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Written by: Huang Weilun
2020-09-26 12:00
Last update date: 2020-09-26 12:00
The MTR’s increase and decrease mechanism has attracted criticism from time to time, and it has been accused of only increasing but not reducing fares.
Under the new crown pneumonia epidemic, the economy of Hong Kong has been greatly affected. However, according to the data published by the current government, even if the economy is stubborn, there will be no price cuts.
According to the latest data released by the government, according to the formula calculation, even if the result of a 0.5% reduction was originally obtained, the fare increase in the past two years was decided to be postponed to the next year, and the result was a 1.08% increase.
In addition, even if the relevant postponement increase is not calculated, according to the mechanism, as long as the adjustment rate is less than 1.5%, whether it is an increase or a decrease, the final fare will not change, and the adjustment rate will be transferred to the next year.
Will the MTR increase its fares next year?
The mechanism also has a "cap" arrangement. The increase shall not be higher than the change in the median household income in the fourth quarter of the previous year. Using the current second quarter data as a reference, it has fallen by about 9.76% year-on-year. In other words, unless In the fourth quarter, the median household household income has changed back to a positive figure, otherwise the MTR fares will be frozen next year.
Frozen payroll by bus companies affects the transport industry wage index in the equation
According to the MTR's "plus or minus" fare adjustment mechanism, the formula is to add the changes in the Composite Consumer Price Index in December last year and the changes in the nominal wage index of the transportation industry in the fourth quarter of last year, multiply by 0.5, and then deduct the extra 0.6%, the result of the fare increase of the MTR can be obtained.
In addition, the formula has a "cap" mechanism, and the fare increase cannot be higher than the change in the median household household income in the fourth quarter of the previous year.
Although it has not yet reached December, Hong Kong's economy has been greatly affected by the third wave of the epidemic. The Composite Consumer Price Index in July and August showed negative numbers, that is, deflation.
In addition, many major transportation companies have announced salary freezes this year, including New World First Bus and Citybus, KMB and Long Win, and even MTR has frozen salary for the first time since 2003, which will affect the wage index of the transportation industry.
0.5 x Change in the Composite Consumer Price Index in August this year (-0.4%) + 0.5 x Change in the nominal wage index of the transportation industry in the second quarter of this year (0.6%)-Productivity factor (0)-Additional deduction (0.6%) = -0.5%
The formula temporarily calculates a 0.5% reduction
However, even in the current economic downturn, according to the latest government data, prices will not be reduced in the end.
The change in the Composite Consumer Price Index for August this year announced by the government earlier was down 0.4% year-on-year; the second-quarter nominal wage index for the transportation industry announced today rose 0.6% year-on-year.
By substituting this data into the equation, the price could have been reduced by 0.5%.
Accumulated 1.58% increase in "savings" in the past two years
However, this is only an adjustment calculated in accordance with the equation, and it has not yet taken into account the increase that has not been calculated due to the "cap" mechanism in the past two years.
According to the mechanism, the fare increase cannot be higher than the change in the median household income in the fourth quarter of the previous year. For example, the MTR originally allowed an increase of 2.55% this year, but due to the change in the median household income in the fourth quarter of last year If it is a negative number, MTR will eventually postpone the increase for two years, and first increase by 1.28% next year.
In addition, a "cap" was also triggered in 2019/20, with a 0.3% increase in the price increase, which will also be extended to the next year. In other words, the two-year increase has a total of 1.58%.
2019/20 deferred increase rate (0.3%) + 2020/21 deferred increase rate (1.28%) + current latest data projected 2021/22 salary adjustment rate (-0.5%) = 1.08%
Two mechanisms to block MTR fare increase
According to this calculation, even in such a sluggish economic situation, taking into account the increase in the past two years, if the "cap" mechanism is not taken into account, the next year can still increase the price by 1.08%.
However, according to the mechanism, since the range is within ±1.5%, the fare will not be adjusted in the next year; and according to the "Quarterly Statistics Report of the General Household Survey" in the second quarter of this year, the median household income is The annual drop of about 9.76% will trigger the "cap" mechanism at the same time, so the ticket price may be frozen next year.
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Intentionally concealing?
Rewind 24 hours before government intervention
Lin Zhuoting: Cumulative increase should be "one-off hook"
Regarding the MTR can be added or subtracted mechanism, the Democratic Legislative Council Member Lin Cheuk-ting believes that a comprehensive review is needed and criticized the MTR’s mismanagement in recent years, such as the scandal of the Shah-Central Line project and problems with the replacement of the new signal system. He described the management as “rotten”. The fare mechanism does not consider related issues.
Lin Zhuoting said that the previous cumulative increase should be "one-off" and should not be accumulated, especially the current economic environment is not good, and there is no reason to increase it.
He also believes that if the result of a price reduction is achieved according to the mechanism, the price should be reduced as soon as possible and should not be postponed due to a 1.5% reduction, unless the reduction is less than 1 cent.
MTR MTR fare increase