Hong Kong housing

How wealthy Hong Kong can tackle vested interests with ‘chequebook reform’

N. Balakrishnan says that, with political consensus difficult to achieve, Hong Kong could leverage its bountiful reserves and try the time-tested method of using money to advance the greater good

PUBLISHED : Monday, 25 September, 2017, 3:52pm
UPDATED : Monday, 25 September, 2017, 7:10pm

It is fashionable to bemoan the lack of reform in Hong Kong, in everything from housing to education, and blame it all on the so-called “lack of political consensus”. One section of the people say political consensus is not possible because there is no “universal franchise”, ignoring the fact that from the UK to the US, there is political gridlock despite universal franchise.

Hong Kong has plenty of tools at its disposal that can be used to initiate, speed up or implement drastic reforms. One is money, and the government has plenty of it.

Hong Kong’s problems by and large do not stem from absolute poverty, but from institutionalised vested interests: in everything from real estate to taxis, and monopolists in business and the professions. It may be time now for “chequebook reform”.

Hong Kong’s problems by and large stem from institutionalised vested interests

There are many precedents. Britain “abolished” slavery in 1807 but its parliament was full of “slave” vested interests that delayed implementation until 1833. The government could implement the “emancipation” only after it granted compensation of £20 million to the slave owners – billions in today’s money – achieving reform by rewarding the bad guys and vested interests.

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The US, in fact, has institutionalised using money to bring about reforms. It is common for the federal government to mandate “targets” in everything from health care to education for state governments to implement, and give federal grants only to those that meet these “targets”.

Hong Kong should use the advantages it has, whether or not it is morally superior

It makes sense for Hong Kong to spend its way to reform. Offered good money, I am sure taxi licence owners would stop pressuring the government to arrest Uber drivers. The public may finally get taxis that are clean and some drivers may even own their taxis, motivating them to provide a better service.

The cross-harbour tunnel operators would be more than happy to take billions and invest it elsewhere. The government could then finally rationalise the various tunnel fees, and at least ease the Central and Wan Chai gridlock.

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Such funding may require some major legal changes, as so much of Hong Kong’s revenue is put into silos that can only be used for pouring more concrete. But surely famous management consultants could be hired for a good fee to tell us that we will be better off spending on services and reform. Faced with “consultants”, political parties and vested interests may agree to change the law to open the spigots.

Other governments have to try the “political” route to reform not because they think this route is morally superior but because their kitty is empty. Hong Kong should be imaginative and use the advantages it has, whether or not it is considered morally superior.

N. Balakrishnan is a former foreign correspondent and an entrepreneur in Southeast Asia and India