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Following is the opening remarks by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, at the press conference to announce the result of the review of the MTR Fare Adjustment Mechanism today (April 16):
Now I would say a few words in English.
The Government and MTR Corporation Limited (MTR) have concluded the five-yearly review of the Fare Adjustment Mechanism. The results have been approved by the Executive Council this morning. An enhanced fare adjustment mechanism, together with a package of related fare measures will take effect from June this year onwards.
The new arrangements serve four objectives:
(1) To address three additional factors – namely the profits level and service performance of MTR, and public affordability – currently not covered by the Fare Adjustment Mechanism;
(2) To retain the direct drive nature of the mechanism so as to keep it simple, objective and transparent;
(3) To meet public expectations, MTR will "share profit" with passengers, and will "share pain" with them in times of economic adversity;
(4) To reduce the fare impact on frequent and medium to long journey passengers, many of whom living in more distant lower-income districts.
The discussions between Government and MTR over the past several months have been tough as we need to balance a range of imperatives and interests.
The final deal now strikes a delicate balance between MTR's corporate interest as a listed company requiring financial prudence and sustainability; its corporate social responsibility as a public purpose enterprise; the wider public interest; as well as the Government's public transport policy objectives.
Under the new deal:
(1) The existing direct drive formula - reflecting changes in the nominal wage index in the transport sector, and the composite consumer price index, minus a productivity factor – will be improved, with the calculation of the productivity factor "value" being subject to a new, objective and transparent methodology. This would result in the productivity factor value being improved from the present 0.1% to 0.6%, so that the 2013 fare adjustment rate will reduce from 3.2% to 2.7% (a 16% reduction), benefiting all passengers.
(2) Further to that, the monthly passes scheme will be comprehensively enhanced, with the addition of a new Tung Chung-Nam Cheong sectional monthly pass, a new MTR City Saver ticket, and a new Monthly Pass Extra scheme to offer fare discount for onward domestic journeys reaching stations not covered by the particular monthly pass. Based on existing travel patterns of passengers, this will benefit some 185 000 frequent and medium to long journey passengers each month.
(3) A public affordability cap based on the change in MMHI (median monthly household income), so that in any year fare increase will not be higher than such change, with any shortfall to be recouped by two yearly phases only in years when the calculated fare increase rate is lower than MMHI.
(4) A profit sharing mechanism, based on MTR's underlying business profits each year, inclusive of profits from property developments and overseas ventures, with the "sharing amount" according to a tiered table being put into a "fare concession account" to support time-limited fare concessions.
(5) A service performance arrangement, with a fine penalty system for serious service disruptions, i.e. lasting 31 minutes and above (except those outside MTR's control), with the fines put into the "fare concession account".
We believe the overall arrangements will reduce not only the general fare table increase rate, but more significantly the fare burden of frequent and medium to long journey passengers.
For those passengers benefiting from various monthly pass schemes and other fare concessions, their effective fare increase for 2013 will be significantly lower than the 2.7% calculated according to the revised direct drive formula. Some will pay less than present, and some will actually pay less than what they are paying at present.
(Please also refer to the Chinese opening remarks.)
Ends/Tuesday, April 16, 2013
Issued at HKT 21:38
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