Why the MTR is not taking the people for a ride

PUBLISHED : Tuesday, 10 April, 2012, 12:00am
UPDATED : Tuesday, 10 April, 2012, 12:00am


When the MTR increases fares, it has a major effect on the population of Hong Kong. In many cases, salary rises have not matched the increases in the rate of inflation, and so the fare hike rubs salt in the wounds ...

I understand the MTR faces higher operating costs and wants to maintain profits, but it should not pass those costs onto passengers.

Letters to the editor, April 6

When in doubt where to start, go for the easy option. The chart shows you the track over the last 20 years of the nominal wage index and of Mass Transit Railway fares as shown in the consumer price index.

It is MTR fares that have fallen behind, not the other way round. Over the last four years, average wage growth has outstripped MTR fares by more than 20 per cent.

So here is an idea for you. Let us tell our government to order an immediate 20 per cent across the board pay reduction for all wage earners in Hong Kong in order to bring pay in line with MTR fares again. Alternatively, we shall grant the MTR a 20 per cent fare increase although it only has only asked for 5.45 per cent.

Better yet, let's dispense with daft ways of setting fares and start instead by observing that a public corporation like the MTR does not make windfall profits. If, by some accident, it does so, the government will assign it a financial loser project like the Airport Express as a way of paying the money back. This is one reason that I am not an MTR shareholder.

We are looking here at a transport service of relatively low profitability for the almost four million passengers it carries every day and we can safely assume that it needs to raise fares because its costs are rising

The pay increases of passengers, their grass roots livelihood issues, whether or not the MTR rubs salt in their wounds, the foggy understandings of legislators in these matters - none of these things has anything to do with the basic question.

That basic question is a simple one. If we want an MTR of at least the present standards of service, we can either pay for it through the fares it charges or through taxes. It's not a question of whether we pay. It's only a question of what pocket we reach into for the money.

So why not reach into the public pocket instead of topping up the Octopus card? The effect of doing it that way is so general that you may never feel it anyway. It's like chickening out at the dentist and calling for the anaesthetic.

There are three reasons why I think this is the wrong approach. The first is that an economy is a dynamic thing that inevitably finds the route of least resistance. This invariably means lumbering the working poor with the cost.

You can never trace just how it happens but always it does, and the more that you abandon the simple, obvious user pay way of doing things, the worse it gets. The consequence of charging the public purse instead of MTR users will in the end be a further slight widening of income polarity.

The second reason is that when you abandon the user pay principle in transport you get more people living at longer commutes than they would if they paid the full cost directly. It is not a big effect at first but it becomes incrementally and steadily bigger. The consequence of making the public purse rather than the user pay is ever greater public transport inefficiency.

The third reason is that it also encourages the public transport provider to engage in uneconomic projects. The MTR's South Island, for instance, does not have a big enough population catchment to justify its construction. If the line had to pay for itself from fare revenues, the prospective users would all take the bus instead.

But who cares if the public purse picks up the bill? It's so easy. Just close your eyes, plug your ears, and pretend no-one is reaching into that other pocket.