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Carrie Lam

MTR fare rises should be next on Carrie Lam’s agenda

Alice Wu says now the Hong Kong government appears to be making progress on its promise to scrap the MPF offset mechanism that’s unfair to employees, why not also take the MTR to task for its unfair fare scheme?

PUBLISHED : Sunday, 01 April, 2018, 9:31am
UPDATED : Sunday, 01 April, 2018, 6:31pm

Is Carrie Lam Cheng Yuet-ngor willing to move mountains for Hongkongers? Back in 2016, when she was chief secretary, Lam seemed ready to do just that. Behind closed doors with some lawmakers, she volunteered that the government aimed to conquer “three mountains”, or the three knotty problems Hong Kong should resolve. These are the management of public housing malls by the Link Reit, the offsetting mechanism of the Mandatory Provident Fund, and repeated MTR fare increases. 

Today, as Lam enters the ninth month of her first year as Hong Kong’s chief executive, these monsters remain. 

Just last week, Lam hinted that she was making some headway on one of them – the MPF offset scheme. Talks on scrapping the MPF offset mechanism, which allows employers to dip into workers’ pension funds for severance and long-service payments (the rawest deal ever for workers), have gone on for years. In his budget in February, Financial Secretary Paul Chan Mo-po announced that the government would commit HK$15 billion (US$1.9 billion) to scrapping it. The welfare chief Dr Law Chi-kwong followed up with saying that it would cost more

Officials in HK$17.2 billion push to axe MPF offset mechanism

The reason this offset scheme, which is basically sanctioned stealing from workers, has to go cannot be simpler. It was the opium the Tung Chee-hwa administration fed employers to get them on board with the MPF, and now Lam is left with no choice but to use public money to feed their greed. 

Lam is correct to say that the scheme undermines “the very purpose of setting up” retirement protection for employees in the first place. The government has a moral obligation to right this wrong.

Carrie Lam still has a mountain to climb despite pledges

The MTR fare adjustment mechanism – which was supposed to provide a fair and transparent way to control ticket prices for Hong Kong’s largest public transport operator – is another headache that won’t go away. Based on the mechanism, fares increase and rarely decrease. Just when Lam was scaling the MPF mountain last week, the MTR Corp announced that fares are set to rise by 3.14 per cent by this summer. 

It’s fair to say that the adjustment mechanism has frustrated commuters since 2009, when it was first put in place. Consistent upward adjustments of fares when the rail company continuously rakes in massive profits have put the government in a tight spot, since it owns 75 per cent of the company’s shares. How affordability, service performance and profit levels are left out of the calculus is beyond us, but the government must face its own demons head-on.

How MTR fares are adjusted and why they upset Hongkongers

While Secretary for Transport and Housing Frank Chan Fan, at the Asia-Pacific Economic Cooperation transport ministerial meeting in October last year, had nothing but praise for public-private partnerships, for which the MTR was his star feature, it is rarely mentioned that these partnerships carry tremendous risks. As Harvard University economics professor Edward Glaeser said, “There are cases where either the government has mistreated the private partner, or companies have figured out a way to mistreat the government.” Such partnerships “always require firm oversight”.

Given the years of grief the adjustment mechanism has caused Hongkongers and the government, officials must now not only fix the mechanism, but also address the bigger problem of inadequate oversight on public-private partnerships. Commuter subsidies like the one Lam announced in her policy address won’t solve the problem. Proper oversight would mean holding the MTR responsible for serious threats to public confidence and public safety, such as the substandard concrete and steel bars that have been found on a section of the Sha Tin-Central link. 

Lam’s mountains are only going to become harder to overcome with time.

Alice Wu is a political consultant and a former associate director of the Asia Pacific Media Network at UCLA