Monday's announcement of a cutback in land sales may alleviate the oversupply of flats. But following a Housing Authority decision to cut the income ceiling for the Home Ownership Scheme, thus barring tens of thousands of households from the scheme and pushing them to buy in the private market, the move leaves the Government open to the familiar accusation of kowtowing to big developers. Yet, it is fair to say that tens of thousands of owners who have seen the value of their flats plunge by more than 50 per cent over the past three years are pleased by the measures, which are likely to propel property prices on an upward path again and, in time, save them from the abyss of negative assets. Of 25 sites up for sale in coming months, only 10 small sites will be sold by auction or tender. The remainder will go on an application list, where interested companies submit a price for the land, before the Government decides whether the sums offered are adequate to release it for auction. The system was designed at a time when the overriding concern was to stabilise the market. But the increased flexibility it brings is offset, however, by other concerns. The Government's discretionary power to refuse to put up sites for auction on the grounds that the likely bids would be too low means that it now has a much bigger say on the prices of big sites. The abiding question, however, is where the money will come from to offset the shortfall in land revenues. Last year's $28 billion land sales revenue fell dramatically short of the $42 billion target. A far cry from pre-handover days when land sales made up to one-fifth of total revenue and helped underwrite a generous social welfare programme for all citizens. When Financial Secretary Donald Tsang Yam-kuen floated the idea of a sales tax two years ago as a solution to the possible emergence of a structural deficit, it was not well received. Fortunately, he was able to balance the books in the last Budget thanks to a rise in stocks bought by the Government during the financial turmoil and a massive rise in stamp duty revenue. This year, Mr Tsang's forecast of a deficit of $10 billion is likely to hit the mark. The shortfall can be covered by dipping into the $400 billion reserves; or Mr Tsang may have some tricks up his sleeve on the March 7 Budget day, such as selling more shares of the Mass Transit Railway Corporation or an issue for the Cross Harbour Tunnel. The Government does not have many family jewels it can unload. Nor is it desirable for recurrent expenditure to be funded by one-off gains from privatisation. The most challenging problem for the economy will be to find new sources of revenue to ensure the SAR can live within its means.
