In search of a fare solution

PUBLISHED : Thursday, 20 November, 1997, 12:00am
UPDATED : Thursday, 20 November, 1997, 12:00am

The public wants a quality bus service with the lowest possible fares. But how low? The search for a perfect answer to this question has taxed the bus companies, Government, political parties and activists year after year.

The companies want to maintain profits by seeking periodic applications for fare increases. Invariably, their proposed increases are denounced by those who purport to represent grassroot interests for being too large.

The Government usually slashes the request, which is then endorsed by the Transport Advisory Committee (TAC), whose members are supposed to be independently minded. Yet politicians and activists still want smaller or even no increases, alleging the bus companies should not be allowed to use their franchises to reap 'excessive' profits.

There is no sign of this cycle of events coming to a halt, at least not until a struggle arising from a weakness in Hong Kong's constitutional structure is addressed.

This struggle is fought between an unelected administration which wields the power to govern permanently and an elected legislature whose members are keen to wrest that power from the administration.

It can be most clearly demonstrated by the Democratic Party's bid to amend the Public Bus Services Ordinance so the Legislative Council can have the final say over increases. The bill was narrowly defeated in June, so the ritualistic campaign against fare increases has continued.

Kowloon Motor Bus recently asked for a 9.2 per cent fare increase, China Motor Bus 11 per cent, and City Bus 8.7 per cent. The Government and the TAC decided the increases should only be seven per cent, eight per cent and six per cent respectively.

Political parties have since used various means to rally the public against these increases. Early this week, the Democratic Party accused KMB of profiting from the current shortage of coins because the operator's failure to provide loose change obliges passengers to pay more than the exact fare.

Yesterday, legislators had a heated debate on a motion sponsored by the Democratic Alliance for the Betterment of Hong Kong denouncing the bus operators' applications for fare hikes as 'unreasonable'.

A Legco motion does not bind the administration. But since no responsible government, not least an unelected administration, can ignore the strongly held views of elected politicians, officials are understood to be keen to find a way to ameliorate the severity of the confrontation over this emotive issue.

Finding the right solution is a difficult task. On the one hand, politicians argue they best represent public opinion, which should be a key criterion in determining bus fares, and indeed the prices of other public utilities. They also argue there must be a concerted effort to stop excessive profiteering by the bus companies.

On the other hand, the administration wants to ensure Hong Kong can continue to rely on the private sector to provide essential public services efficiently. Allowing too much politicking to influence the fare determination mechanism could discourage private sector investment.

Previously, the bus companies were allowed to reap profits equivalent to 16 per cent of their net fixed assets. The beauty of the scheme was that it encouraged the companies to invest to improve their services because returns were guaranteed. A major drawback was it could encourage over-investment, which led to unnecessarily high fares.

The scheme has since been scrapped. However, the replacement fare adjustment process is arguably highly subjective. Gone are any guaranteed returns. Instead, the Government assesses the bus companies' applications for fare increases according to a set of criteria. As a result, bus companies face the uncertainty of not knowing the amount or timing of approved increases.

During the debate on an amendment to the Public Bus Services Ordinance, then Transport Secretary Gordon Siu Kwing-chue said he was considering setting up an accountable transport authority to oversee transportation services.

'Accountable' is a very elastic term and accountability can take various forms. Under Hong Kong's executive-led system, having a directly elected transport authority is out of the question. At best, such an authority could be like the Housing Authority or Hospital Authority, whose members are appointed from a wide cross-section of the community, including elected politicians.

But the Housing Authority's role of providing low-cost housing and the Hospital Authority's job of running hospitals are different from a transport authority which plays a supervisory role over providers of public transport.

The Housing Authority and Hospital Authority are both statutory bodies with no commercial secrets to hide. But the commercial operators of bus, rail and ferry services might hesitate to open their books to some members of the transport authority.

Yet, overall, having a transport authority whose membership would be more broadly based should be better than having a TAC which has a restricted membership and deliberates behind closed doors. At the very least, authority members opposed to a proposed fare increase would be able to make much more informed criticisms.