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Jake's View
PUBLISHED : Tuesday, 25 September, 2012, 12:00am
UPDATED : Tuesday, 25 September, 2012, 4:46am

Can anyone get through to Carrie Lam?

A public forum on the plan to develop 787 hectares of land descended into chaos on Saturday as 6,000 people turned up, many to protest. But Chief Secretary Carrie Lam Cheng Yuet-ngor said the development was needed to meet the city's housing needs.

SCMP, September 24

 

Will someone do me a favour? Will someone please tell Carrie Lam that Hong Kong has 2.6 million homes for 2.35 million households, which means that about 250,000 flats in this town are vacant.

The way to meet Hong Kong's housing needs is to make proper use of flats already built, not to build more flats that cross-border speculators will then buy and keep empty on the reasoning that an empty flat fetches a higher resale price than an occupied one.

You would have thought that bureaucrats who make pronouncements on housing might a least do a few minutes' research on the basic facts, but members of the Leung administration do things backwards. First they start with a policy. Then they retract it. Then they hold a public consultation on it. Then they think a bit about what the policy should be. I'm not sure about the thinking bit.

Here is another possible explanation for why the government is so eager to build more new towns. We start with Article 161 of the Basic Law, which states that the government may make no decision affecting the New Territories unless it has first paid off the Heung Yee Kuk.

This article was breached when a cabal of cross-border political heavies quietly bought 87 hectares of contaminated mud on the Shenzhen River, transferred it to the Hong Kong administration after redirecting the flow of the Shenzhen River north of it, and then announced big development plans for it. The Kuk never got a look-see.

I put it to Ms Lam that the latest new town proposal is a compensation pay-off to the Kuk for being cut out of the Lok Ma Chau Loop. The Kuk will block the Loop project until it gets its pay-off, and the Loop project absolutely must go ahead. Article 162 of the Basic Law says Hong Kong must always defer to the wishes of Guangdong political heavies.

Thus, let us ignore this latest new town proposal as having very little to do with finding decent housing for bona fide Hong Kong residents who may legitimately expect more than the squalor in which illegal immigrants live. The question at hand is how to get occupants into those 250,000 empty flats. How do we make the speculator owners sell or lease them?

And I have the answer to that question. What we shall do is institute a land development tax, an annual levy based on the market value of the floor area of each and every property if developed to the full extent that its lease allows.

It would be nice if we could make this tax apply only to unoccupied property, but there would be too many ways to cheat on that provision. We shall have to make it apply to all property, but we would include commercial and industrial as well as residential.

It would serve several objectives. In the first place it would sting non-resident speculators and start to induce them to lease or sell up, thus making more flats available.

It would also push developers to build on their land banks as soon as possible rather than waiting years for better prices, as is so often the case now. Every year they wait, they would be stung again. Their empty lots would be taxed as fully developed property.

In addition, it would serve the government as a finely balanced tool of urban planning. The lease conditions established by government would closely determine where incentives are greatest for private development.

And, finally, a land development tax fully extended to all classes of property and stiff enough to have an effect on development policies could easily bring in as much as the salaries tax, which at present accounts for less than 12 per cent of fiscal revenues. Ours could be the first government in the world in a position to abolish personal income taxes. The whole world would sit up and take notice.

But it won't happen. The new town will be built and do nil to ease housing distress. Carrie Lam will then come up with yet more ideas that no one has thought out, no one wants and that will do us no good. Can anyone get through to her?

jake.vanderkamp@scmp.com

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This article is now closed to comments

recanter
The government just wants to be seen doing something.... But will there be a good result? Not likely.
tamerlane
"Here is another possible explanation for why the government is so eager to build more new towns..." yet another column based on what Jake's mate down the pub reckons. Does he ever do any research before putting finger to keyboard?
yellow_lynx_cat
If anyone have been at the event, lots of lies by the Government was revealed. The New Territories North East develop, if went ahead, would give about 170 hectres of land, yet the Government had in its hand at least 1500 hectres of land that can be used for building houses.
The plan was proposed because those affected are not indigenous people but people arrived during the 1950's from the mainland and settled there. Unlike indigenous people who could receive handsome compensation, these people will get meager compensation, not to mention their homes built with lifelong hardship, their communities will be destroyed. This is plain injustice!
SpeakFreely
One more point. I wrote to our most popular and beloved politician, hk people just love her for being tough?ms.carrie lam asking what is the point of pushing for demolishing the so called illegal structures that are safe structurally. I wrote the same letter to our dump democratic parties too but they never replied. My question is if they demolish all so called illegal structure they will displace tens of thousands of habitants and basically will push for more flats and will push up prices. Again benefits the developers. As a policy maker if she just tough to execute a very old law but not having a housing policy to address all issues, why we all say she is doing a good job? We don't need policy makers to execute old laws, that is the job of civil servants!
Secondly, I asked her why she is not demolishing the clubhouse built from inflated GFA Gross Flat Area? So called inflated buildings. But rather pushing for crashing the so illegal buildings ? Again, who will be benefit most? No brainer....
SpeakFreely
Jake at al, I think you missed the point I commented few minutes ago on other article.
First, yah there are more houses than household. But if you consider a family of 4 living in a 300 or 400 sq. ft home is ok or a poor man living in a 6x3 cage home is totally acceptable.
Second, in my other comments, who benefits most if hk GDP grew by increased population but not by increase average GDP ? Well if avg GDP is stagnant means avg people are not better off or in fact worst off as costs are keep going up. But that doesn't bother 2 major stake holders, developers and government as if the GDP pie keep growing by simply growing the population, there will always be x% of that be allocated to housing for developers to sell more house and government to sell more lands and for repeated income from resales of existing houses. No brainer. So even average hk people suffers, developers and government will gain more as basically is similar to they have recruited more cheap labor working for them. No brainer?
If you look at GDP per capital growth in the past 15 years, does it explain clearly?
captam
One solution to the lack of affordable flats is for the forthcoming correction to be speeded up a bit. And preferably in a manner which cannot be blamed on Hong Kong’s C.E. or poor Carrie Lam.
SARS did quite a good job of this back in 2002 and the BBC has just announced that we might be for some luck with a few new cases of a mysterious coronavirus beginning to spread around the world from the Middle East
Here we go again! Anyone want face masks? Only $20 each each. (parallel imports from Shenzhen)
I won’t be booking a room in a certain Ho Man Tin hotel this weekend !
Greenwash
Excellent column. The land development tax is a great idea with just a few refinements. For built-up areas, i.e. most of Hong Kong Island and Kowloon, the tax should apply to what is built rather than what could be built. We don't need every 5-10 story building in Wanchai knocked down in a matter of 2 years.
It seems that CY Leung's government's motto is government "by the Communist party, for the Communist party."
SpeakFreely
It is always a matter of balancing your book. Income form the hk governments are mostly now land sales plus taxes vs expenses are civil servants or services provided to all hk people. We have been enjoying so called low tax but in fact we are paying a very high premium for space that hk is the most expensive place to live in this planet. So we hk people or government has to ask do we want cheaper land and housing but willing to sacrifice for less service or paying more taxes? No free lunch. Or by increase our average GDP in a longer term basic to generate more tax to pay for all services. With the current model, both developers and government still benefit the most. So why would they want to change? They are happy! No brainer.
honkiepanky
Jake, how come you are always beating the drum of free-market principles but when it comes to land policy, you favor Hong Kong's system of central planning and cronyism?
What the government is proposing is to take some of the highest-valued land in the world and convert it from extremely low value, low density uses to uses more aligned with what the market demands. This is eminently sensible. Hong Kong needs more, cheaper, bigger flats. To deny this is willful blindness.
Having a land development tax is reasonable but the revenue should be used to replace land sale revenue, so the government is not so dependent on high land prices.
megafun
Totally agree with a land tax.........except that the idea of taxing a commodity tha everyone needs is not a good direction to go.........so, more public housing & abit more like Singapore.

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