Thursday, March 29, 2012, 00:00

MTR fare hike plan a wrong move, may start vicious circle

By Violetta Yau

Following hot on the heels of the citys two power providers tariff increase debacle, it is as if that had not been exciting enough, with Hong Kongs only subway operator MTR Corporation (MTRC) lately dropping a bomb that there will be a 5.4 percent fare hike in June.

This piece of news is of course outrageous and surely not welcome given the fact that the railway monopoly reaped a hefty net profit of HK$14.7 billion last year with a sharp rise of 22 percent from the year before. In fact, the railway operator has been making annual profits of over HK$10 billion for years but has never adjusted its fares downward even once. Coupled with the fact that this increase is the highest since 2007 after its merger with the Kowloon-Canton Railway Corp following a 2.05 percent rise in 2010 and 2.2 percent last year, it is not unfair to say that the more it earns, the more it sucks blood from the people.

The decision is based on a fare adjustment mechanism using a formula that takes into account the inflation rate and salary index for the transport sector, which stands at 5.7 percent and 5.1 percent respectively. In other words, in times of inflation, this adjustment formula will serve as a license to justify fare rises by the MTRC regardless of passengers affordability and its social responsibility. The 5.4 percent fare hike will mean an average rise of about 37 cents per trip. For middle-class families, they may just shrug if off. But for poor families, students, the unemployed and elders, this fare hike matters much as it will surely make their lives harder.

The biggest public worry, however, is the vicious cycle that will be triggered by this fare hike. As the leading corporation in the public transport sector, the fare increase may spark off a wave of fee rises by other public utilities. It will not be surprising to see Hong Kong Tramways, Star Ferry and the citys mini buses demanding a fare rise. The Kowloon Motor Bus, which sank into the red last year, has also rolled its sleeves up to follow suit. Needless to say all these potential fare rises will fan the flames of inflation, aggravating the plight of the working class and underprivileged.

However, what really baffles me is the governments laissez-faire and wishy-washy attitude. Just three months ago when the two power companies put forward their original proposals to increase electricity tariff by 9.2 percent and 6.3 percent respectively, the Environmental Bureau was quick to chide the two power giants for ignoring their social responsibility and branded the tariff rises unreasonable. Now, as the government is the biggest MTRC shareholder with a 77 percent stake, why does it stay mum on this issue? Why did it give the railway operator the green light to allow its unabashed greed to take priority over public interests?

No doubt that the fare adjustment mechanism allows the MTRC to exercise its right to a fare rise. But this right should not be mandatory but discretionary, taking into account other factors such as the MTRCs profitability, the economic environment and the passengers affordability. With the railway operator sitting on a net profit of HK$14.7 billion last year, why would the government still think this is alright to squeeze every penny out of the publics hard-earned money?

Who can be capable of standing up for the public when the government chooses to take a laissez-faire approach? When even the fare adjustment mechanism for buses will factor in a basket of indicators and economic indices and subject to the Executive Councils approval for a fare rise, why is the government still sticking to this flawed mechanism for the MTRC? For the citys two power companies, they also set up a tariff stabilization fund to offset the pressure for a tariff increase.

In fact, the fare hike might be justified if the MTRC had improved its service quality and safety facilities. But this has not been the case. There have been 300 incidences that caused delays of between eight minutes and over an hour last year compared to 234 in 2007, while there is still no platform screen doors in place at the East Rail line, Ma On Shan station and the Light Rail stations. It is obvious the railway operator has done more on advertising campaigns than on railway maintenance and repairs. Is it fair for passengers to pay more for the unimproved service?

The Leung Chun-ying-led government will take over in July. It is time for him to flex his governance muscles to overhaul the fare adjustment formula for the MTRC by taking into account a host of factors like passengers affordability and the salary index of other sectors. The new government should also consider setting a cap on MTRCs profits and transfer extra profits to a fund to stabilize fare.

The author is a current affairs commentator.