The development chief yesterday accused the MTR of not doing enough to help solve the city's housing shortage.
"The MTR Corp has not launched a single project in the past three years. The government shouldn't be the only one to put more effort into boosting supply," Secretary for Development Paul Chan Mo-po said, after revealing the government would negotiate a subsidised-housing project with the corporation.
"The MTR Corp should try harder too," Chan added.
Such criticism is rare, given the government is the company's major shareholder. But government sources said the fact the MTR Corp was a listed company made it difficult for the government to exert influence over the rail operator.
Moving a step closer to what would be a major policy change, Chan said the government would negotiate with the MTR Corp about building subsidised housing on a site in Tin Shui Wai.
The company has launched only three tenders in the past year - two for a site proposed for subsidised housing at Tin Wing Light Rail station at Tin Shui Wai and one for Tai Wai station. It rejected all the bids, saying they failed to satisfy tender conditions.
The rail giant now builds only private flats and is not required to provide any public housing.
"We are considering the [subsidised housing] option seriously and will negotiate with the MTR," Chan said. "Building subsidised housing is not a bad option. But we should not disclose too many details at this stage."
Chan said the 34 sites in the land sales programme for 2014-15, and other plots, would allow for the construction of 29,930 flats. But 22 sites will require rezoning as they are in green belts or meant for other uses.
Chan expressed confidence the government would meet its housing target by providing land for 18,800 private flats a year.
Under its merger with the Kowloon-Canton Railway Corporation in 2007, the MTR Corp paid HK$4.9 billion for the right to develop property at eight sites - including the Tin Wing Light Rail station.
A real estate specialist at City University said the government's talks with the MTR would be tough. Dr Lawrence Poon Wing-cheung noted a government valuation in 2006 estimated flats built on the site would cost HK$3,450 per sq ft, compared with the HK$2,000 to HK$2,300 surveyors estimated yesterday.
"Whether the government should pay the company according to current market prices or the previous estimate would be a political decision," Poon said.
Chan also said the former Lee Wai Lee campus next to Baptist University in Kowloon Tong would be removed from the housing list so it could be used for special-needs education, an area the chief executive said in his January policy address would require more resources.