Debate over where Hong Kong's public rental housing should be located has been long and heated, so it comes as welcome relief that government officials are finally formulating a policy. Whatever their agreed approach, it will be controversial: this is an issue of economics versus social good and there are strong arguments on both sides. Property developers contend that prime sites, such as those with sea views or in central locations, should be sold at auction to the highest bidder rather than be used to build subsidised flats. Groups backing tenants believe that this approach widens the social gap between the rich and poor and consigns the less wealthy in society to substandard living environments. There is also the view that mixed development is preferable, and that a percentage of new private housing projects should be ear-marked for public rental. In essence, the arguments are that prime sites should either be put to their best economic use or become part of a government policy of social harmony. That there has been no firm policy is surprising; half of Hong Kong's population lives in low-rent, government-built flats. The first were built 52 years ago in the wake of a fire that swept through a squatter area in Shek Kip Mei on Christmas Day 1953, leaving 53,000 mainlanders who had fled communist rule homeless. Hundreds of thousands of flats have since been built under housing programmes, with blocks and estates located wherever was considered suitable. Generally, they were on the periphery of urban areas where bigger parcels of land were available in what were then considered comparatively remote locations. Hong Kong's growth has meant many older estates now occupy prime urban land - those in Kwun Tong built in the 1950s and Wong Tai Sin in the 1960s, for example, may once have been considered in far-flung locations but are now on sites worth billions of dollars. Even those in the new towns of the New Territories, such as at Tuen Mun, are not as remote as they once appeared because of the commercial developments that have sprung up around them and the transport networks that have developed to serve residents. The land surrounding the North Point ferry terminals, where North Point Estate once stood, exemplifies the arguments. High maintenance costs led to demolition of the buildings in the late 1990s and the land, with unobstructed harbour views and next to the ferry, MTR and market, has since remained vacant. If put up for sale, it could fetch tens of billions of dollars for government coffers and the developers would most likely build luxury flats. Alternatively, with the government needing to keep on schedule with construction of 17,000 new flats a year, it could be again used for subsidised housing or, as under a never-implemented section of the 1998 Long Term Housing Strategy recommends, public rental flats could be 'selected at random throughout the development'. The latter approach was seen by the Housing Authority in a submission to the government in 1997 as a means 'to remove the possible social labelling which public housing projects carry, and therefore help to foster social harmony'. There has never been such integration, despite the arguments - the closest has been the siting of private developments opposite public estates. As thoughtful as such a strategy is, it is not founded on evidence of social disharmony between Hong Kong's poorer and better-off citizens. Nor is it consistent with property principles the world over: that there will always be places that are desirable to varying degrees and that housing costs will be reflected by that. Best, then, for the government to put economics at the forefront of its public housing policy. The extra revenue from selling prime land sites can go towards improving lives through social welfare and developing poorer areas so as to ensure their residents have better access to jobs, transportation and services. As their circumstances improve, public housing tenants can make their way through the accommodation stratum, bettering their quality of life as they go.