel (LRT), Government's proposal is to introduce a small increase in the flat toll of $6 to $8 (increase of $2). With growing development in the New Territories, it is essential that all the tunnels connecting Shatin and urban Kowloon should perform an effective streaming function to meet the increasing transport needs. The toll level for the LRT has not been adjusted in 9 years. The proposed slight increase will facilitate vehicle streaming and increase Government revenue.

The proposal to increase on-street parking meter charges is also a reasonable one. Most of these parking meters are located conveniently in the urban area. Their charges have not been adjusted since 1994. The proposed increase (from $2 to $4 for 15 minutes of parking) corresponds to the maximum level to be charged. Charges of meters located in less busy areas will be considered on a case by case basis.

I would now like to turn to the proposed increase in fixed penalties for transport related offences. First, I wish to point out that these proposals would only affect those drivers who have violated the traffic law. The level of these penalties has not been adjusted since 1994. To discourage traffic offences, we need to adjust the penalty level to maintain the deterrent effect. It is noted by some Members that the number of fixed penalty cases is dropping in the recent years. But I would like to point out that the figure of 1.7 million cases a year is still considerable, and should not be taken lightly. Traffic offences may result in traffic congestion or even serious traffic accidents, particularly in congested areas with heavy pedestrian and vehicular flows.

I should draw Members' attention to the fact that Government constantly reviews traffic laws, to ensure that legislative provisions are reasonable and are kept up-to date vis-a-vis the current traffic situation. This is important to ensure fairness in the prosecution of traffic offences. The recent announcement of Government's decision to increase the speed limits of a number of major roads is one example. We are reviewing the speed limits of other roads and will consider increasing the speed limits of other road sections if appropriate. Apart from speed limit, we will also review and amend other legislation as and when necessary.

Specific concerns have been raised by some Members of this Council and the public light bus and taxi trade on the shortage of parking spaces and the proposed increase in fixed penalties. To further assist the trade to improve the operational environment, Transport Department will continue to maintain close liaison with operators, with a view to implementing a number of proposals to lighten the burden of professional drivers. Measures being examined include the provision of more parking meters on half-hourly intervals; allowing taxis to park at the end of taxi stands for short duration to facilitate drivers to have lunch etc; the identification of more over-night parking facilities; and relaxing certain restricted zones.

I would like to assure members that the purpose of the proposed increase in fixed penalties is to deter traffic offences. The worries expressed by some Members of this Council and the trade about possible abuse of power in issuing penalty tickets in order to increase Government revenue are totally unfounded. As I have explained, Government will review the legislation from time to time, to ensure that they are reasonable and up-to-date with the current traffic situation. Government will act strictly according to the law when prosecuting traffic offences, and where appropriate, we will exercise suitable discretionary power. Although an estimate is included in the budget on the revenue to be generated by fixed penalties, I can assure Members that this is purely an estimate and no more. Government has never set a target or quota on the number of traffic offence tickets to be issued by the Police. I hope Members' worry can be dispelled by this clarification.

Public Transport

On public transport, some Members expressed the view during the debate that Government should tighten the monitoring over public transport services. Although public transport services in Hong Kong are provided by private sector, Government has always assumed a monitoring role. We closely monitor safety standards and operation of public transport services, the quantity and quality of services, and the fare level. Although the two railway corporations have autonomy over railway fare, it is the prevailing practice for public views to be taken into account in the fare setting process. Competition with other public transport modes is also another important factor.

On service standards, market competition is the best incentive for improvement. Government has introduced competition in the markets for the provision of ferry and bus services, this is a good example. The views expressed by this Council and the public are also very important. For example, there is recent public concern over the apparent over-provision of bus services on Hong Kong Island. Transport Department, as the regulatory authority, immediately held discussion with bus companies, and implemented a number of measures to rationalize bus routes and bus stops. On the whole, the current framework - under which Government is the lead regulatory authority, with participation from the public and the Legislative Council, together with the forces of market competition - works well. The public transport system in Hong Kong operates smoothly. We will of course continue our monitoring work to ensure that there is adequate provision of public transport to meet community needs.

Privatization of MTRC

The MTR is an important and integral part of the public transport system in Hong Kong. Since its establishment in 1979, the MTRC has built up an excellent international reputation both in the operation of its services and the financing of railway projects. The FS proposed in the budget to privatize a minority share of the MTRC. This will provide the people of Hong Kong the opportunity to participate in the ownership of a successful and profitable public corporation. So far, the general reaction from the public is encouraging. The purposes of the privatization proposal, i.e. diversifying MTRC's access to funds, the strengthening of the local stock market and the benefits to Government's budgetary position over the medium term etc., are generally recognized and shared by the community.

Since the announcement of the proposal, the Transport Bureau, Finance Bureau and MTRC are proceeding in full speed on the preparation work. Government is considering the legal issues relating to privatization proposal, and the future regulatory framework for monitoring MTRC's operation and service provision. We will of course take into account the need to ensure efficient operations by the MTRC and to maintain the current sound financial status of the Corporation. To achieve this, MTRC and Government will separately appoint financial consultants through tendering exercise. The appointment is expected to be made by the end of May 1999.

As the privatization of MTRC is a new and unprecedented measure, Government will widely consult the views of the public, investors, MTRC staff and passengers, so as to secure their support for the privatization proposal.

As the policy bureau responsible for monitoring the provision of public transport services, the primary task of the Transport Bureau is to ensure that privatization will not adversely affect the safety, service standard and operational efficiency of the Corporation. The relevant new legislation and the future operating agreement to be entered with the MTRC will contain provisions covering these three important aspects. The legislation is expected to be introduced to this Council in the next financial year.

Thank you Madam Chairman.

End/Wednesday, March 31, 1999