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Authority first set up to cater to a flood of migrants now struggles to stay afloat

It was the night before Christmas 50 years ago when tragedy struck the Shekkipmei squatter village.

But the fire which left 50,000 people from the village homeless  prompted the establishment of public housing in Hong Kong to cope with the influx of mainland refugees.

The government celebrated the anniversary of half a century of public housing development in Hong Kong yesterday by unveiling a commemorative plaque at the Shekkipmei estate.

Public housing has been hailed by many as one of Hong Kong's success stories, an example of how the government was able to settle families in basic but affordable flats so they could work and study and contribute to the city's  growth. But its future  is now in doubt.

The Housing Authority, originally set up to house hundreds of thousands of refugees that flooded in from the mainland from 1949, faces a growing budget deficit and other financial woes.

Some prominent academics have argued that the public housing system should be privatised  because  it distorts the property market and disenfranchises a sector of residents.

The problems were highlighted at yesterday's ceremony, which was marred by demonstrations.  Some protesters wanted lower rents while others were frustrated by the long waiting lists.

The financial prospects of the authority also suffered a major blow this year when it lost a court case that could force it to cut rents, which have been frozen since 1998, to 10 per cent of tenants' income, as stipulated in the amended Housing Ordinance.

The ruling could cost the authority an estimated $48.7 billion over the next decade.

The authority has also agreed to review rentals, which could add to its financial woes.

In the 2002-03 financial year,  it recorded a budget deficit of $775 million, and the figure is estimated to hit $524 million this year.

As a result, the authority is scrambling for ideas on how to raise money, including selling off 10 million sq ft of  retail space and 100,000 car-parking spaces worth $20 billion.

Even more bizarre ideas have been floated, including turning Home Ownership Scheme apartments into hotels.

One of the most vociferous voices against public housing is  Richard Wong Yue-chim of the University of Hong Kong's School of Economics.

He  argues that the government should get out of housing entirely. That would force people to stop depending on subsidies and start fending for themselves. It would also allow residents to feel  a greater stake in the community.

Subsidised housing has become so popular  that last year half the population lived in permanent public housing.  There are 90,000 people waiting an average of three years for a public housing flat, down from 150,000 in 1997.



Public housing teeters on the brink after 50 years