Lai SeeInfrastructure spending is declining, says Starry Lee

This one is for Starry Lee Wai-king, who while talking on RTHK's Backchat yesterday about the budget, said that the government's spending on infrastructure was declining. Starry, it will be recalled is a member of the Executive Council, the Legislative Council and the Democratic Alliance for the Betterment and Progress of Hong Kong (DAB). Why, she was asked, was the government so keen to spend on infrastructure. She waffled about the need for Hong Kong to stay competitive, and to provide more facilities for visitors and so on.

But we all know why the government spends the money. The money goes into the capital works reserve fund from the premium from land sales. It's spent because it's there. It is an aspect of the absurd organisation of government finances. Obviously hospitals and schools are necessary, but it also serves to fund a raft of projects for political reasons that certainly cannot be justified on economic grounds. The Hong Kong-Macau-Zuhai bridge and the express rail link are two such projects. Capital works expenditure forecasts in the 2006/07 budget until 2010/11 range from HK$29 billion - HK$39 billion. In the latest budget it goes from the current year's HK$88 billion, to HK$77 billion next year, and then HK$98 billion for the three subsequent years. Not even the government can make that look like a decline in expenditure.

We see that the world of independent research houses is alive and well. Jim Walker, founder of Asianomics and the firm's chief economist, says that he is expanding and has announced the appointment of Peter Rawle and Tathagata Guha Roy as directors and co-heads of its Forensic Asianomics research product.

The raison d'être of independent research houses, of which there are now a number, is that their research is not conditioned by the need to generate commission income, which introduces a conflict of interest. We last caught up with Walker in late 2010 when his former colleague at CLSA, Gillem Tulloch, joined him as managing director of Forensic Asia. The operation has evidently expanded since then. "The addition of TG and Peter to the Asianomics team marks the next step in our firm's development," said Walker. This next step will take place without Tulloch who at the end of last year, amicably, we are told, left to once more go off and do his own thing.