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Following is the transcript of remarks by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at a media briefing on the fare adjustment application of the Kowloon Motor Bus Company (1933) Limited today (February 19):
Secretary for Transport and Housing: The Executive Council today discussed the fare increase application from the Kowloon Motor Bus Company (1933) Limited (KMB). Having given full and careful consideration of the matter, the Executive Council approved an average fare increase rate of 4.9 per cent for KMB. The new fares will take effect on March 17 this year.
The decision has struck a careful balance having regard to the basket of factors that need to be considered under the current policy. These factors include changes in operating costs and revenue since the bus company's last fare increase in May 2011; forecasts of future costs, revenue and return; the need to provide the bus company with a reasonable rate of return; public acceptability and affordability; the quality and quantity of service provided; and the outcome of the formula for a supportable fare adjustment rate under the current Fare Adjustment Arrangement for franchised buses.
As I said, we tried to strike a balance among these various considerations, and of course the decision is not easy. On one hand, we need to ensure that the bus company can operate on a financially and economically sustainable basis; on the other hand, we have to pay attention to the affordability of the travelling passenger public.
The rate that we have now approved, which is 4.9 per cent, is much lower than the 8.5 per cent asked for by KMB. This rate is also lower than the inflation rate of 6.31 per cent, as well as the change in Median Monthly Household Income of 7.14 per cent since KMB's last fare increase in May 2011.
We feel that this approved fare increase of 4.9 per cent is a level that should be acceptable by the community, but of course we are aware that KMB's accounts remain to be difficult. KMB is likely to run a deficit in 2012 after settling its accounts. Even with the fare increase of 4.9 per cent, the overall financial situation of KMB would not be completely improved immediately. It is interesting to note that in addition to staff costs, the main factors that affect the operating costs of KMB include the fluctuation in fuel prices and cost effectiveness of bus routes.
At present, some bus routes overlap or some are seriously under-utilised. This not only affects the operating efficiency of the services, but also creates unnecessary road congestion and roadside pollution.
The Government is determined to improve air quality in Hong Kong. It is also determined to enhance the efficiency of road resources. Therefore, we would rigorously implement bus route rationalisation by an area approach on the basis that bus services play a supplementary role in Hong Kong's public transport system. The Government will start talking to various District Councils and local communities to gain their support to a larger-scale bus route rationalisation because we believe that the better, the more efficient, we can utilise the bus routes will not only improve the operating efficiency of the bus companies, but also help to reduce road congestion as well as roadside emission.
On this opportunity, I would also like to appeal to the community for support to future efforts by the Government as well as the franchised bus companies to rationalise bus routes.
Reporter: Is it too early or is the 4.9 per cent too much given that the bus service is due to be re-allocated?
Secretary for Transport and Housing: First of all, the 4.9 per cent compared to what the KMB has asked for, which is 8.5 per cent, and also compared to other indicators, including inflation since the last time fare was increased, which was May 2011, and also the increase in median household income, we think that 4.9 per cent actually is not high.
But of course every time, when we consider requests from franchised bus companies for fare increase, we have to take into account a basket of factors, various factors. On one hand, we have to ensure that the fare level is reasonable and affordable by the community; on the other hand, we have to ensure the financial and economic sustainability of the bus services. So at the end of the day, we have to strike a balance.
But of course, as I said, what will affect future bus services as well as fare levels is how we could improve the operating efficiency of bus routes. At the moment, there are a number of bus routes which are under-utilised, quite seriously under-utilised, so we have to be quite determined to do something about bus route rationalisation in order to strengthen the operating efficiency and to reduce the risk of further bus fare increase.
(Please also refer to the Chinese portion of the transcript of remarks.)
Ends/Tuesday, February 19, 2013
Issued at HKT 18:27
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