Untitled - Civic Exchange

SUSTAINABLE TRANSPORT IN HONG KONG: DIRECTIONS AND OPPORTUNITIES
However, privately owned buses do not pay fuel duty or significant licensing/registration fees. Hence,
buses do not contribute to the cost of building and maintaining the basic road infrastructure upon which
they rely. In effect, travelers on buses receive a substantial cross-subsidy from other road users.
Although buses account for only about 5% of the vehicular traffic on HKSAR roads, they account for about
30% of all vehicle kilometers traveled (vkt). 59 In addition, buses account for the overwhelming share of
heavy vehicles on urban roads. Heavy vehicles impose disproportionately high road maintenance costs per
vkt. Therefore, buses are responsible for a large percentage of the costs faced by all road users, including
maintenance and congestion, but are not obligated to help finance these costs.
At the same time, the government insists that railways largely pay their own way, including the cost
of building and maintaining rail lines. The Second Rail Development Strategy (RDS2) states,
"Government acknowledges that any new railway project will have to provide a commercial return." 60
None of Hong Kong's transport providers pays for the residual - and legally allowable - external costs their
operations impose on society, including air pollution, noise, accidents, and congestion. Yet the unpriced
external costs per passenger journey in Hong Kong are much greater for buses and other road transport than
for rail transport, even after considering the emissions from the power plants that provide energy for rail
systems. 61 Road traffic also necessitates the creation of roadways and setbacks, which occupy valuable
land in space-constrained Hong Kong. Access to rail, on the other hand, tends to increase property values.
Thus, although rail is expected to be largely self-financing, it imposes by far the lowest external costs on
Hong Kong residents, while buses, which generate much higher external costs, receive a substantial
cross-subsidy.
Rail financing worldwide
Hong Kong's rail financing policy was first formulated in the 1970s when the population was less than 5
million and incomes were far lower than they are today. Today, it is not only out of step with the mobility
needs of a much wealthier Hong Kong, but as the population heads toward 8 million and beyond, it is at
odds with rail financing practices worldwide. A survey of 15 major urban systems around the world
examined how major intra-city urban passenger rail systems are financed. 62 The survey showed Hong
Kong is alone among the 15 survey participants in expecting its rail systems to be self-financing. 63
The Mass Transit Railway (MTR) Corporation, Hong Kong's major rail provider, which accounts for 25%
of journeys on public transport and 22% of all journeys in the HKSAR, is almost entirely self-financing.
About 80% of its revenue comes from passenger fares. Of the remainder, about half (10% of total revenue)
comes from the right to exploit property development opportunities created by the existence of a rail
station. The remaining 10% comes from a variety of sources, including advertising, shop rental, and
20
59 Transport Department (1999), Third Comprehensive Transport Study: Strategic Environmental Impact
Assessment.
60 Transport Bureau (2000), Second Railway Development Strategy, Hong Kong: HKSAR Government.
61 Barron, W., and Steinbrecher, N., eds. (1999), Heading Towards Sustainability Practical Indicators of
Environmental Sustainability for Hong Kong, Hong Kong: Centre of Urban Planning & Environmental
Management, University of Hong Kong.
62 Barron, W., Ng S., and Kwok, V. (2001), Financing Urban Passenger Rail: An International Survey, Hong Kong:
Centre of Urban Planning & Environmental Management, University of Hong Kong.
63 The following cities participated in the survey: (Asia/Australia) Osaka, Taipei, Hong Kong, Singapore, Sydney;
(Western Europe) London, Paris, Milan; (The Americas) Toronto, Boston, New York, Washington DC, San Francisco,
Sao Paolo (Brazil), Santiago (Chile). Because some of the data requested in the survey are potentially sensitive,
respondents were assured that individual answers would not be specifically attributed to them by name. In the
following table a broad geographic categorization is used along with a letter identifier in place of the city name.