Delays from Legco will hit taxpayers, warns Macleod

PUBLISHED : Sunday, 11 July, 1993, 12:00am
UPDATED : Sunday, 11 July, 1993, 12:00am

FINANCIAL Secretary Hamish Macleod has warned taxpayers would have to foot the bill if deals such as the Western Harbour Crossing franchise were frustrated by legislators.


''I am very anxious that this project should succeed and should be agreed by Legco,'' he said. ''It would be quite serious if it wasn't, because it is not just that project - it would probably be taken as a signal that we were going to find it difficult to do similar projects, and that would cost the taxpayer an awful lot of money.'' There have been suggestions the consortium that has won the franchise would pull out if agreements to fix toll fees were changed by legislators.


''Hard-headed businessmen need facts and need assurances and not ifs and buts,'' Mr Macleod said. ''[As we move towards 1997] the conditions must be clear and bankable.'' He added: ''We are not, of course, guaranteeing them a particular profit, but what we are giving them is the rules and the circumstances in which tolls will be decided and revised.'' Legislators last week suggested amending the terms of the 30-year franchise. In particular, they asked for a lower toll than the recommended $30 per car, when the tunnel opens in 1997.


They also queried a stipulation in the Western Harbour Crossing Bill that allowed the tunnel operator to automatically impose a higher toll if its rate of return did not reach 15 per cent.


Mr Macleod said it would be very difficult for banks to fund the tunnel project if increases in toll fees were subject to the whim of legislators.


''When you are asking what the public's reaction is to $30 - or I would like to say $20 toll [at today's prices] - perhaps one should also bear in mind the cost if there isn't an adequate toll; that is, a toll high enough to make this project attractive,'' Mr Macleod said.


''We would then have to put the money up ourselves. And it is not just a case of $7 billion for the Western Harbour Crossing, it will be billions for this, that and the other thing.


''I hope, in looking at this issue, those wider implications will be borne in mind.'' He said the franchise package had a ceiling for profits, as well as a floor. Profits over a certain level would be put into a reserve fund that would be used to reduce the need for future toll increases.


The consortium that will build and operate the tunnel consists of CITIC Hongkong, CITIC Pacific, Cross Harbour Tunnel Co, Kerry Holdings and China Merchants.