It could only happen in Hong Kong. First put up a massive public housing project of 2,470 flats and then, just when the project has been completed, call off the public housing programme, sell the project back to the developers and watch them tear it all down again to rebuild it as housing in a different style. Where else in the world have you ever seen this happen?

And it is certainly a little amusing to see the developers justify themselves in part by telling us that redevelopment will bring in more stamp duty (it will not even wet the bottom of the government's revenue bucket) and that it will create a thousand new jobs (let us tear down all our buildings and rebuild them then. We will never have unemployment again).

But Mr Leung is still absolutely right. The original project represented a misallocation of land resources. The best thing to do with it is tear it down and rebuild it for the proper use. The waste of which environmental groups now complain was in the original decision to put up public housing on the site.

That decision was wrong in the first place because the real shortage in Hong Kong is not of small flats but of larger ones. I have gone through it before in this column but it can do with repeating. Over the past 30 years real gross domestic product per capita has almost quadrupled but the average flat size has remained virtually unchanged at a shoebox of less than 400 square feet of usable space.

Hong Kong people want bigger homes and deserve to see their economic achievements rewarded with better accommodation. The chart shows you just how much the craving for it has grown recently in Kowloon alone. There is much more of the existing housing stock that needs rebuilding than the Hunghom Peninsula project.

The original decision to go with public housing was wrong in the second place because it was a prime waterfront site. It is all very well to say that poorer people may like waterfront views too but what the poor need, rather than what they may just like, is money for essential living requirements.

And one of the better ways of having that money available for them is to sell waterfront views to the rich for huge premiums. This brings in extra revenues for the public purse and the money can then be used for social programmes. Whether or not the money is actually used for them is a different matter. The point is that it can be and without proper land use the extra money would not even be there.

Thus when green groups lambaste Secretary for Housing, Planning and Lands Michael Suen Min-yeung for allowing redevelopment, they have the right man but the wrong reason. It is waste indeed but the waste was made when the land was allocated for small public housing flats. Mr Suen has now made up for it to a degree by allowing the proper use.

Of course, I could give you the darker view too. Here we have a pay-off to the big boys to keep them in support of the Tung Chee-hwa administration as its blunders mount. Make of that what you will. There could be an element of truth in it although it will certainly not account for the full story.

But, most of all, what I see here is a clear instance of how the very tight and detailed control that our government exercises over housing construction has gone awry. This was always inherent in the way we determine development through payment for changes in leasehold restrictions administered by the Lands Department.

These may be an important source of revenue for the government but we badly need reform of our archaic land policies to create a more recurrent base of land taxes and allow the market a greater say in determining what people actually want in the way of housing.