'Spending on highways, airports, mass transit systems and water systems is not being fiscally irresponsible. It is an investment in future growth and quality of life. The poor souls who shivered through the Lunar New Year on the mainland would be the first to agree.'
Glen Norris, SCMP, March 25
I question the thesis in our Observer column yesterday that spending on infrastructure is a good thing to do and we had best beware that we do not underspend.
A good number of people take this view, and I am not saying they are wrong. But there is also such a thing as overspending on infrastructure, either in general or in particular sectors. I think it apparent that the mainland is now overspending on infrastructure in general and we in Hong Kong on transport infrastructure in particular.
It certainly should not be taken as proof of too little infrastructure spending that many people on the mainland suffered from power outages during the Lunar New Year. Leaving aside that unseasonably cold weather was chiefly to blame, the fact that many of these people had access to power at all was a major accomplishment.
As the first chart shows, electricity demand on the mainland has doubled over the last five years, rising by an average of almost 15 per cent a year during the period. Rarely has any country in the world developed such a ravenous demand for power. The average for the rest of Asia has only been about 3.6 per cent a year.
But much of the power is inefficiently used. Last year the mainland produced only about US$1 of gross domestic product for every kilowatt hour of electricity consumed. Hong Kong got about five times as much GDP buck for its electricity bang. An additional difficulty is that many of the mainland's power plants are located too far from their markets, requiring long transmission systems that are particularly vulnerable to icy weather.
