Is Hong Kong in the grip of vested interests?

Philip Bowring says the fuss over Uber in Hong Kong serves to highlight the distortions in our taxi industry, yet another example of apparent government capture by interest groups

PUBLISHED : Saturday, 29 August, 2015, 9:30am
UPDATED : Saturday, 29 August, 2015, 9:30am

Dear chief secretary, please would you explain a few decisions which suggest vested interests, not principles of government, now rule.

The Uber case is before lawyers and courts. It is a side issue. What you and your predecessors have to explain is why you have declined to issue any urban taxi licences for 21 years and only some 1,500 since 1984. In other words, a 10 per cent increase in 30 years! Your bureaucracy and influential licence-owning interests have made taxi licence ownership yet another facet of the worst type of capitalism - that of monopoly rentiers. How many bureaucrats own taxi licences?

It was foolish of the colonial government to have sold licences for capital revenue rather than receiving annual recurrent licence fees which could be adjusted in accordance with inflation and public transport needs. But that had limited damage so long as new licences were issued regularly as the population and demand grew. But, instead, you have followed a policy designed to reward the licence holders at the expense of the users, the drivers and public revenue.

Hence, now, someone who buys a licence at the going rate, which has been over HK$7 million, can expect a return, after vehicle depreciation and maintenance, of HK$200,000 a year - more than renter-drivers get for a 10-hour shift, six days a week. Licences are now sold as retirement plans, a mockery of government if ever there was one.

Despite this, taxis are cheap in Hong Kong because they are not charged for road use and use duty-free LPG fuel - another policy absurdity to please the trade.

The most radical solution to the taxi mess would be a compulsory buy-back of licences at the maximum paid at government auction - a little less than HK$2 million, meaning a total of about HK$30 billion. Licences could then be issued annually at an appropriate price. But, in this supposed citadel of capitalism, well-connected speculators cannot be allowed to lose.

Licences are now sold as retirement plans, a mockery of government if ever there was one

Instead, leave the existing unlimited licences alone but issue a few thousand more to taxi and other types of hire cars on payment of an annual licence fee. All should pay fuel duty. This would increase competition, raise revenue and provide a wider range of service levels offered via Uber and equivalents.

Before the government claims that we need to keep down the number of taxis on the road, it should be noted that there has been zero effort to restrain private car ownership, which is three times 1984 levels, and double 1994 levels. A 1994 advisory report said there should be no pre-set quota for taxi licences but efforts were needed to address manipulation of licence transfers. Nothing happened.

The taxi mess is a reminder of how the government was brought to its knees by the taxi strike and road blockage in 1984. This was more a threat to the rule of law than the Occupy movement ever was. Those behind it were not so much the drivers but the big licence owners.

The real estate developers are more conspicuous than the taxi licence mafia and one might have thought more vulnerable to public interest pressure. It is a relief to see the uproar aroused by the stitch-up involving the Leisure and Cultural Services Department, the Home Affairs Bureau, Town Planning Board and New World over the redevelopment of the Avenue of Stars and public waterfront land. But even this perverse decision in favour of specific interests has been shrugged off by your officials in arrogant disregard for due process.

In other cases involving influential groups, your departments are remarkable for their ability to allow developers to keep alive proposals which had earlier been rejected. You are, of course, familiar with Hopewell's plan for a huge hotel/conference centre on Queens Road East, opposed as out of proportion to the site, the roads and amenities. The history of this project is so long and complicated that machinations over the years cannot be summarised here. You were supposed to have resolved this as development secretary in 2008. But still it rumbles on as Hopewell plays games with various departments and a pliant Town Planning Board, and is allowed to keep alive hopes of building the rejected monstrosity. Your ruling then is meaningless now.

Then we have your supposed commitment to the rule of law. Forget for a moment your unwillingness to enforce parking laws in Central or land-use laws in the New Territories. Think instead of your refusal to enforce criminal laws relating to illegal fees, provided by loans at outrageous interest rates and often enforced through the illegal withholding of domestic helpers' passports, by employment agencies.

Police raids on a few of the well-known agencies (and financial institutions) engaged in or party to this criminal activity, could put an end to it. There are only two possible reasons for inaction. Either relevant officials are receiving favours in return for non-action or your ethnically cleansed administration cares nothing for the legal rights of brown-skinned helpers.

The last thing Hong Kong needs is the bigger government role suggested by your boss. It needs a Margaret Thatcher to sweep away the restrictive practices and selective law enforcement that your government protects.

Philip Bowring is a Hong Kong-based journalist and commentator