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LCQ1: MTR dividends and fare concessions
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     Following is a question by the Hon Paul Chan and a reply by the Secretary for Labour and Welfare, Mr Matthew Cheung, in the Legislative Council today (May 19):

Question:

     The Government decided in 1999 to sell part of its shares of the Mass Transit Railway Corporation through an initial public offering.  According to the Legislative Council Brief issued then, the public offering would provide a useful boost to Government finance in the medium term.  Shares of the MTR Corporation Limited (MTRCL) were listed on the Stock Exchange of Hong Kong in 2000. Subsequently, the Corporation and the railway operations of the Kowloon-Canton Railway Corporation were merged to form MTRCL in 2006.  Many members of the public have complained in recent years that transport costs in Hong Kong are very high, while the fare concessions offered by MTRCL to disadvantaged groups and senior citizens are imperfect.  In this connection, will the Government inform this Council:

(a) of the amounts of dividends the Government received annually since the listing of the shares of MTRCL in 2000; whether it has assessed how those dividends have specifically helped Government's financial situation each year, how far its financial position has been improved as a result, and whether such help is in line with its estimate and expectation at the time when the shares of MTRCL were listed;

(b) of the names and expenditures of various transport support schemes that the Government implemented in the past five years; and

(c) whether it has considered allocating the dividends received from MTRCL, or part of the dividends collected, to fund the implementation of schemes which offer appropriate transport support to members of the public in need; if it has, of the details; if not, the reasons for that?

Reply:

President,

     My reply to Hon Paul Chan's question is as follows:

(a) The MTR Corporation Limited (MTRCL) issued its Initial Public Offering prospectus in September 2000 and was listed on the Stock Exchange of Hong Kong in October the same year.  On December 2, 2007, the Rail Merger Ordinance (11 of 2007) took effect and the Chinese name of MTRCL was changed from "地鐵有限公司" to "香港鐵路有限公司".  On the same day, the Kowloon-Canton Railway Corporation (KCRC) granted MTRCL the right to use its assets to operate KCRC railway lines and its other transport-related businesses.  The status of KCRC as a statutory corporation and the status of MTRCL as a listed company remain unchanged.

     The amounts of dividends received by the Government from MTRCL since the listing of MTRCL in 2000 are tabulated at Annex I.  Pursuant to section 3 of the Public Finance Ordinance (Cap.2), the cash dividends that the Government receives from MTRCL form part of the general revenue.  According to the paper on Privatisation of the Mass Transit Railway Corporation submitted in June 1999 by the then Transport Bureau to the Legislative Council Panel on Transport, the Government expected that the privatisation would "provide a useful boost to Government finance in the medium term".  Such income referred to the one-off sales proceeds from the privatisation exercise envisaged by the Government, but not the estimated dividends to be received by the Government annually upon the listing of the MTRCL.  In fact, declaration of annual dividends is the commercial decision of MTRCL.

(b) The expenditures of the Student Transport Subsidy Scheme, Transport Support Scheme (TSS) and Transport Supplement implemented by the Government in the past five years are set out at Annex II and brief descriptions of these schemes are at Annex III.

     In addition, major public transport operators are currently offering various kinds of fare concessions.  The Government has all along been encouraging public transport operators to introduce fare concessions as far as possible to help reduce passengers' travelling expenses, taking into account the operators' respective operating and financial conditions, overall economic environment and passenger needs.

     At present, MTRCL provides fare concessions to the elderly, children, students and people with disabilities.  Monthly passes are also available for some of the routes.  As regards franchised buses, the bus companies are offering fare concessions to the elderly and children.  Moreover, the bus companies have implemented section fare arrangement and bus-bus interchange concession schemes for about 70% of the bus routes.  Most of the ferry operators also provide fare concessions to the elderly, children and people with disabilities.  Monthly passes are also available for some of the routes.

(c) As stated in part (a) above, the cash dividends that the Government receives from MTRCL form part of the general revenue.

     The Financial Secretary announced in the 2010-11 Budget on February 24 that the Administration noted that there were many suggestions calling for the extension of TSS which is currently limited to four designated remote districts in the New Territories only.  In this connection, the Labour and Welfare Bureau will complete by the end of this year a study on ways to reduce the burden of travelling expenses borne by low-income employees in Hong Kong and come up with a specific proposal. In the meantime, the existing TSS will remain in force.  The Administration will make suitable financial provisions in the light of the findings of the said study.

Ends/Wednesday, May 19, 2010
Issued at HKT 15:56

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