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Following is a question by the Hon Tang Ka-piu and a written reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung,in the Legislative Council today (October 31):
Question:
The Fare Adjustment Mechanism of the MTR Corporation Limited (MTRCL) has been in operation for four years since 2009. Except for the first year with freezing of fares, MTRCL increased its fares for the other three years despite making profits of more than $10 billion. The fare increase for this year was as high as 5.4%, the highest among all these years. Some members of the public have pointed out that MTRCL has tried to "make every possible gain" in making fare adjustment. Quite a number of members of the public have also reflected to me that the fare concessions and promotional schemes introduced by MTRCL (such as the monthly pass for the Tung Chung Line, the "Ride 10 Get 1 Free" scheme, etc. launched this year) have not brought real benefits to the public, and that the Government, being the major shareholder of MTRCL, should have "the final say" and "monitoring power" over MTRCL's annual application for fare increase. In this connection, will the Government inform this Council:
(a) whether it knows as of date the respective numbers of people who have benefited as well as the total savings from the various concession schemes introduced by MTRCL in the past three years;
(b) whether it knows the weekly average numbers of Octopus cards, since the introduction of the "Ride 10 Get 1 Free" scheme by MTRCL this year, the holders of which took nine and eight MTR journeys respectively in a week (from Monday to Friday), and the respective percentages of such numbers in the total number of the Octopus cards sold; if such statistics are not available, of the reasons for that;
(c) of the annual dividends received by the Government from MTRCL in the past four years; how the Government disposed of the dividend income and details thereof;
(d) whether the government officials who are currently non-executive directors on MTRCL's Board of Directors have the power to veto fare adjustment proposals at the board meetings; if yes, whether they have exercised such power; if not, the reasons for that; and
(e) given that it has been reported that MTRCL undertook in May 2012 to introduce concessionary measures to give back to MTR passengers within one year the additional income of $670 million generated by fare increases, of the specific measures taken by the Government, as MTRCL's major shareholder, to ensure that MTRCL will honour this undertaking; how the Government will follow up the situation of MTRCL not honouring this undertaking?
Reply:
President,
My reply to various parts of the Hon Tang's question is as follows:
(a) Over the past three years, the major fare promotions and concessions offered by the MTR Corporation Limited (MTRCL), as well as the number of passengers benefitted and the amount involved, are set out at Annex 1.
(b) MTRCL launched the "Ride 10 Get 1 Free" promotion on June 18, 2012. The promotion period will last till December 30 this year. Passengers can enjoy this fare promotion by riding 10 journeys or more on MTR from Monday to Friday in the same week. Up to this moment, the weekly average number of passengers who can benefit from the "Ride 10 Get 1 Free" promotion amounts to some 870,000. The average number of Octopus card holders who take eight and nine journeys from Monday to Friday in a week are about 196,000 and 149,000 respectively.
(c) The details of dividends received by the Government from MTRCL annually in the past four years are set out at Annex 2.
Pursuant to section 3 of the Public Finance Ordinance (Cap. 2), the dividends that the Government receives from MTRCL form part of the Government's general revenue. The Government will give a holistic consideration on the utilisation of these dividends as well as other Government's revenue. These financial resources will be used on various public services and the community at large via appropriate deployment in response to different policies and priorities.
(d) During the merger of the two railway networks in December 2007, the Government and MTRCL signed the Operating Agreement (OA). The OA stipulates various matters including the construction and operation of railways, and the Fare Adjustment Mechanism (FAM) is also covered. Under the current FAM, the fare adjustment rate for the prevailing year is determined in accordance with a direct-drive formula linked to the year-on-year percentage changes in both the Composite Consumer Price Index and the Nominal Wage Index (Transportation Section) of the previous year, as well as a productivity factor. The OA is legally binding.
Currently, the Secretary for Transport and Housing, the Secretary for Financial Services and the Treasury, and the Commissioner for Transport are serving as the non-executive directors of the Board of MTRCL. Public officers reflect the community's views and requests on MTRCL's services and fares in the Board. During the discussion of the fare adjustment, the Government also urges MTRCL to take into account the overall macro-economic environment, and implement more and various effective fare concessions so as to address the needs of passengers and alleviate their burden of travelling expenses.
The Government is reviewing the FAM of MTRCL and conducting a public consultation exercise. We are actively examining whether and how new elements in addition to the data linked with the economic performance, wage index and productivity factor should be introduced in the FAM so as to reflect the operating costs, profit level, efficiency of operation and service performance of MTRCL as well as the affordability of general public, etc.. The review is expected to be completed by early 2013.
(e) While MTRCL published the adjusted fares on May 25, 2012, at the same time it also announced the offer of a new package of fare promotions to give back to passengers the value of the additional revenue it would receive in the year from the 2012 fare adjustment, bringing an overall savings in transport expenses of approximately $670 million to passengers.
According to MTRCL, the savings were calculated based on the Corporation's past experience in offering similar promotions. The actual savings would depend on the patronage figures and the participation level of passengers. MTRCL stated that it would not terminate the promotions prematurely even if the actual savings reach $670 million. If the actual savings are less than $670 million, the Government will urge MTRCL to consider extending certain promotions or introducing other promotions.
The Government will continue to monitor closely the implementation of the promotions. MTRCL will also regularly review the effectiveness of the fare promotions. Upon the completion of the fare promotions, MTRCL will submit to the Government the actual utilisation data of the promotions.
Ends/Wednesday, October 31, 2012
Issued at HKT 12:30
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