Officials are exploring the possibility of tapping the massive reserves of private capital in Hong Kong to increase funding for public infrastructure projects. The radical proposal is seen as a bid to alleviate the economic downturn and stimulate employment by using private funds for projects without worsening the budget deficit. Secretary for the Environment, Transport and Works Sarah Liao Sau-tung told the South China Morning Post that she had started consulting the private sector after being lobbied by industry groups to do something about the recessionary conditions. She said there was a lot of money available in the private sector which could be used to fund projects traditionally undertaken by the public sector. The facilities could then be leased to the government. In some cases, they could even be operated by a private company for the government, Dr Liao said. She did not outline exactly what she was considering for what would be a new, deeper level of privatisation in Hong Kong, but made it clear she was exploring options. Dr Liao said Hong Kong could follow the United States, Britain and Australia, where private contractors build and operate public institutions such as jails, schools and water treatment works. Her spokeswoman later said decisions concerning whether private companies could operate prisons or government schools were the responsibility of other departments. Dr Liao was referring only to the building and leasing back of the facilities, she said. Hong Kong already has a significant level of privatisation of what traditionally are considered government-provided services and facilities but that appears to be set for expansion. Dr Liao's spokeswoman said: 'Everything could be considered.' She said sewage treatment plants could be operated by companies and more roads and bridges could also be farmed out to the private sector. A number of cross-harbour tunnels and roads, including the Sun Hung Kai Properties-led companies running Route 3 in the New Territories, are run by consortiums. Officials from around the world had used Hong Kong to learn about the concept of build, operate and transfer projects such as the Cross-Harbour Tunnel, said one consultant. Funding could come from banks - where large amounts of deposits remain untapped - or from venture capitalists, said the source. The private sector has been calling for greater participation in public facilities such as schools and hospitals. Dr Liao has approached professional associations including the Hong Kong Institute of Architects for ideas about how to proceed. Institute president Patrick Lau Sau-shing said it would prepare a consultation paper on the issue. A number of community facilities such as concert halls, stadiums and swimming pools - which had previously been built by the disbanded urban and regional councils - could be handed over to the private sector to develop and operate, Professor Lau said. 'In principle, the institute supports this. Now, when the economy is not so good, the government has to create work for people,' said Professor Lau, also of the architecture department at the University of Hong Kong. Depending on how far senior officials proceed with the privatisation plans, they could expect to face opposition from public sector unions as thousands of professionals employed in areas such as the Architectural Services Department could find themselves out of work, sources warned. In March, the government said it planned to contract out 80 per cent of Architectural Services Department building projects. Privatisation of some traditional government services is proving controversial in Britain. Prime Minister Tony Blair has rejected a call from his Labour Party to review the private finance initiative under which a number of projects have proved embarrassing for the government. Examples include a new hospital where patients were forced into armchairs because of a shortage of beds - it had 75 fewer than the facility it replaced - and schools where the contracts for refurbishing failed to include 'furniture and equipment', requiring a council to spend an extra GBP6 million (HK$73 million).