LegCo Paper No. CB(1) 912/96-97
(These minutes have been seen
by the Administration)
Ref : CB1/BC/25/95/2

Bills Committee on Public Bus Services (Amendment) Bill 1996

Minutes of the Meeting on Thursday, 12 December 1996 at 2:30 pm in Conference Room B of the Legislative Council Building

Members present :

    Hon Zachary WONG Wai-yin (Chairman)
    Hon Ronald ARCULLI, OBE, JP
    Hon Mrs Miriam LAU Kin-yee, OBE, JP
    Hon LEE Cheuk-yan
    Hon LAU Chin-shek
    Dr Hon LAW Cheung-kwok
    Hon Bruce LIU Sing-lee
    Hon SIN Chung-kai

Members absent :

    Hon Mrs Selina CHOW, OBE, JP
    Hon Edward S T HO, OBE, JP
    Hon Howard YOUNG, JP
    Hon CHAN Kam-lam
    Hon CHAN Wing-chan
    Hon CHAN Yuen-han
    Hon CHEUNG Hon-chung
    Dr Hon John TSE Wing-ling

Public officers attending :

    Transport Branch

    Mr Gordon SIU, JP
    Secretary for Transport
    Mr Isaac CHOW
    Deputy Secretary for Transport
    Miss Eliza LEE
    Principal Assistant Secretary for Transport

    Economic Services Branch

    Ms Rhoda CHAN
    Acting Principal Assistant Secretary for Economic Services

    Transport Department

    Mr Daniel AU
    Assistant Commissioner for Transport

Clerk in attendance :

    Mrs Vivian KAM
    Chief Assistant Secretary (1)2

Staff in attendance :

    Miss Eva LIU
    Head (Research & Library Services)
    Mr Jackie WU
    Research Officer 1
    Mr Joseph LEE
    Research Officer 5
    Mr Arthur CHEUNG
    Assistant Legal Adviser 5
    Mr Matthew LOO
    Senior Assistant Secretary (1)4 (Acting)

I.Confirmation of minutes of previous meeting and matters arising

(LegCo Paper No. CB(1) 359/96-97)

The minutes of the meeting held on 4 October 1996 were confirmed.

II.Research report on "The fare revision process of overseas city bus services transport-related bodies"

(LegCo Paper No. CB(1) 478/96-97)

2. At the Chairman’s invitation, the Head (Research & Library Services) (H(RL)) briefed members on the research findings on the fare revision process of overseas city bus services. Supplementary information setting out the fare revision mechanisms of six countries based on the analytical framework of the study was tabled at the meeting to facilitate comparison. In essence, none of the countries surveyed were required to submit fare revision proposals to their respective legislatures for deliberation and approval. Fare revisions were controlled either by the Minister of Transport or the approving authorities and their decisions were final. The study could not draw any correlation between the establishment of advisory bodies and the ownership of the operators, the financing of operating costs as well as fare structures. Fare increases of privately-run bus services had either been in line with or higher than inflation. H(RL) said that most monitoring authorities were likely to have informal negotiations with the respective operators. However the authorities did not provide written response on this aspect, nor details on how their fare revision mechanism operated. This had restricted the findings of the study. As the same authorities were in some cases responsible for monitoring both mass transit and city bus services, she suggested that the findings of the Panel’s overseas study scheduled for February 1997 might shed more light in this respect.

3. Some members noted that Singapore had had a 25% fare increase in 1990 after nine years’ suspension of fare revision. In response, H(RL) and Research Officer 1 explained that the fare increase in Singapore resulted mainly from the introduction of sales tax. Furthermore, the annualized fare increase of 2.5% in Singapore was very close to the inflation rate of around 2%. The Secretary for Transport (S for T) advised that the overall bus fare increases in Hong Kong were below the rate of inflation and undertook to provide members with data on the proposed and actual rates of bus fare increases over the past ten years. Hon LAU Chin-shek noted that the fare level in Hong Kong was relatively high in comparison with Singapore, Taipei and Seoul. H(RL) said that the fare level in Seoul had already been presented in the report. Such figures were however not applicable for Singapore where different bus routes had different fares, Taipei was not within the scope of this research study.Admin

4. Hon LEE Cheuk-yan commented that the proposed legislation would be more suitable in Hong Kong’s political setting. He pointed out that although legislatures overseas did not control the fare revision process, the Government in cities such as Singapore and Seoul were elected and there was therefore indirect monitoring by citizens. The reverse was applicable to Hong Kong and hence monitoring of fare revision by LegCo in Hong Kong was called for in order to strike a balance. On the other hand, Hon Mrs Miriam LAU Kin-yee was of the view that introduction of further legislative control over bus fare increases in Hong Kong was unnecessary having regard to the quality of service provided and the rate of increase which was normally at about the inflation rate. She considered the existing mechanism effective while the other countries were unable to achieve this goal irrespective of their mode of controls.

5. In response to the Chairman, Dr Hon LAW Cheung-kwok explained that the Committee stage amendments (CSAs) he intended to move aimed to correlate the vetting of fare revisions by LegCo with the rate of inflation; he undertook to provide a written response at a later stage to explain the definition of inflation. Dr Hon LAW Cheung-kwok advised that the rate of inflation had been defined under Clause 2b(1A)(b) of his CSAs. On the rationale for adopting inflation rate as an indicator for determining vetting of fare increases by LegCo, he said that fare revision would normally cover staff and other costs of the operators, and these were mostly in line with inflation. Any increases above the rate of inflation would justify vetting by LegCo. The study conducted by the Research and Library Services Division had also concluded that bus fare increases in other countries were either in line with or higher than the rate of inflation. Dr LAW added that his proposal had been made having regard to the fact that if the proposed rate of increase was above inflation, district organizations would raise objections with LegCo and lobby for reductions; LegCo’s intervention would therefore be inevitable.Dr Hon Law Cheung Kwok

6 Some members and S for T pointed out that it was inappropriate to single out one factor in the fare revision process, since other considerations such as profit control by the Administration and population growth which would impact on operators’ income should also be taken into account. Furthermore, they remarked that revenue and operating costs for different routes were inter-related and it would be difficult to examine these individually. Dr LAW’s proposal would also create an adverse consequence of encouraging bus operators to apply for fare increases annually solely for the purpose of keeping the increase below inflation. Hon SIN Chung-kai said that Dr LAW’s proposal appeared technically feasible although the Democratic Party had yet to form a view. Hon Bruce LIU Sing-lee commented that the crux was monitoring by LegCo. Hon LAU Chin-shek objected to Dr LAW’s CSAs as he considered that correlation of fare increases with inflation would violate the principles of his original proposal.

7. In response to members, the Assistant Commissioner for Transport advised that the Administration assessed fare levels based on, inter alia, the forecast revenues and costs of the bus operators. Revenues were estimated on the basis of major route groups and not by individual routes. There were currently more than 500 bus routes and the number was increasing. Cross subsidisation existed among bus routes operated by an operator and it would be very complicated to assess fare levels on a route by route basis. He estimated that the resources requirement for the Administration would be increased significantly if revenue forecasts for fare increase assessment had to be made on individual routes. In response to the Chairman, the Acting Principal Assistant Secretary for Economic Services remarked that at present the Administration assessed the cost forecast of each bus company as a whole. It would be complicated to assess the cost forecast by bus routes, particularly in handling those common costs such as administrative overheads. In response, Dr Hon LAW Cheung-kwok clarified that his proposal would be applicable not only to a specified route but also a group of routes. S for T advised that he understood Dr LAW’s concerns. As for the Administration, he emphasized the importance of striking a balance between the interests of passengers, bus services operators and other parties concerned. To facilitate members’ understanding, S for T offered to provide an analysis on the resources implications of Mr LAU’s and Dr LAW’s proposals both on LegCo and on the Administration.Admin

III .Any other business

8. Members then discussed the work to be undertaken by the Bill Committee. As it might take some time for the Administration to collate information, and either members or the Administration might request another meeting upon availability of the information, members agreed that the Chairman should make a verbal report to the House Committee in order to vacate the slot until the Bills Committee next met. Hon LAU Chin-shek reiterated that he might seek resumption of Second Reading debate of his Bill if the bus companies were to submit the next round of fare increase applications before availability of the requisite information. Dr Hon LAW Cheung-kwok, on behalf of the Hong Kong Association for Democracy and People’s Livelihood, also affirmed his intention of moving CSAs on the Bill.

(Post-meeting note: The Chairman made a verbal report accordingly at the House Committee meeting on 20 December 1996.)

9. The meeting ended at 4:30 p.m.

Legislative Council Secretariat
20 February 1997

Last Updated on 10 December 1998