Budget calls for bold route to be taken on Hong Kong transport subsidies

If a public welfare policy becomes fiscally unsustainable and prone to abuse, it should be scrapped or at least modified. In the case of the HK$2 concessionary transport fare for senior and disabled citizens, Hong Kong officials have opted for a compromise. But as fares continue to rise and more people qualify for the subsidy each year, the burden on public coffers will only grow.

Adjustments are expected to be unveiled on Wednesday in the budget of Financial Secretary Paul Chan Mo-po. Authorities are said to be considering capping the number of trips at 240 a month and making users pay more for longer journeys, reportedly at 20 per cent of fares more than HK$10. However, age eligibility will remain at 60. The new proposals will help save between HK$100 million and HK$300 million annually, according to informed sources.

They give the impression officials have opted for minor tweaks incrementally instead of more sweeping changes, such as a tighter cap on the number of rides for those aged below 65 or introducing a means test. While such an approach may avoid upsetting hundreds of thousands of beneficiaries, the government is also shying away from bolder reforms to curb what is essentially a financial snowball.

Questions have been raised whether the monthly cap of 240 subsidised trips – averaging eight trips per day – will really make a difference. We do not know how many senior citizens, excluding couriers, commute more than eight times a day. But this is exactly why the scheme is being seen as distorted. The lowering of the qualifying age to 60 by former chief executive Carrie Lam Cheng Yuet-ngor was seen as benefiting those who work beyond the usual retirement age of 60.

Chan is being urged to clearly explain the rationale behind the adjustments. The HK$2 concessionary fare was widely praised when it was introduced in 2012 to encourage the disabled and those aged 65 and above to lead a more active social life. But the burden became heavier when eligibility was further lowered to 60 in 2022.

Over the past five financial years, more than HK$10.7 billion has been paid in reimbursements to public transport operators, with costs escalating from HK$1.2 billion in 2019-20 to HK$3.9 billion in 2023-24, and are projected to reach HK$6 billion in 2024-25.