LegCo Paper No. CB(1) 809/96-97
(These minutes have been seen by the Administration)
Ref : CB1/PL/TP/1

LegCo Panel on Transport

Minutes of meeting held on
Friday, 13 December 1996, at 8:00 am
in the Chamber of the Legislative Council Building

Members present :

    Hon Mrs Miriam LAU Kin-yee, OBE, JP (Chairman)
    Hon Zachary WONG Wai-yin (Deputy Chairman)
    Hon Mrs Selina CHOW, OBE, JP
    Hon Albert CHAN Wai-yip
    Hon LEE Wing-tat
    Dr Hon Samuel WONG Ping-wai, MBE, FEng, JP
    Dr Hon Philip WONG Yu-hong
    Hon CHAN Kam-lam
    Hon CHAN Wing-chan
    Hon CHOY Kan-pui, JP
    Hon Albert HO Chun-yan
    Dr Hon LAW Cheung-kwok
    Hon LEE Kai-ming
    Hon NGAN Kam-chuen
    Hon SIN Chung-kai
    Hon TSANG Kin-shing

Members absent :

    Hon Edward S T HO, OBE, JP
    Hon CHEUNG Hon-chung
    Hon LAU Chin-shek
    Hon Lawrence YUM Sin-ling

Public officers attending :

Item II

Transport Branch
Mr Gordon SIU, JP
Secretary for Transport
Mr Paul LEUNG, JP
Deputy Secretary for Transport (Transport Infrastructure)
Mr Isaac CHOW
Deputy Secretary for Transport
Mr K C LAU
Principal Assistant Secretary for Transport
Mr John Wilson
Principal Assistant Secretary for Transport

Item III

Transport Branch
Mr Gordon SIU, JP
Secretary for Transport
Mr Paul LEUNG, JP
Deputy Secretary for Transport (Transport Infrastructure)
Mrs Jenny Wallis
Principal Assistant Secretary for Transport (Transport Infrastructure)4
Mr LI Wing
Principal Assistant Secretary for Transport (Transport Infrastructure)7

Highways Department
Mr C K MAK
Government Engineer (Railway Development)

Attendance by invitation :

For Item II

MTRC
Mr Clement KWOK
Finance Director
Mr Andrew McCusker
Operations Engineering Design Manager
Mrs Miranda LEUNG
Corporate Relations Manager
Ms Maggie SO
External Affairs Manager
Mr William R. Steinmetz
Director, Railway Technology Strategy Centre, Imperial College, the University of London

Clerk in attendance:

    Mrs Vivian KAM

Staff in attendance :

Mr Matthew LOO
Senior Assistant Secretary (1)4

I Date of next meeting and items for discussion

(List of outstanding items for discussion)

The Chairman referred to the letter of 9 December 1996 from the Chairman of the Western Harbour Tunnel Company Ltd (WHTCL) in response to members’ concerns raised at the meeting on 6 December 1996 regarding the taxi surcharge for the Western Harbour Crossing. The WHTCL Chairman advised that the determination of taxi surcharge was outside the purview of WHTCL and that the Company would charge tunnel tolls specified in the schedule of the Western Harbour Crossing Ordinance. Instead of attending the Panel’s meeting, the WHTCL Chairman proposed to arrange a briefing-cum-site visit for members. After deliberations, the Panel agreed that the issue should be pursued by the Administration.

(Post-meeting notes: The WHTCL Chairman’s letter was circulated to members vide LegCo Paper No. CB(1) 522/96-97.)

2. The Chairman also advised that a special meeting had been scheduled for 17 December 1996 for discussion of the three agenda items of Tuen Mun Road widening works mediation case, taxi fare receipt and safety of school transport. A closed session would be held at 8:15 a.m. before the meeting in order for the Legal Advisor to brief members on the subject of sub judice.

II London University Benchmarking Study -- report commissioned by the Mass Transit Railway Corporation on mass transit systems

(Paper No. CB(1) 456/96-97(01) provided by the Mass Transit Railway Corporation)

3. At the Chairman’s invitation, Mr William R. Steinmetz briefed the Panel on his analysis of the performance of Metropolitan railways with the aid of presentation materials tabled at the meeting. In brief, the complex subject being studied assessed the performance of urban railway systems and the influence on business performance under various regulatory frameworks. Taking into account the environmental and demographic factors, technology and the level of investment, management and the regulatory dimensions, the following conclusions had been drawn:

  1. city success measured in terms of population and economic growth correlated highly with the financial success of the metro systems;
  2. low regulatory levels correlated reasonably with high degree cost coverage;
  3. a strong relationship existed between high levels of regulation and high total operation costs per route kilometre;
  4. imposition of higher levels of regulation would have a long-term effect on management, investment and operating efficiency of the railway operators. This would escalate overall costs and lead to higher fares for passengers; and
  5. competition was the best mechanism for encouraging improved level of performance which at the same time would help to keep the costs and fares down.

Mr Steinmetz added that regulations beyond the fundamental safety and public service aspects would impose long-term counter-productive pressures on urban railway systems, and create significant effect on the three areas of investment, reliability and overall recovery times.

(Post-meeting notes: Copies of the speaking notes and the presentation materials were circulated vide LegCo Paper No. CB(1) 522/96-97.)

4. In response to members, Mr Steinmetz advised that the regulation rating for metro systems, which could be defined as what Government had done in terms of regulations, ranked from 0 to 10. He estimated that the numeric grading for Hong Kong would shift from 0 to a level between 4 and 6 if a regulatory mechanism on fares was introduced. He also pointed out that a spiral decline in commercial and service vitality had been commonly experienced overseas following the introduction of regulatory actions.

MTRC

5. Mr Steinmetz agreed with members that apart from regulations, other factors such as operating environment and conditions were also important in determining the financial performance and operation costs of the operators. He advised that while these fundamental differences had been taken into account in the study, the effect of the level of regulation was still significant. The cost differences amongst operators with the same regulation level was attributed to the disparity in labour costs, and the effectiveness of their management within the regulatory framework including the maintenance and investment policies and their responses to the imposition of regulations. Whether the metro systems were new or had been developed over time would not make as much difference as how the managements could operate effectively under the regulatory regime. Mr Steinmetz considered that a commercial operator which was accountable to the public would normally achieve good performance. In response to a member on the differences in control by an elected legislature and by appointed Government officials over the regulation level, Mr Steinmetz said that he had only examined the functional but not the political aspects of the control mechanism in his study. Upon members’ requests, he undertook to provide the Panel with graphs showing the relationship of financial performance and operation costs with the population density, number of cars per family and daily number of passengers per kilometers for countries covered in the study. He also agreed to provide supplementary information on the historical development of railway operations of these countries with particular emphasis on the effect of regulations introduced over times.

MTRC

6. Members enquired if competition would still be the best mechanism for enhancing a system which had failed to keep pace with demographic and environmental changes. They also questioned if the introduction of new cross-harbour bus routes would enhance the annual ridership of the Mass Transit Railway (MTR) in Hong Kong. In reply, Mr Steinmetz said that competition just provided the catalysts for improvement, and the way in which management reacted to the change would have a more significant bearing. He agreed with members that the flattening out of MTR ridership might be due to the saturation of the system during rush hours as well as the high fares in comparison with other means of transportation. However, the service demand for MTR had not reached a saturated point during off-peak hours, and new cross-harbour bus routes would impose pressure on the management for further improvements. In response to members, he undertook to provide the Panel with information relating to the spiral of decline where demotivation could impact on the quality of management aligned with the environment of competition experienced by the railway operators covered by the study.

MTRC

7. Mr Steinmetz also advised that fare levels and fare structures were both important in the evaluation of the regulation assessment gradings. In general, fare levels and structures were distance-related and these two factors had often been made use of in achieving political objectives in setting the regulation level. He had not come across any Government or systems which had a high level of regulation but minimal control over the fare level, or vice versa. At members’ request, he undertook to provide details on the quantification of the regulation assessment gradings.

8. The Chairman thanked Mr Steinmetz for the study and the informative presentation. She also asked representatives from the Mass Transit Railway Corporation (MTRC) to consider providing copies of the research report to the Panel for reference if available.

III Briefing on Railway Development Strategy

(LegCo Brief on Railway Development Strategy - Implementation of High Priority Projects)

(LegCo Brief on Railways Bill)

Western Corridor Railway

9. At the Chairman’s invitation, the Principal Assistant Secretary for Transport 4 (PAS(T)4) briefed members on the way forward for the Western Corridor Railway (WCR) project on the basis of the presentation materials. The Administration had adopted the route proposed by the Kowloon-Canton Railway Corporation (KCRC). Following enactment of the Railways Bill and allowing one year for the necessary preparation work, the domestic passenger line from West Kowloon via Tsuen Wan, Kam Tin, Yuen Long and Tin Shui Wai to Tuen Mun would commence construction in mid-1998. This would be aimed for completion by end 2002 up to Yuen Long, and by September 2003 to Tuen Mun. The construction of cross border passenger and freight rails would form the next stage of the project as the Administration needed time to study and reconcile the assumptions and uncertainties in the forecasts demand with the relevant Chinese authorities. This schedule would reduce initial land resumption and clearance by about 40%. On the cost and financing forecasts, the consultants commissioned by the Administration had assessed that the cost for the full WCR proposal could be trimmed by 10%. For the domestic passenger line, the consultants considered that KCRC’s estimate of $56.4 billion could be reduce to $49.6 billion. Through using different assumptions concerning the borrowing and debt capability for KCRC etc., the consultants had also assessed a lower level of Government support required for the project. The Secretary for Transport added that the actual cost could be further lowered since in line with the practice for other major capital works projects, 25% of the costs had been included as the project reserve and contingency. The Administration would closely monitor usage of the project receive and contingency. PAS(T)4 advised that amendments to the Kowloon-Canton Railway Corporation Ordinance would be required to enable the Corporation to undertake activities relating to the construction of the project.

(Post-meeting notes: The presentation materials were circulated to members vide LegCo Paper No. CB(1) 522/96-97.)

Admin

10. Members considered the estimated fare from West Kowloon to Tuen Mun of $21 too high and enquired if the Internal Rate of Return (IRR) could be revised so as to reduce the fare level. They also remarked that the Administration should strengthen financial support for the project to relieve the burden of loan repayment and interests incurred from the debt. In response, PAS(T)4 and the Government Engineer (Railway Development) (GE/RD) explained that the fare was basically distance-related. They further advised that no decision had been made on the fare level at this stage. The current assessment only served to estimate the project IRR on the basis of an assumed fare structure. The Deputy Secretary for Transport (Transport Infrastructure) (DS(TI)) supplemented that the cost, funding and IRR mentioned in the LegCo Brief represented the preliminary estimates by KCRC and the Government consultants, which were based only on limited data of 5% of design work for the WCR project. More technical studies would be undertaken to further ascertain the accuracy of the estimates and the Administration would take into account members’ views in further discussions with KCRC regarding project cost and funding. On the capability of KCRC in taking up the project, DS(TI) advised that the Administration had reported in previous meetings the measures for improving the Corporation’s management. The Administration would closely monitor progress in this respect. Upon members’ request, he undertook to provide the Panel with the interim report on the WCR project prepared by the Government’s consultants; the full report would also be provided once available.

Admin

11. Members enquired if the construction schedule could be speeded up and if construction of sections other than the Tai Lam Tunnel could commence earlier than 1999. In response, GE/RD said that land resumption and clearance, which involved about 400 graves, were the main causes for the time taken for the project; the extension to Tuen Mun Central on the other hand involved the clearance of the San Fat Estate. As some members pointed out that residents of the San Fat Estate had been planned for resettlement at the Fu Tei Estate, GE/RD undertook to check on the latest position and revert to the Subcommittee on WCR. On the construction of the Tai Lam Tunnel, GE/RD explained that this was the critical section of the project and work should start on this part at an early stage; experience gained from the construction of Route 3 had been made use of in estimating the time required for construction of the tunnel. As the Tai Lam Tunnel was 5.7 kilometers in length compared with that of 3.8 kilometers for Route 3, an overall time frame of four years (as opposed to 38 months) was considered reasonable for completion of this tunnel section. DS(TI) noted members’ view for setting up a special team to deal with land resumption for the WCR and advised that the Administration would aim to speed up construction of the project.

12. Members were concerned with the passenger services to be provided by the Light Rail Transit (LRT) and the WCR in the Tin Shui Wai, Tuen Mun and Yuen Long areas. In response, DS(TI) and GE/RD advised that several LRT stations in the areas quoted would serve as interchanges for WCR. The KCRC would conduct a review on the design of the LRT regarding interchange arrangements and its function as a feeder to the WCR. Although a certain degree of duplications on services provided by the two railways would be expected, this should not pose serious problems since WCR was a mass transit system to service North West New Territories and the urban area and was basically different from the localized LRT.

13. Members urged the Administration to examine carefully the cross border passenger and freight rail projects as there had been increasing demand for freight transport by ship and more passengers tended to cross the border by buses; a member further suggested that the rail border crossing should be shifted to the west of Lok Ma Chau. In reply, DS(TI) affirmed the need for a new rail for cross border transport. The Administration would need more time to consult the relevant Chinese authorities on the forecast demand as well as the complex modes of operation for handling containers and freight. He undertook to report progress in a few months time. GE/RD supplemented that although the share of China-related cross border freight transport had decreased from 90% to 80%, the volume of containerized freight transport was on the increase. Dr Hon Samuel WONG Ping-wai referred to the domestic passenger service and suggested consideration be given to constructing a cross-harbour railway linking Tuen Mun to Lantau Island as this would have the least requirements for land resumption, and would improve traffic for Tuen Mun residents in a more expedient manner.

14. The Chairman invited members’ view on the work schedule for the Subcommittee on WCR. After deliberations, members agreed that the Subcommittee should meet again upon receipt of the requisite information from the Administration.

Tseung Kwan O Extension

15. The Principal Assistant Secretary for Transport 7 (PAS(T)7) briefed members on the Tseung Kwan O Extension (TKE), including the Quarry Bay Relief Works (QBR). The Governor in Council had directed MTRC to proceed with the QBR immediately as an improvement to the existing MTR system; and the detailed planning and design of TKE with a view to drawing up a project agreement for approval by Government in 1998. The construction of QBR and TKE would be completed by end 2000 and mid-2002 respectively, subject to the necessary land resumption and clearance exercises being resolved. On the cost and financing aspects, the estimated costs of QBR and TKE were $4.9 billion and $25 billion respectively, and both projects would be financed by MTRC without financial support from the Government. In response to members, GE/RD confirmed that in MTRC’s proposal a portion of the rail between Lam Tin and Quarry Bay would not be used in the proposed design for TKE. This section would be reserved for daily maintenance work by MTRC and possibly for emergency use between Lam Tin and Quarry Bay.

Admin

16. Members were concerned about the capability of TKE in coping with ridership demand in Tseung Kwan O (TKO), particularly in anticipation of the increase in population following completion of the reclamation at the TKO Bay. In reply, GE/RD advised that the design of TKE was based on a population estimate of 450,000 while allowance had been made for a further expansion to 520,000. An extension would be provided in the form of an additional interchange at the TKO station and a spur line from TKO station to the new reclamation at TKO Bay. Two interchanges would be constructed at Yau Tong and Tiu Keng Leng with the analogous design of the Mong Kok and Prince Edward stations on the Tsuen Wan Line, and these would be able to cope with the interchange flows. As regards the line capacity, this would be similar to the existing MTR system of 75,000 passengers per hour per direction. GE/RD also advised that the completion of QBR would encourage more passengers to cross the harbour via the Eastern Harbour Crossing and this would hopefully help relieve cross-harbour traffic in the Tsuen Wan Line. On the plot ratio of the property development at TKE stations, PAS(T)7 advised that the development proposed by MTRC had not exceeded the statutory limit stipulated in the Buildings Ordinance. He undertook to provide the Panel with further information for reference.

17. On the possibility of advancing construction of the TKE, DS for T(TI) explained that the project entailed the resumption of land, including a school and some 32 marine lots at Yau Tong Bay, for the construction of a depot. The Administration considered that MTRC might have underestimated the complexity involved having regard to the objections and compensation claims which would be put forward following enactment of the Railways Bill. The land resumption and acquisition process was a key concern as any delay in making land available would impact on the project programme. He also affirmed that the Administration had no intention of postponing this project pending completion of the Airport Railway.

IV Any other business

18. The meeting ended at 11:00 a.m.

Legislative Council Secretariat
29 January 1997

Last Updated on 22 August 1998