The MTR, which has an average daily passenger capacity of 3.16 million, announced earlier (March 28) that it will continue to freeze fares this year because various indices failed to meet the fare increase targets under the "add or drop" mechanism last year. Adjustment; however, given that the MTR has accumulated a 3.35% delayed increase, if the economy improves next year, it is possible to increase the fare by nearly 5% at one time, so many people question the current fare adjustment mechanism to allow the delayed increase, and the result is often just an extra increase Reduced reduction, simply did not fully consider the affordability of the general public.
The Legislative Council Committee on Transport discussed the adjustment of MTR fares on Friday (April 22), and the Deputy Secretary-General of the Transport and Housing Bureau, Huang Peiwen, responded that the fare mechanism will be reviewed in the second half of this year.
The "add and drop" mechanism seems to be more "objective" than the company's own determination of fares, but in fact, the chance of "reduction" is very small.
(Photo by Zhang Haowei)
The novel coronavirus epidemic has lasted for more than two years, and repeated social restrictions have undoubtedly caused citizens to reduce travel, and the use of public transport has indeed declined.
According to the Transport Department's "2021 Transport Information Annual Report", as of December 2020, the average daily passenger capacity of various means of transport has decreased to 8 million, representing a 28.2% decrease in ten years, with the largest decrease in passenger capacity. The top three are MTR (32.4%), ferry (29.7%), public light bus and resident bus (26.2%).
However, it is worth mentioning that the MTR seems to be the hardest hit, but the actual revenue is the most.
Since October 1999, the SAR Government has announced the results of the third overall transport study, "Going Forward: Hong Kong's Long-Term Transport Strategy", which stipulates that in the next 20 years, "the railway will be more fully utilized and the railway will become the backbone of the passenger transport system". Since then The railway-based public transport policy has made the MTR widely used by citizens and tourists. The daily passenger volume accounts for about 40% of the total passenger capacity of public transport. By 2017, it has accumulated more than 2 billion passengers, and the turnover is naturally considerable. .
Furthermore, as a listed company with a market value of more than 260 billion yuan and about 75% of the shares held by the SAR government, in addition to train operations, the MTR Corporation also has station business, property leasing and management business, property development, as well as Mainland and International business, income is of course no trivial matter.
Even affected by the epidemic, according to the MTR's performance report released in March this year, as of December 31 last year, MTR still earned 9.55 billion yuan for the whole year, an increase of 11% year-on-year.
This is even more puzzling. Why does the MTR still not cut prices to give back to the public?
All of this has to start with the "add or subtract" mechanism, which is common in news reports but unknown to most citizens.
Hong Kong pursues a laissez-faire market economy, and believes that free competition under certain conditions can maximize social welfare; however, public transport services are special, and if the industry is allowed to operate freely, many will use the advantages of public services to obtain huge profits. The various problems that lead to the damage to the rights and interests of the citizens are therefore usually regulated by the government through different means, some are issuing franchise licenses, and some are managed by statutory public bodies in accordance with commercial principles.
Take the MTR's predecessors, the Mass Transit Railway Corporation and the Kowloon-Canton Railway Corporation as examples. The former was originally wholly owned by the Financial Judiciary Corps in trust on behalf of the Hong Kong government and later privatized and listed in order to reduce the burden on the government, while the latter was reorganized by the government department. established public corporation.
Regarding the management of fares, before the merger of the two railways, the Hong Kong government has allowed the MTR to have the autonomy of fares; when the two railways merge, the SAR government has introduced a “additional or deductible” fare adjustment mechanism, hoping to change it by formula be objective and transparent.
The top three passengers with the largest decrease were the MTR, ferries, and public light buses and resident buses, with a decrease of 32.4% (MTR line and Airport Express), 29.7% and 26.2% respectively.
(Photo by Gao Zhongming)
According to this mechanism, MTR needs to consider factors such as price level, wage level and productivity when formulating fares. The calculation method is as follows:
Overall Fare Adjustment = 0.5 x Change in Composite CPI + 0.5 x Change in Nominal Wage Index for Transportation - Productivity Factor - Additional Deduction 0.6%
A final result between +1.5 and -1.5% will not trigger a fare adjustment and can be deferred until next year.
According to various indexes announced by the government, the MTR fare increase this year is 0.5%, which is lower than the adjustment limit of 1.5%, so it is decided to freeze the fare adjustment.
However, some Legislative Council members are worried that since the mechanism allows for a deferral of the increase, and the 3.35% increase has been accumulated so far, if the economy improves next year, there may be a one-off increase of 5%, so they propose to cancel the deferral of the increase.
The Deputy Secretary for Transport and Housing, Wong Pei-min, told the Legislative Council Panel on Transport last Friday that the mechanism will be reviewed in the second half of the year.
However, according to the "Operation Agreement" signed with the government when the two railways merged, although the MTR Corporation or the government can review the fare adjustment mechanism every five years, if the two parties fail to reach a consensus, the existing "additional or deductible" will continue to be used. "mechanism.
After the last review in 2017, the two sides only agreed to increase the fare concessions provided under the "profit sharing mechanism", and the amount allocated for concessions will be specified in the default basic business profit scale.
In fact, there are quite a few issues that need to be reviewed in the fare adjustment mechanism.
The introduction of various indices through this mechanism seems to be more objective than the practice of private organizations to determine their own fares. However, based on the experience over the years, the result is often "more increase and less decrease".
Data from the MTR Corporation shows that in the past seven years, only 2021 has been reduced in fares, and the rest of the years have been frozen or increased. The reason why the fares are frozen in 2017, 2020 and this year is that the MTR promises a one-time fare increase. 10% off, the median monthly household income hits the “Affordability Cap” capping mechanism, and the increase is less than the 1.5% limit.
According to Article 13 of "Public Bus Services", Chapter 230 of the Laws, the fare scales for all buses are determined by the Chief Executive in Council, and the authorities will also determine the maximum fare increase rate.
(Photo by Liao Yanxiong)
It is undeniable that before the outbreak of the novel coronavirus, with the steady development of the economy, the income of citizens did increase; however, the increase in property prices far exceeded the increase in income, and most people’s living burden was already quite heavy. The cost of public transport has increased year after year, and it is a big company that is majority owned by the government and makes money year after year.
Furthermore, the government, as a major shareholder, absolutely has a say in the adjustment of MTR fares.
In 2012, Tian Beichen, a member of the Legislative Council of the Roundtable on Actual Politics, proposed a non-binding motion on "MTR fares, which will be checked by the line."
In fact, this practice is not new, because all public transport franchise companies, except the MTR, have to be approved by the Executive Council after they propose a fare increase.
Taking franchised bus companies as an example, Article 13 of the Ordinance, "Public Bus Services", Chapter 230, states that the fare scales for all buses are determined by the Chief Executive in Council, and the authorities will also determine the maximum fare increase rate.
It is precisely because the increase in fares of franchised bus companies is regulated by the Executive Council that their fares can be maintained at normal levels, and the government is very strict in regulating the increase in fares of public transport other than the subway - NWFB and Citybus in 2010 No fare increase was ever approved between 2017 and 2018, and the Star Ferry was only approved once from 2017 to 2021.
Since the government is so active in regulating the fares of other public transport, there is really no reason to let the MTR go too far. Otherwise, "favoring one over the other" will only cause financial burdens to other companies and ultimately harm the interests of the public. The Ferry has lost 70 million since June 2019, and Citybus and NWFB once lost as much as 3 million a day. If the situation persists and the route is suspended, citizens will lose these transportation options.
Protecting the public interest is the government's heavy responsibility. "Hong Kong 01" has always advocated that the government must regain control of MTR fares, and the most effective way is to buy back the MTR.
As a matter of fact, whether it is a "trade check" or the repurchase of the MTR, as long as the government is determined, it can definitely be accomplished.