The Hong Kong government’s former reputation for fiscal prudence and good budget management is in ruins. The latest bail-out plan for its Mass Transit Railway Corporation entails not only throwing another HK$19.6 billion of public money at the quasi-public rail and property development company but rewarding its shareholders for the company’s incompetence.
Despite needing this money to cover a massive cost-overrun on its 27 kilometer high-speed rail line from the heart of Kowloon to Shenzhen it is proposing to pay a special dividend. This will go not only to the government itself but to the public owners of the 25 percent of the MTRC that is publicly listed. The notion of capitalism has been turned upside down by government bureaucrats who may well own some of that 25 percent.
The latest estimated cost of the line is HK$84.4 billion (US$10.8 billion) and the completion date is not until 2018 – three years late. All kinds of excuses have been rolled out for this but the underlying one is that the government railroaded the project through for dubious reasons and the MTR board of government yes-men took it on with scant investigation, let alone any sense that it was either commercially viable or served the public transport needs of more than a small minority of Hong Kong people.
The line was agreed partly for political purposes, to provide a tangible link to the mainland’s own high-speed system that terminates at Shenzhen. The fact that the train couldn’t reach very high speed before stopping at the border was ignored, as was the fact that one can drive from Central Hong Kong to the border in 20 minutes.
But what added some 50 percent to the cost (and technical difficulty) of the project was the decision to take it into the middle of Kowloon rather than stop in the New Territories and interchange there with the local rail system. It is noted that Beijing and Guangzhou for practical reasons both placed their high-speed terminus far from the center of the city. Hong Kong, however, being ruled by property companies and bureaucrats with scant responsibility for the use of public money, decided that cost was no object. Commercial interests wanted it in the middle of Kowloon.
The railway is just one of several commercially worthless government projects running far over budget and years late in delivery. The biggest of all is a 42-kilometer bridge/tunnel combine to link Hong Kong with Macau and Zhuhai. The latest estimate of Hong Kong’s part of this is now HK$116 billion and completion now put back to 2017. Even that date is probably optimistic as the project has encountered major civil engineering problems to which the government refuses to own up when when these are reported by local on-line media. The bridge, which carries no rail line, is almost irrelevant for Hong Kong’s seaborne trade and of marginal benefit to the city given the existence of many high speed ferry routes across the Pearl River estuary.