Private cash mulled for schools and hospitals

PUBLISHED : Monday, 16 May, 2005, 12:00am
UPDATED : Monday, 16 May, 2005, 12:00am

But calls for laws to govern partnerships on major public projects are dismissed

Schools and hospitals could be included among a range of public services in Hong Kong opened to private investment.

Duncan Pescod, head of the Government Efficiency Unit, said public-private partnership (PPP) projects were better than government ones in terms of quality control. But he brushed aside suggestions that legislation would be needed to govern such schemes, and he insisted that the new model was not designed to avoid scrutiny by the Legislative Council.

'In PPP, payment is usually involved. You can penalise a private company by not paying if it fails to deliver quality services. But you cannot penalise a government department if its service standard is not up to [a certain] level,' Mr Pescod said yesterday.

Under the PPP, public works and services are paid for and operated by private companies under government control.

Unlike normal government infrastructure projects, where finances have to be approved by lawmakers, PPP schemes can bypass Legco because they do not necessarily involve public expenditure.

Last month Mr Pescod led government representatives from 29 departments on a visit of several PPP projects in England and Scotland. The delegation visited water and sewage treatment centres, waste management schemes, prisons and facilities for fire and flying services.

Other facilities included a hospital, schools, community sports facilities, housing projects, a tram system, transport ticketing, radio communications and information technology systems.

'I would say 90 per cent of the PPP projects will involve government spending, which means it has to go to Legco for approval,' he said. 'The projects are also subject to government audit examination.

'It is wrong to think the government is selling off public services or infrastructure.'

He added: 'The government would continue to have a very active role. It has to administer the contract.'

Mr Pescod described the scheme as 'a new way of providing services' and 'every government department, except the Constitutional Affairs Bureau, has the potential to turn some of their works into public-private partnership projects'.

The controversial West Kowloon Cultural District is a PPP project - and legislators are furious because they have no voting power to block the development.

The government has been considering expanding the PPP scheme since last year, particularly for infrastructure projects, as a way of funding public developments it cannot afford to pay for.

Mr Pescod said that by leaving some government services and infrastructure to the private sector, 'the administration can concentrate on its core competencies'.

In Britain, PPP was one of Prime Minister Tony Blair's New Labour initiatives to reform public services.

Britain has almost 700 such projects with a combined capital value of GBP40 billion ($580 billion). Each project opened to the private sector must be valued at more than GBP20 million.

Joint effort


West Kowloon Cultural District

A leisure and cultural centre in Kwun Tong

An ice rink, bowling alley and park in Tseung Kwan O

A cultural centre in Tai Po

The Sha Tin Water Treatment Works

Conservation of 12 environmentally sensitive sites in New Territories


Prison redevelopment at Lowu and Chi Ma Wan

Provision and management of cemeteries, crematoriums and columbariums

Upgrade of Pillar Point Sewage Treatment Works

Construction of Yung Shue Wan and Sok Kwu Wan Sewage Treatment Works

Source: HK government