Community funds would restore some credibility for the Hong Kong government
Instead of pouring public money into fancy mega projects, it would be better spent on improving the lives of the people in the name of social equity
By now, it should be clear that large-scale infrastructure projects so loved by our post-1997 governments have only served to delegitimise it politically.
Over the past 20 years, from Disneyland and the Kai Tak Cruise Terminal to the cross-border high-speed rail and the Hong Kong-Zhuhai-Macau bridge, the official estimates of costs and benefits have all been proved seriously off. The government is seen to be either overselling or crying wolf, sometimes both.
This is often said to be the result of collusion between the government and big business. Maybe, maybe not. I think it has more to do with the current system of public works funding, and the distortions it forces into the policymaking process.
In simple terms, when you are sitting on a huge pile of money that keeps coming in year after year and cannot be used for anything else than public works, you, too, would think of spending it on the single mega project – to make work for bureaucrats and aggrandise yourself while creating jobs, albeit only temporarily.
Our system of public financing is dysfunctional, but there is no will to overhaul it. The government wants to make housing more affordable, yet everything it does is pro-cyclical in encouraging high land value and property prices.
The windfalls from land premiums, which account for between 20 per cent and 25 per cent of annual government revenue, go directly into the capital works reserve fund, which stood at slightly over HK$100 billion last year.
As the fund’s name implies, the money has to be used for capital works. That’s not completely accurate, though. A clause in the fund, set up in 1982, affirms that “the Financial Secretary may transfer from the Fund to the general revenue any balance in the Fund which is not required for the purposes of the Fund”.
But financial secretaries are loathe to do it, for obvious reasons. However, if the government thinks current property prices are excessive, must it not logically conclude that the premiums it has been charging at land sales are excessive as well? The one reinforces the other.
High real estate prices benefit the few but undermine the quality of life for everyone. It’s only social equity to feed excess funds from land sales back into the community for its betterment rather than blindly commit to more “landmark” capital works.
It may even help restore some credibility and legitimacy to the government.