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Following is a question by the Hon Frankie Yick and a reply by the Secretary for Transport and Housing, Professor Anthony Cheung Bing-leung, in the Legislative Council today (January 20):
Question:
The Government is studying the introduction of quality taxi service to be operated under a franchise model, with a view to improving the current situation that taxi service varies in quality, which is caused by the highly scattered ownerships of taxi licences and management responsibilities of taxis. Some members of the taxi trade have conducted surveys on taxi service, with findings showing that respondents generally hope for improvements in the ways of hailing taxis and the service attitude of drivers, and they are in general willing to pay up to 30% more in fares for better taxi service. Those members of the trade are worried that the direction of the Government's study deviates from public expectations. In this connection, will the Government inform this Council:
(1) of the considerations based on which the authorities will decide whether or not to introduce quality taxi service, and the criteria to be adopted for determining the relevant details (including the number of franchises, vehicle types, compartment facilities and restriction on vehicle age); whether they have studied if the introduction of quality taxi service is the only solution to the current problem that taxi service varies in quality; if they have studied and the outcome is in the affirmative, of the relevant justifications;
(2) as the authorities suggest that any company holding a quality taxi service franchise be required to maintain an employer-employee relationship with its drivers, and the drivers concerned will hence be covered by the protection of the current legislation related to labour rights, such as the Employment Ordinance, the Minimum Wage Ordinance, etc., of the reasons why the authorities have proposed to add a franchise term to additionally require the franchised company to properly handle matters on drivers' remuneration, so as to ensure reasonable protection of drivers' benefits and interests; whether they have assessed if such a proposal constitutes over-regulation and violates the principle of free market operation; and
(3) as some taxi groups have now formed their own fleets to operate taxi service, and have set the standards of service level, drivers' work attitude, reward and punishment system as well as vehicle quality for fleet members to follow, whether the authorities will consider first keeping the situation in view for a period of time to ascertain if such an operation model can address the public calls for improvement in the quality of taxi service before deciding whether or not to implement quality taxi service; if they will, of the details; if not, the reasons for that?
Reply:
Acting President,
My reply to the various parts of Hon Frankie Yick's question is as follows:
In recent years, the number of complaints relating to taxi service has increased rapidly from around 6 200 complaints in 2005 to around 10 000 complaints in 2014. The majority of the complaints were about refusal to hire, "cherry-picking" of passengers and poor service of taxi drivers. Improvement of quality of existing taxi service is a common request from the public. In response, some members of the trade are actively proposing some improvement measures. The Government welcomes the trade¡¯s effort. Meanwhile, there is community¡¯s demand for point-to-point transport service of better quality and higher fares. In this connection, the Government is studying whether to introduce premium taxi service, while enhancing the regime for approving and regulating hire cars (including ways to facilitate the entry of new service providers into the hire car market). We hope that by working on the three areas together, the passenger demand on enhanced point-to-point transport service will be more comprehensively met.
The Government is studying the introduction of premium taxis through a franchise model given the limitations of the existing taxi operation model in ensuring the overall long-term quality of taxi service. At present, some 18 000 ordinary taxi licences have been issued and they are all permanent in nature. These licences have been issued without any conditions directly related to service quality. As such, we cannot impose any penalty against unsatisfactory services through the licence conditions. Regulation of taxi services can only be carried out by enforcement actions under the Road Traffic Ordinance and its subsidiary legislations. Yet, the effectiveness of enforcement is subject to constraints in respect of the high threshold for prosecution and gathering of evidence.
Moreover, the ownership of ordinary taxi licences is scattered. There are over 9 000 licence holders. Taxi owners and drivers do not usually have an employer-employee relationship. Incomes of taxi drivers are not directly related to their service quality. Thus, there is a lack of an incentive mechanism to ensure drivers' service quality. The service quality varies as it depends on the willingness or performance of individual owners or drivers.
Premium taxis are introduced to provide a passenger choice other than ordinary taxis. This helps improve the taxi service and meet the community¡¯s demand for diversified services.
Through a franchise model, the granting of time-limited franchises to a few companies to operate premium taxis will enable the Government to set service standards and monitor the operators' performance through franchise terms. Operators will have to maintain an employer-employee relationship with their drivers. Drivers' performance will be monitored and managed centrally by operators. Moreover, operators will have to be of a certain business scale in order to benefit from economies of scale. Regulation of public transport services through franchise or similar regimes is not a new idea. The most noteworthy example is the franchised bus service.
The Government is examining in detail other operational issues under the franchise, such as the number of premium taxis, vehicle types, compartment facilities, restriction on vehicle age, fare structure and level, etc. When determining the number of premium taxis, we will review the overall supply and demand of taxi service in Hong Kong, community's demand, operating environment of the taxi trade and traffic impact, etc. This is to ensure an orderly implementation of premium taxis and to continue to maintain reasonable competition and long-term sustainability of various public transport services.
As premium taxis will be a kind of public transport service, the Government, when setting the fare level, will carefully strike a balance between the higher operating cost to be borne by the operators for better service quality and affordability for the target passengers. We will also study how to adjust the fares as and when necessary. When setting service standards, we will canvass views from the public and trade as well as make reference to the experience of other places.
With regard to the rights of drivers, the vast majority of ordinary taxi drivers are currently self-employed. Their income varies mainly with the fluctuation in patronage, fares and rental expenses. For premium taxis, the future operators will have to maintain an employer-employee relationship with their drivers under the franchise, and thus be regulated by the Employment Ordinance and other ordinances relating to employees' rights. Drivers' right will be protected as their remuneration and fringe benefits will be properly handled. It is worth noting that the drivers' remuneration will become one of the operating costs. As such, such costs will be taken into account when the Government considers fare adjustment for premium taxis in future.
Some members of the taxi trade have formed their own fleet to provide hire-as-a-whole service for passengers (i.e. a different ordinary taxi service with fare to be agreed between parties), with a view to enhancing their operation and service quality. Meanwhile, as far as we know, some members of the trade are also preparing to launch a taxi-hailing mobile application that can be used by all ordinary taxis in Hong Kong for passengers' convenience. The Government welcomes the abovementioned trade's effort. The Transport Department will continue to liaise closely with the trade to assist them in implementing various measures for enhancing the taxi service. We trust that the trade's effort in enhancing the taxi service will complement with the Government's plan to introduce premium taxis and enhance hire car service, thereby improving the point-to-point personalised transport service in Hong Kong and providing diversified choices for passengers.
We plan to brief the Legislative Council Panel on Transport on the progress of the study on introduction of premium taxis in mid-2016, and will strive to complete the study in the third quarter of 2016. If it is confirmed that the introduction of premium taxis is feasible, we will immediately proceed with the necessary legislative amendments for early implementation.
Ends/Wednesday, January 20, 2016
Issued at HKT 16:56
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