Why Hong Kong’s grandstanding lawmakers should shut up and approve HK$32bn Kai Tak Sports Park

Given previous and current white elephants like the bridge to nowhere and the ghost-town cruise terminal, politicians’ fear and doubt are understandable – but the latest mega-project should actually benefit Hong Kong’s citizens

PUBLISHED : Friday, 19 May, 2017, 4:08pm
UPDATED : Saturday, 20 May, 2017, 8:02pm

Recent meetings of the government’s Public Works Subcommittee (PWSC) have been fascinating viewing. There’s a sentence no-one has ever written.

In case you’ve had better things to do, the Home Affairs Bureau (HAB) wants the PWSC to recommend to the Finance Committee that it approve HK$31.898 billion to start construction on the Kai Tak Sports Park. We are eight hours in to the festival of bloviating, with more scheduled for Saturday.

The Sports Park, first proposed in the Tang Dynasty (okay, it was ‘only’ 20 years ago), will be a much-needed boon to sports and music fans in the city, as well as providing much-needed community facilities and public space, and finally making some attractive use of our amazing harbour.

It is also, obviously, expensive and requires a new-in-Hong-Kong approach to tendering and implementation – lawmakers, mainly pan-democrats, have seemed determined to stymie it.

“You’re throwing Hong Kong people’s money into the sea,” blasted ‘Long Hair’ Leung Kwok-hung, before ranting away like me after a pint or two. He called the HAB’s consultants “insultants” and somehow even managed to blame them for the global financial crisis.

The main sticking points are the procurement model, a so-called ‘Design-Build-Operate’ (DBO) scheme and its ‘bid incentive’ proposal.

The 28-hectare project on the site of the former airport will incorporate a 50,000-seat stadium, 10,000-seat indoor arena, 5,000-seat community sports ground, 57,000 square metres of shopping space, a 3,000 square-metre ‘dining cove’, hotel, offices, public park, and more.

HK$31.9 billion Kai Tak Sports Park won’t be a ‘fat pork’ contract, government insists as lawmakers continue criticisms

According to HAB, it must “promote sports in the community, support elite sports and make Hong Kong a hub for major international sports events ... [and] address the demand for venues of entertainment and other large scale community events”, and be a “vibrant” public space.

The scale and complexity is such that the HAB’s consultants, after analysing nine procurement models, reckon DBO best ensures the government’s goals are met and its financial risk limited. I was convinced, having read the paper presented to the PWSC; it seems many lawmakers did not bother to do so.

Under DBO, a consortium of architects, builders, retail and dining companies, event organisers etc, will plan the design and construction then run it under a 25-year contract (five years for construction). The government pays for design and construction then leaves things to the professionals, collecting an annual fee and revenue share.

To attract bidders, it is proposed that unsuccessful tenders will receive up to HK$60 million of the cost of their bid back, (a maximum ‘cashback’ of HK$180 million assuming four bidders).

These issues have bewildered and angered many politicians.

Some say the government should run everything, an obvious recipe for complete disaster.

Others argue the project should be a joint venture (like the hugely successful Disneyland and Asia-World Expo) or designed and built by one party and run by another (like the hugely successful Kai Tak Cruise Terminal). DBO aims specifically to avoid birthing more white elephants like those.

Politicians slam plans to give HK$60m ‘cashback’ to unsuccessful bidders for Kai Tak Sports Park

Some lawmakers think the bid incentive will encourage back-of-a-fag-packet bids thrown together over lunch to get a HK$60 million payout. The wily HAB, somehow foreseeing this possiblity, says extensive pre-qualification, cost audits etc will be carried out on the bids.

Interested consortiums will have to spend between HK$100 million to HK$200 million each, for a one-in-four shot of winning the tender; word from industry professionals is that this is a non-starter without the sweetener.

Other criticisms are that the winner will cash in hand over fist – but construction margins are estimated at around 2-3%, while HAB projections say the operator might average HK$200 million a year in the first five years after the park opens – not deducting the share it will have to return to the government. Not obscene sums, and when did making some money become anathema in Hong Kong?

Another argument is that Hong Kong doesn’t have enough major sports events to justify the project, but that’s because our facilities are inadequate.

Hong Kong’s Kai Tak Sports Park plans are taking shape nicely – but will the government ever approve them?

The criticisms are understandable.

The government has saddled us with many projects of dubious utility that few wanted – as well as those mentioned above, the bridge to nowhere and the high-speed train to the motherland obviously stand out. The Lantau Mega 2030 Concrete-Pouring Plan and the Super Bay Area Connector Scheme or whatever they’re actually called are other looming mainland-mandated monstrosities.

But the Sports Park can actually benefit Hong Kong people.

Hong Kong Stadium (Designed and Built by one party, Operated by another) has been almost unfit for purpose ever since it was redeveloped in 1994, and existing indoor venues such as the Hong Kong Coliseum are outdated and incapable of hosting major events.

The city is in dire need of more community sports facilities and public open space.

And 90 per cent of 6,500 residents surveyed want to see the project finally become a reality (according to the HAB’s public engagement exercise at least, maybe lawmakers’ constituents say otherwise).

Would it be a disaster if we got some major international bands playing here? Or the chance to be a host city when China bids for the World Cup?

Yes the project is worthy of debate and yes it’s a lot of taxpayers’ money – but does there not come a point when our politicians can abandon their grandstanding and actually get something done to improve the city?