Panel on Transport (Minutes) 12 Sept 97

PLC Paper No. CB(1)362
(These minutes have been
seen by the Administration)

Ref : CB1/PL/TP/1

Panel on Transport

Minutes of meeting held on Friday, 12 September 1997, at 8:30 am in Conference Room A of the Legislative Council Building

Members present :

Hon Mrs Miriam LAU Kin-yee, JP (Chairman)
Hon CHEUNG Hon-chung (Deputy Chairman)
Hon WONG Siu-yee
Hon LEE Kai-ming
Hon Mrs Selina CHOW, JP
Hon Henry WU
Hon CHAN Choi-hi
Hon CHAN Wing-chan
Hon CHAN Kam-lam
Hon CHENG Kai-nam
Hon LAU Kong-wah
Hon CHOY Kan-pui, JP
Dr Hon TANG Siu-tong, JP
Dr Hon LAW Cheung-kwok

Members absent :

Hon Edward HO Sing-tin, JP
Dr Hon Raymond HO Chung-tai, JP
Hon YUEN Mo
Hon Andrew WONG Wang-fat, JP
Hon NGAN Kam-chuen

Public officers attending :

All items

Mr Kevin C M HO, JP: Secretary for Transport (Acting)
Miss Nancy LAW, JP: Deputy Secretary for Transport (Transport Management)
Mr Isaac CHOW, JP: Deputy Secretary for Transport (Transport Services)
Mrs Fanny LAW, JP: Commissioner for Transport

Item IV

Mr Davey CHUNG: Principal Assistant Secretary for Transport (T) 2
Miss Glenda CHAN: Principal Economist
Mrs Judy LI: Assistant Commissioner for Transport/Ferry and Paratransit

Item V

Miss Maureen WONG: Principal Assistant Secretary for Transport (T) 3
Mr LI Shu-ming: Assistant Commissioner for Transport/Technical Services

Item VI

Miss Eliza LEE: Principal Assistant Secretary for Transport (T) 1
Mr K T LI: Principal Assistant Secretary for Economic Services
Ms Zina WONG: Assistant commissioner for Transport/Bus Development

Clerk in attendance :

Mr Andy LAU,: Chief Assistant Secretary (1)4 (Acting)

Staff in attendance :

Ms Pauline NG,: Assistant Secretary General 1
Mr Daniel HUI,: Senior Assistant Secretary (1)5

I. Confirmation of minutes of previous meeting
(PLC Papers No. CB(1)92 and 207)

The minutes of the meetings held on 22 and 23 July 1997 were confirmed.

III. nformation papers issued since last meeting

2.Members noted that no information paper had been issued since the last meeting.

III. Date of next meeting and items for discussion
(List of outstanding items for discussion)

3.The Panel agreed that the following items would be discussed at the next meeting on 17 October 1997:

Operation of the Octopus ticketing system;
Franchise of ferry services; and
Compatibility of the existing autotoll systems.
(Post meeting note: With the concurrence of the Chairman, the agenda for the meeting on 17 October 1997 had been revised in order for the Administration to consult the Panel on applications for bus fare increases from Kowloon Motor Bus Company (1933) Limited, China Motor Bus Company Limited and Citybus Company Limited, and additional fares for taxi passengers using cross harbour tunnels. To allow sufficient time for discussion, the meeting was advanced to start at 8:00 am. The items originally scheduled for discussion on 17 October 1997 would be discussed at a special meeting scheduled for 22 October 1997).

4.The Panel also agreed to include the following in the list of outstanding items for discussion:

Electronic road pricing scheme;
Bus fire accidents;
Safety measures for pedestrians;
Ma On Shan rail; and
Improvement to road markings for restricted zones.

5.In connection with the subject on using liquefied petroleum gas as a fuel for vehicles, members noted that they were invited to attend the meeting of the Environmental Affairs Panel on 19 September 1997 at 9:10 am for a discussion on pilot scheme for liquified petroleum gas taxis. Depending on the outcome of the discussion, the Panel would determine whether it was necessary to follow up the subject.

6.The Chairman informed members that after the Chief Executive's Policy Address on 8 October 1997, the Panel would need to hold a special meeting to receive a briefing by the Secretary for Transport. Members would be informed of the details for the meeting.

(Post meeting note : With the concurrence of the Chairman, the special meeting had been scheduled for Tuesday, 14 October 1997 at 11:30 a.m.)

IV. Taxi Licensing System
(PLC Paper No. CB(1)214(01) and 186)

7.An information paper on " Taxi Licence Premiums" was tabled at the meeting.

(Post meeting note : The paper was circulated to members vide PLC Paper No. CB(1)234 after the meeting.)

8.At the invitation of the Chairman, the Assistant Commissioner for Transport/Ferry and Paratransit (AC/FP) briefed members on the salient points of the information paper. She said that the review on taxi licensing system was conducted in response to concerns raised by members of the public about the sharp increase in taxi licence premiums in 1996 and early 1997. In March 1997, the Transport Advisory Committee reconvened its Working Group on Taxi Policy Review (the Working Group) to undertake the review. According to findings of the Working Group, there was no evidence to suggest that increases in taxi licence premiums had adversely affected taxi services. However, it was considered that the existing taxi licensing system, which provided individuals with a right to own and operate a taxi on a permanent basis, had created a fragmented and individualistic trade which was not conducive to effective monitoring. In order to reinforce the Administration's monitoring and to pave the way for more competitive taxi services, the consultative paper issued by the Working Group set out six options to tackle the issue of taxi licences.

9.Deputy Secretary for Transport/Transport Services (DS/TS) added that the options given in the paper were by no means exhaustive and the Working Group had not formulated its own views on this subject. The Administration would carefully assess the implications of each and every option, having regard.

10.A member considered it inappropriate to link the quality of taxi service to the licensing system. She opined that the review should have focused on how to improve taxi services rather than the licensing system. She also cautioned that any change to the taxi licensing system might adversely affect the interest of existing taxi licence holders.

11.The Commissioner for Transport (C for T) advised that given the quality of taxi services was determined to a large extent by the conduct and behaviour of individual taxi drivers, the current fragmented nature of the trade made it difficult for the Administration to monitor and improve taxi services. She said that there were currently around 18,000 taxi licences. Of which, around 13,000 were held by taxi drivers themselves. In view of the permanent nature of the existing taxi licences, not much could be done by the Administration even if they were not satisfied with the licencees' performance. Against this background, if taxi services were to be provided by organized entities such as private companies or public corporations, the Administration could issue new licences with specified terms and conditions to govern their operations. If considered necessary, their licences could be suspended or revoked. The ultimate objective was to put in place a suitable regulatory framework to improve the quality of taxi services. As in the case of the bus companies, fixed-term taxi licences would enable the Administration to review the performance of the operators before extending the licences. It was hoped that the overall taxi service provided by individual operators could be improved as a result.

12.C for T advised that the Administration was aware that any changes to the taxi licensing system should not affect the rights of existing taxi licence holders. The Administration would take into account the views expressed by the legislature and the parties concerned, and strike a balance to preserve the rights of existing taxi licence holders on one hand whilst establishing a regulatory framework for monitoring and improving taxi services on the other. Regarding the impact of the review on taxi licence premium, she said that it was difficult to assess at this stage. The introduction of short-term licences might not necessarily affect the premium. The demand for the existing taxi licences might even be greater as they were not subject to any time limitation.

13.C for T advised that a series of improvement actions had been introduced to improve the quality of taxi services over the years, for example, the issue of taxi fare receipts. The Working Group also received other suggestions to improve taxi services, including the introduction of an incentive scheme whereby both taxi-drivers and taxi-owners contributed to a fund, and taxi drivers with consistently good performance would receive a lump sum cash payment after a specified period of time. The Administration would continue to look for other means to improve the quality of services.

14.A member did not agree that increases in premiums had no direct effect on taxi fares and said that the Administration should gradually increase the number of taxi licences with a view to enhancing competition, meeting the transport need of commuters and curbing speculations. In reply, AC/FP advised that in considering the need for issuing more taxi licences, the Administration would take into account the demand for taxi service, operating conditions of the trade and associated impact on traffic. Whilst the Administration was concerned about the rising taxi licence premium, it was not a relevant factor for considering whether to increase the supply of taxi licences. On the basis of findings of surveys on the trade that the average waiting time for taxis was decreasing, a total of 410 new licences were issued between September 1994 and May 1997. The Administration would closely monitor and review the situation to keep pace with the transport need in Hong Kong.

15.C for T explained that the taxi licence market had served two different purposes. Taxi licences had long been bought and sold as a licence for operating a taxi and as an investment. Whilst the Administration would monitor both the investment market and the transport market, the Transport Department would focus more on the latter to ensure an adequate supply of taxis to meet the transport needs in Hong Kong.

16.On the investment aspect of the taxi licence market, the Principal Economist advised that the increase in premium might be attributable to a limited supply of new taxi licences. However, taxi licence was also well received by investors as a tool for investment as taxi licences were perpetual in nature with no possibility of physical deterioration, they were easily transferable at low cost, mortgageable and could provide financial leverage. Whilst it was not the intention of the Administration to see a taxi licence being bought and sold for investment purpose, they should not intervene in the natural development of such a market. She said that there had been a close correlation between movements in taxi licence premiums and interest rates. When the cost of borrowing fell, investments in taxi licences and hence the premiums increased. Since taxi licence premiums were subject to market fluctuation, the Government would not take administrative actions to deliberately suppress the investment market. A member disagreed that the evolution of taxi licence into an investment tool was a natural development of the market. She opined that this could be avoided if taxi licences with time limits were issued at the outset.

17.In response to the enquiry on the relationship between taxi licence premiums and taxi fares, AC/FP advised that there had been no direct relationship between movements in taxi licence premiums and changes in taxi fares and taxi rentals. The level of taxi fare increase was dependent on such factors as fuel, maintenance cost and depreciation. Increases in premiums had therefore no direct effect on taxi fares. Regarding taxi rental, it was purely a matter of demand and supply. Given the existing operating environment and the demand for taxi, the rentals had risen only moderately. In fact, taxi rentals remained unchanged even after the last fare revision in April 1997.

18.A member remarked that there might be a need to introduce administrative measures to tackle irregularities in the market and to improve the quality of taxi services. He therefore considered that the options under consultation could be further examined.

19.The Panel opined that in reviewing the subject matter, the Administration should also assess the impacts caused to taxi drivers with a view to preserving their livelihood. The Administration noted the Panel's views.

V. Safety Belts & Child Restraints
(PLC Paper No. CB(1)214(02))

20.At the invitation of the Chairman, the Assistant Commissioner for Transport/Technical Services (AC/TS) briefed members on the salient points of the information paper. He said that since 1995, new standards for seat belts and child restraint devices had been developed in UK, Europe, Australia, New Zealand and USA. There were improvements on the effectiveness of the restraining devices and ease of use and reduction in the chance of incorrect usage, thereby providing better protection to drivers and passengers. These new design standards had been closely examined by the Transport Department and were considered suitable for use in Hong Kong. As such, no separate test was considered necessary before the products complying with these standards were launched in the market.

21.In order for the new products to be registered for use in Hong Kong, vehicle manufacturers needed to attach quality marks on their products with the specification number, mark or symbol indicating compliance with any of the approved standards. The Administration would regularly examine other design standards that might be developed and accepted by overseas authorities. As for the pace of development, AC/TS advised that this would be difficult to say as the programme would be subject to the progress of researches undertaken in overseas authorities.

22.On fraudulent use of products not complying with approved standards, AC/TS advised that this would be subject to the control of the Hong Kong Police Force.

23.On the different standards adopted by different overseas authorities, AC /TS advised that whilst there were some variations among products, they all met minimum safety standards. The approved products were also found to be effective in protecting drivers and passengers by overseas authorities. A member opined that since new products complying with improved standards emerged in the market from time to time, it would be desirable to adopt the latest standards.

24.On arrangements for product recall, AC/TS advised that in general, faults in products were more related to the manufacturing process rather than the design standard. The Principal Assistant Secretary for Transport (T) 3 added that the Administration maintained close contacts with vehicle importers. In case product failures were reported in overseas markets, vehicle importers would immediately liaise with the Transport Department to sort out the detailed arrangements for recalling products in the market.

VI. Kowloon Motor Bus Co. Franchise
(PLC Paper No. CB(1)206(01))

25.On the inclusion of an arbitration provision in the Public Bus Services Ordinance to allow Kowloon Motor Bus Company (1933) Limited (KMB) to seek arbitration if a reasonable return on investment was not attainable, the Principal Assistant Secretary for Transport (T) 1 (PAS/T1) advised that in the course of the negotiation with KMB over the franchise renewal, the Administration undertook to examine, inter alia, whether and how far a right to arbitration should be provided in the Ordinance. DS/TS advised that there was no specific timetable for the completion of the review but the Administration would conduct the review as soon as possible. The present thinking was to conduct it in connection with the overall review of the fare increase mechanism for public transport services.

26.Noting that all existing bus franchisees were now operating their bus routes on a non-exclusive basis, a member asked if the current restrictions on residents' services could be relaxed and introduction of additional services be allowed in this respect. In reply, the Assistant Commissioner for Transport/Bus Development (AC/BD) advised that whilst the provision would enable the Administration to open the bus services market in case circumstances warranted, it was not the intention of the Administration to allow picking up or setting down activities of residents' services along the routes. She advised that residents' services operating mainly to and from housing estates during peak hours supplemented services provided by the franchised bus operators. In considering the introduction of new residents' services, the convenience of commuters would be one of the many considerations. Other factors to be considered included the existing services of franchise operators and their performance, the percentage of route duplication, the financial impact on existing franchise operators and the resulting impact on road traffic. The Administration would constantly review the coverage of bus network with a view to meeting the transport need of commuters.

27.Responding to a member, C for T advised that under the new franchise, the Administration would conduct a mid-term review after the fourth year of the franchise to evaluate KMB's performance. Furthermore, the routes granted to KMB were non-exclusive. If the performance of the company was not satisfactory, the Administration could consider inviting other operators to provide replacement bus services.

28.Regarding the loss-making routes, AC/BD advised that under the new franchise, KMB was required to continue to operate those loss-making routes which the Transport Department considered necessary in order to cater for the transport needs of the commuters. In considering the application for bus route cancellations, the Administration would carefully examine the impact on the travelling public. They would not approve such applications if they were not satisfied that affordable alternative services were available in the market with adequate capacity to absorb the additional demand so generated.

29.Members noted that with the abolition of the Profit Control Scheme under the new franchise, any credit balance in the Development Fund would be applied to offset pressure on fares in assessing the first fare increase applications made by KMB following the grant of the new franchise. PAS/T1 advised that the cut off date for the calculation of the Fund was 31 August 1997, concurrent with the expiry of the former franchise, and the balance of the Fund was being computed.

30.In response to a member's question on the yardstick for " reasonable return " , C for T advised that the Administration would take into account the operating costs and revenue, performance and public acceptability in processing fare increase applications.

31.Noting that a subsidiary company of KMB, the Long Win Bus Company, had been awarded a new franchise to operate 12 bus routes to and from the new airport, a member enquired about the financial arrangements for the two companies. In reply, PAS/T1 advised that they should maintain separate accounts and be governed by their respective franchises and hence, there was no direct relationship between the two.

32.Noting that the location of the Lai Chi Kok Depot was a source of constant complaint of environmental nuisance by residents in Mei Foo Sun Chuen, a member urged the Administration to speed up the site searching exercise for a replacement depot on the West Kowloon Reclamation. The Administration noted the member's request.

VII. Any other business

33.There being no other business, the meeting ended at 10:30 a.m.

Provisional Legislative Council Secretariat
21 October 1997