Proposed MTR fare hike may be halved, says Michael Tien

Ex-KCR chairman says government seeks to reduce planned 3.2pc increase in ticket prices

PUBLISHED : Wednesday, 27 March, 2013, 12:00am
UPDATED : Wednesday, 27 March, 2013, 5:12am

The government aims to cut the MTR's proposed 3.2 per cent fare increase by half, according to a lawmaker briefed on the negotiations between the two sides on new tariffs.

Michael Tien Puk-sun, of the New People's Party, said he had heard from the government that it and the rail corporation were in the final stages of negotiations, and that a new formula for setting fare increases would be announced this week.

"My impression is that it's not so much about the formula now. It's about whether the final figure would please the public," said Tien, a former board chairman of the Kowloon-Canton Railway Corporation.

Both sides were trying to come up with different ways of putting the formula to suit their needs, he said.

Under the current formula the MTR could increase its fares by 3.2 per cent in June. The formula takes into account changes in the consumer price index and wages in the transport sector. The sum of the two increases is divided by two, and a productivity factor of 0.1 percentage points is then deducted.

The year-on-year inflation rate in December was 3.7 per cent and the change in transport wages, announced yesterday, was 2.9 per cent.

If the fare rises were adopted, they would be the fourth in consecutive years under this formula.

However, Tien said, the government was hoping to change the formula so that the 3.2 per cent rise could be halved, but the MTR thought the resulting rise would be too low. He nevertheless expected the final rate of increase to be less than 2.24 per cent, or 70 per cent of the rise derived using the current formula.

A review of the fare adjustment formula was launched in August, following a fare rise of 5.4 per cent which sparked a public outcry after the company reported a net profit of HK$14.7 billion for 2011.

Some critics have suggested giving the Executive Council the final say over the rate of increase, while the government has promised that the new formula will factor in affordability, the company's profit and performance.

Secretary for Transport and Housing Professor Anthony Cheung Bing-leung said yesterday the government preferred not to leave the final say to the Executive Council.

Both economist Dr Andy Kwan Cheuk-chiu and transport analyst Dr Hung Wing-tat said the government should consider setting an upper limit to prevent the MTR raising fares when its profits exceeded a certain threshold.

Another lawmaker, Gary Fan Kwok-wai, of the NeoDemocrats, said the MTR should not raise its fares at all this year, because of its HK$13.5 billion net profit last year and its deteriorating services. Its profit from property should be used to subsidise the fares.

In a statement issued last night, the MTR Corporation said that in the event that the government and the company did not agree on a modification, it would adjust its fares in June in accordance with the existing formula.