Recent actions by two local bus companies have revived debates on the franchise system for buses. The bus companies are taking advantage of the present inequitable system, according to many social groups. Meanwhile the government, the indisputable watchdog of the bus companies, is slow in taking action.
In early February, Kowloon Motor Bus Company Limited proposed a 9.4 percent fare increase in effective this month.
"Last year, KMB got a profit of $410 million from bus fares. It is really shameless of KMB to propose a fare increase," commented Mr. Law Cheung Kwok, the public utility and economic affairs' spokesperson of Hong Kong Association for Democracy and People's Livelihood.
There is a provision for a maximum 16 percent profit in the franchise of KMB.
However, the company has been claiming that increasing labour costs prevented them from making ends meet.
Liberal Party legislator Miriam Lau Kin Yee said, "Of course we have to consider the need and affordability of the general public. Yet, we should not neglect the interest of KMB's shareholders. I think an increase of not more than 6 percent is appropriate for KMB."
Another legislator, Mr. Zachary Wong Wai Yin of the Democractic Party, has drawn fire for his comments on the maximum profit provision: "It is useless to set the maximum profit on 16 percent. It only gives them (the bus companies) an excuse to propose fare increase if they cannot obtain the profit."
Mr. Law sided with Mr. Wong.
"Originally, the restriction on maximum profit was designed to prevent the bus companies from taking too much money," said Mr. Wong. "Now, it clearly has ended up in a failure."
Deputy Secretary for Transport Isaac Chow Yiu Nam, however, said that lifting the restriction was out of question.
"Since KMB's franchise will expire in 1997, the government is not considering removing the restriction on maximum profit in the meantime.
"Nevertheless, we will discuss the matter with KMB, which is the only company having the restriction," said Mr. Chow.
Unsatisfactory government supervision of the two bus companies is reflected in the regulation of fare increase, according to Mr. Law.
"The existing supervision is not beneficial to the majority. The Transport Advisory Committee, a body that comments on proposed fare increases, is largely made up of businessmen. Certainly, they will look after their own interests rather than those of blue collar workers," he said.
Said Mr. Lau Chin Shek of the Democratic Party: "The government should strengthen its supervision by tabling the problem in the Legislative Council, which has more elected supervisors. We cannot trust the bus companies to be self-disciplined."
As the debate about fare increase continues, public attention has been captured by proposed property sales by China Motor Bus Company.
Its shareholders voted in February to sell the Wong Chuk Hang depot for a profit of $379 million.
This sparked a disussion of the relationship between fare adjustment and profits from land sales by the two bus companies.
Mr. Haider Barma, secretary of the Transport Branch, regarded the decision to sell Wong Chuk Hang depot an inappropriate move.
Said he: "The Commissioner for Transport has made it crystal clear that the government is not prepared to release this site, since it is required for bus operations during the current franchise.
"It is not appropriate for CMB to assume that the Wong Chuk Hang depot will not be required after the expiry of the current franchise," he added.
The bus company refused to comment.
The other company, KMB, earned an estimated $1.7 million from two land sales last year.
The land was designated by Mr. Rafael Hui Si Yan, the Commissioner for Transport, as not needed in the bus operations.
The bus companies insist in a separation of bus operations and other unrelated businesses. This principle implies that revenue from land sales will not be used to subsidize bus fares.
This runs contrary to the idea of a "fare stabilization fund" which would put aside part of profit from land sales of the two companies. The plan was proposed last year to stabilize bus fares, but was later dropped by the Executive Council, despite a favourable nod from the government earlier.
Mr. Barma explained the move as such: "The proposal is an appropriation of private property without compensation, and this violates Hong Kong's free market principle."
The Democratic Party's Mr. Lau, however, is opposed to it, "The government has provided some temporary leases and loans to the bus companies, so they are gaining much benefit already. It's high time they shared the benefits with the public.
"From now on, the government should reject any more land sales. Besides, there is not much land left for the bus companies to sell," he added.
To Mr. Law, revenue from land sales was not even the property of the bus companies: "The revenue of land sales should be regarded as social property rather than private property of the bus companies. They should return some, if not all, of the revenue to society,"
He said his party, the Hong Kong Association for Democracy and People's Livelihood, would continue to ask the government for a reconsideration of the "fare stabilization fund".
Another fundamental problem is the "non-competitive" nature of the franchise system, according to the Liberal Party's Mr. Lau.
Under the existing system, the government plays a passive role, reminding the bus companies to serve the community.
"Since the bus companies have autonomous boards, they are out of government control. Therefore, competition should be allowed in order to make improvements in their services."
Mr. Wong, a Democratic party member, prefers more drastic action.
"The existing franchise system should be changed to a more competitive mechanism. The first step might be not to grant CMB a new franchise when it is due to expire on 31 August 1995," he said.
Liberal Party's Miss Lau, however, took a different view.
"We appreciate a competitive market. However, we cannot stop giving franchises to CMB or KMB," she said. "Don't forget that they are carrying most of the commuters around the city every day."
Miss Lau instead suggested introduction of competition to cut some routes of the two bus companies with poor services.
The last time CMB's franchise was reviewed, it lost 26 routes to Citybus.
Mr. Wong said, "Many people think that KMB is franchised in Kowloon and the New Territories while CMB is franchised on Hong Kong Island. This is not true.
"In fact, the government only gave franchise to the two companies in terms of different routes, not the whole area. In other words, for some new routes like those in Tseun Kwan O, the franchise can be given to other companies."
But the government seems cautious of the idea.
"In case of the public bus network in Kowloon and the New Territories, the franchise of KMB must be taken into consideration before opening some of the bus routes to other operators," said the Transport Secretariat Press Office.
It is almost certain that CMB will be granted an extended franchise later this year, according to the chairman of the Transport Advisory Committee. For KMB, there is still one and a half years before its franchise expires.
Meanwhile, how to balance the interests of the public and the bus companies will apparently continue to appear on the government's public transport agenda.