THE controversy surrounding the Western Harbour Crossing Bill was highlighted last week when the pro-China Wen Wei Po called for the legislation to be passed without amendment and criticised some legislators' opposition as a crude attempt at vote grabbing. This was seen by some as a clear signal of China's support for the franchise. However, this kind of interpretation does more harm than good. Wen Wei Po's argument treats the bill as Hongkong's internal affair. This ''local affairs'' viewpoint is correct and should be encouraged. It was agreed at the Joint Liaison Group (JLG) that the franchise, which extends beyond 1997, could be granted. But whether it actually will depends entirely on the administration's judgment and on whether law makers pass the bill. Legco's consideration must not rest on the fact that an agreement has been reached at the JLG. It must be based solely on the answer to the question of whether the franchise proposals on offer serve the best interests of Hongkong. What does the franchise actually entail? Here is a bill that proposes to charge a motorist $30 each time he passes through the crossing when it opens in 1997. Thereafter, the toll would be increased automatically every four years by a formula which meansthat by 2021, he will have to pay $105. The formula is contrived to enable the consortium to earn an average net return of 16.5 per cent on the $25 billion investment. And according to the Secretary for Transport, K. Y. Yeung, ''nobody, not the Legco, not the Exco, not the Government. Nobody'' is to touch it. The bill could not be amended. To quote the Secretary again: ''I am not pointing a pistol at your heads. But I am putting before you the reality of the market.'' Legislative councillors must face up to this arrogant challenge and defend the public's interests. The crux of the matter is simple. The bill is asking tunnel users to pay an excessive toll in order to give the consortium a guaranteed return on its investment. As a commercial concern, the consortium is, of course, entitled to look forward to a satisfactory return. As the sole tenderer, it has been in an even stronger bargaining position to ensure it gets one. I do not doubt for a moment that the Government pushed hard during negotiations. But is there any alternative? The answer must be yes. Simple arithmetic proves the point. Let the Western Harbour Crossing be built by the Government with public funds, at its own estimated cost of $6.5 billion. Assuming that the daily traffic volume is 100,000 cars during the first 10 years, starting mid-1997, and 120,000 during the following 16 years, a toll of $20 would yield an internal rate of return of 7.7 per cent. If the toll is increased by $10 in 2005 and again at 2013, the rate of return would rise to 9.8 per cent - by any standard, a very respectable return on an infrastructure project. But the public would have to pay much less; note that the $6.5 billion outlay is spread over four years. The Government have taken it as read that the Western Harbour Crossing must be privatised. No justification for this decision has been given. No analysis of costs and benefits has been undertaken. This is merely an ideological position. The crossing proves the case that some infrastructure projects simply cannot go private, at least not without detriment to public interest. The argument that financing the tunnel from public funds would deter the privatisation of other infrastructure projects can equally be dismissed. There is no fundamental reason that Route Three or airport the railway projects should be privatised. Each project must be considered from the point of view of public interest. If there is money and sufficient profit to be made, private investors will always take part. The present crisis has arisen because the Government has consulted neither Legco nor the public. It has chosen to ignore Legco members' views and now expects law makers merely to rubber stamp the bill. The Government has also argued that if the tunnel was financed with public money, cash earmarked for other community projects would need be withdrawn. It must be made clear there is plenty of money in the Government coffers. If the Government wished, it could issue bonds to raise funds, as current interest rates are very favourable. The main constraint on Government financing is the administration's own financial criterion which restricts public spending from increasing beyond the projected gross domestic product growth rate. This is again another ideological hurdle which seeks to contain the size of the public sector. But as I have argued, even purely from an investment point of view the tunnel would still be a worthwhile public investment. The community would benefit from a regular toll income and tunnel users would benefit from a much lower charge. I have nothing against privatisation, but I do not support privatisation on ideological grounds. Whether or not a project or a service is privatised must be judged on its own merits and how it best serves the public. The bill before Legco to build and operate Western Harbour Crossing fails miserably in this regard. Luk Shun-Tim is deputy chairman and infrastructure policy spokesman of Meeting Point. He is also a chartered civil engineer.
