Although there is government oversight of public transport rates, principally by the Transport Advisory Committee, the final decisions on fare increases are made in the Executive Council, which meets in secret and has low accountability to the public.
The past six months have witnessed announcements of fare increases from no fewer than four main sectors of public transport services - taxis, trams, Kowloon Motor Bus and the MTR. Clutching more proposals on the sidelines are at least two big companies: China Motor Bus and Hong Kong Ferry.
Kowloon Motor Bus is one of the principal players in the saga: KMB shareholder profits recently rose a
staggering 70 percent, due in large part to land sales, but the company still asked the Government for
permission to increase fares by almost 20 percent.
Apparently stonewalling the press, Kowloon Motor Bus repeatedly declined requests for interviews for
this story. Meanwhile, proposals for fare increases have drawn scorn from nearly all sectors of the public,
mostly because the increases are much higher than the inflation rate.
Fare increases are commonly higher than the inflation rate.
Last year inflation remained around 8 to 9 percent. However, what the two main bus companies demanded, for example, was nearly a 20 percent increase, double the inflation rate.
Kowloon Motor Bus was hounded by legislators and the public for proposing a 19.6 percent increase. It
was only after heated debate in the Legislative Council and the Transport Advisory Committee that the
rate of increase was cut to 12.9 percent, still well above the inflation rate.
The rate went into effect on April 1.
Even with the cut imposed by the Government, many citizens find the price hike unreasonable.
"An increase of 12.9 percent was still higher than the inflation rate, and this increase will further bring up inflation," said Mr. Lau Chin-shek of the United Democrats.
"The Kowloon Motor Bus is the largest transport service company in Hong Kong. The company has just earned $1.7 billion from selling their land lots, and the profit for shareholders has risen 70 percent as a result. In this situation I don't believe Kowloon Motor Bus has ample reason to increase their fares, especially on such a dramatic scale.
"The company should share their profits with the public. Actually, they could well afford to maintain the current fares," Mr. Lau explained.
Mr. Law Cheung-kwok, spokesman for the Hong Kong Association for Democracy and People's
Livelihood, echoed Mr. Lau's opinions.
"I think they did not have the rationale to support their increase in fares," Mr. Law said,"The profit made
should be used to ease the pressure to increase fares, instead of lining the shareholders' pockets. What they
want is solely to maximize their profits."
Kowloon Motor Bus refused to comment, and a spokesman for the China Motor Bus questioned the
relevance of relating the fare increase to the inflation rate.
The company's application for a 19.1 percent increase is still being reviewed by Legco's Transport
Advisory Committee.
"Why should you compare our rise with inflation?" asked Mr. K. C. Ng of the Public Relations
Department of China Motor Bus.
Mr. Ng said the reason for the increase was the rise in operating costs. And he denied that the loss of 26
routes to Citibus contributed to the increase.
"Of course, our company's business has become smaller; but I don't see a necessary relationship between
these 26 routes and our application," said Mr. Ng.
This statement contradicts earlier statements made by the company, however.
Mr. Lau of the United Democrats strongly opposes China Motor Bus's request for a nearly 20 percent
increase in fares.
He considered the loss of the 26 routes a penalty imposed by the Government, but "the company learned
nothing from that".
"Even after these 26 lines were taken away, the China Motor Bus made no significant improvement in
their services. The buses remain irregular," said Mr. Lau.
The China Motor Bus's Mr. Ng, however, remarked: "Every public transport service has this kind of problem."
Like the China Motor Bus, Hong Kong Ferry is also waiting for government approval for its proposed increase in fares. Their last increase took place in July 1992 and was an average rate of 14.6 percent. The current scheme, handed in last year, demands a 16 percent increase.
"The last time we made an increase was already two years ago. That's why our requested percentage
nearly doubles the inflation rate," explained Miss Cecilia Ko, Corporate Communications Manager for
Hong Kong Ferry.
"Moreover, so-called `inflation' is a very general figure. The labour costs to our company were higher than
the inflation rate. So I believe it is not fair to judge our increase by correlating it with the inflation
rate."
Mr. Law of the Association for Democracy and People's Livelihood scoffed at this."There is no way that labour costs could climb above inflation," Mr. Law said.,"They (Hong Kong Ferry) have been unable to put up figures that can verify what they said.
"Moreover, the recent drop of the cost of fuel further disproved their rationale. Their words are groundless," he added.
Legislators had a similar reaction when the MTR announced an increase of fares. They claimed that the request was masked in numerous novel ideas formulated to solve congestion problems.
Mr. Hamish Mathers, chairman of the MTR Corporation, explained in a press conference in March that "the increase was for covering increasing costs, servicing and repaying of its debts, and also to allow for continuous improvements of services".
This time round, the increase of fares was at an average of 7.1 percent, according to the corporation.
"Over the past 14 years of operations, the MTR's overall average fare has increased by 7.7 percent per year
which was lower than the increase in the Consumer Price Index [A] (inflation) of 8.6 percent per year,
and was significantly below the increase in workers' payroll of 13.8 percent per year," explained Mr.
Mathers.
United Democrats' Mr. Lau said linking the fare increases to the nominal payroll increase rate was "illogical,"he continued,"The payroll percentage was just a nominal figure, which could not reflect the actual increase of the general public," said Mr. Lau.
Mr. Law of the Association for Democracy also criticized the rise.
"They should admit that one of the reasons behind the increase is to repay the shareowner; but the
`shareholder' of the corporation is actually the Government.
"The Government has not asked the corporation to make these repayments, so why is it so enthusiastic to
do so?
"Their theory of `giving the shareowner back his worth' was just a strategy to mislead the public that their
increase was justified," Mr. Lau said.
Mr. Lau also questioned the necessity for the MTR to raise its fares nearly annually.
"The MTR was funded totally by the Government, and each year it earned a lot. Why should the MTR
keep on charging more and more?" queried Mr. Lau.
In fact, these increases have always been controversial; it may stem from the fact that the Executive Council alone has the power of approving or disapproving these fare increases. In these matters, Legco is simply a consultative body.
Both Mr. Lau and Mr. Law are dissatisfied that legislators and the public have little say over these fare increases. In the case of the MTR, which is a Government funded corporation, even the Executive Council's endorsement is not required.
"The Executive Council does not care what the general public says," said Mr. Law. He said all increase requests of public transport services, including the MTR, should pass through the legislature before permission could be granted.