Whenever you ride the MTR to work or take the KCR to commute home, hop on a plane for a holiday, leave your vehicle in a public carpark or mail a letter, you are using a service that is owned or operated by the government. As the government's finances have deteriorated, calls have increased for such services to be privatised. But which ones? The use of accrual accounting could give a better idea, Civic Exchange said in its report on the budget and public finances. And privatisation could raise funds for public works, with long-term bonds making up the balance, instead of paying for it all at once. Echoing the strongest argument for selling government-owned or controlled services, Civic Exchange said 'the private sector is generally more efficient than the public sector'. How much can Hong Kong raise from selling its assets? Of the government's $1 trillion in assets, 'some $150 billion is fairly liquid', Civic Exchange says. It adds that under accrual accounting, the balance sheet would include assets now held in the Capital Investment Fund. These include railways, the airport and 'seed capital' for Disneyland - all worth about $105.7 billion as of March 31 last year. Then there are a host of smaller entities that the government owns, such as the Cross-Harbour Tunnel, Hong Kong International Theme Parks and the Housing Authority's land and housing, retail space and car parks. As Stephen Brown, head of research at Kim Eng Securities and a contributor to Civic Exchange's report, wrote in an earlier study on government finances: 'It has to be realised that we are enormously asset-rich but currently are income poor.' Many groups seem to agree with the need to sell government assets. Sin Chung-kai, the Democratic Party's spokesman on economic affairs, recently said his party was in favour. 'The Democratic Party proposed asking the government to sell some of its assets to balance its budget,' including the tunnels, multi-storey car parks, commercial properties, railways and airport, he said. Whatever the value of these assets, under accrual accounting, the money raised when they are sold would not have such a big impact on the government's income from year to year but could help ensure fiscal discipline. For example, this year's expected budget deficit of $70 billion has been blamed partly on the delayed sale of $15 billion in MTRC shares. But under accrual accounting, the value of these shares would already have been included in the government's books and would not affect income unless they were sold at more or less than the book value. 'Thus, the ability to patch over short-term problems with extraneous items is much reduced, and a much clearer picture of the financial state of the administration can be seen,' Civic Exchange said.
