• Thu
  • Dec 18, 2014
  • Updated: 4:59pm
NewsHong Kong

Cost of new government offices in West Kowloon 'too high'

Legislators give initial go-ahead to construction of a government complex in Yau Ma Tei, but warn they will be watching for cost overruns

PUBLISHED : Friday, 07 February, 2014, 2:37pm
UPDATED : Saturday, 08 February, 2014, 5:08am

A HK$6 billion plan to build a new government office complex in Yau Ma Tei has sparked fresh concerns over unchecked spending on public projects.

Legislators warned officials yesterday that the plan could be voted down in the end if lax monitoring of the use of public money was found, although the project was given an initial green light by the Legislative Council financial affairs panel.

At least one panel member compared it with the HK$6.1 billion plan for RTHK's new headquarters, which was voted down last month.

The government is planning to build the West Kowloon Government Offices on a one- hectare site next to the HKMA David Li Kwok Po College. It will comprise two blocks of 16 storeys and 18 storeys, according to the Financial Services and the Treasury Bureau.

Construction is scheduled to start next year. On completion by 2019, some department offices housed in government office towers in Wan Chai and Yau Ma Tei would be moved in phases to the new complex. Some government units now renting private offices in Wan Chai, Tsim Sha Tsui, Mong Kok and Kwun Tong would also be moved there, resulting in an annual saving of HK$150 million in rent, according to the bureau.

The government says the relocation will also help release more core business sites for commercial use. There are also plans to build new government office towers in Kai Tak and Tseung Kwan O.

Deputy Secretary for Financial Services and the Treasury Yeung Tak-keung told the panel yesterday that the West Kowloon Government Offices project could cost about HK$6 billion.

He said that was a rough estimate only, and a more accurate estimate could be made when the detailed design of the project was available by early next year, adding that legislators had to appreciate that rising costs and inflation could push up prices.

James Tien Pei-chun of the Liberal Party expressed surprise.

"It is almost as expensive as the RTHK new headquarters project. I presume the government offices tower is an ordinary office building. There is no need to build big studios for TV productions. But both projects are as costly."

Starry Lee Wai-king of the Democratic Alliance for the Betterment and Progress of Hong Kong said: "We appreciate there is a labour shortage and inflation problems. But in a private firm, the boss would not accept it if every project was over budget by 30 per cent or 40 per cent.

"I hope the government can work hard in order to contain costs. Otherwise, legislators will have no choice but to vote down the projects."

Vetoing the HK$6.1 billion RTHK proposal last month, the Legco public works subcommittee said it was too costly - almost four times the original estimate of HK$1.6 billion made in 2009.

Last month also saw a government request for an extra HK$8.5 billion for a new Liantang-Heung Yuen Wai border crossing fail to get past the development panel.



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Simply put this 6 billion into US treasury bonds for a 4% return, the government can get 240 million dollars interest per annum which is more than the rental saving of 150 million... We also need to be reminded office building is not helping the government to generate values for the public.
If we look into how crazy our government spends on infrastructure like office building, high speed rail, the increase in social service spending is too small for us to shout at....
I was just punching my calculator when I read your post....let's not forget the cost to govt by not leasing the land to a private sector developer; another $10 billion or so?
"new complex in a bid to save an annual HK$150 million in rental payments."
$6 billion to save $150 million a year in rent. Do the math and see when the rental savings match the currently forecast costs, By when the 'new' building will be antiquated, outdated and in need of replacement. Absurd!
The proposed new government office at West Kowloon is to house present offices from several districts including even the Central. Yet the Central Government Complex in Central is just in use for three years. Why can’t it be planned for more space in one go? I think it is either due to irresponsible planning or just the customary lavish way in using the revenue for construction. This time it is asking in a tune of 6 billion dollars.
So how many cubic feet of concrete is the government going to buy from the concrete factory(s)? At what cost? Let us find out.
The government blindly adheres to the policy set by the Government Property Agency ie they should reduce rental expenses through leasing less office space from the private sector. In theory, this is a sound policy but as other posters have said you need to weigh the costs of rental against the building and associated costs. The opportunity costs squandered by not leasing the land to a private developer could also be astronomical.
Thereafter some property developer will raise and says that the construction cost cannot be lowered hence the high cost of primary market.


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