Leung Chun-ying's government presides over two serially delayed, seemingly bottomless money pits: the Guangzhou-Shenzhen-Hong Kong Express Rail Link (left) and the Hong Kong-Zhuhai-Macau Bridge. Photos: HKEJ, Xinhua
It used to be said that, for all its failings, the Hong Kong government at least knew how to handle major infrastructure projects and was good at getting things done.
That claim can no longer be made, not least because of the high-level bungling surrounding the high-speed cross-border rail project, where costs have mushroomed, completion dates scrapped again and again, building flaws exposed and now the government is resorting to sophisticated mendacity to make things look good.
Chief Executive Leung Chun-ying proudly declared on Dec. 1 that the cost of the project to the government had now been capped at HK$84.42 billion (US10.89 billion).
For obvious reasons, he did not mention that this was around a third higher than the financial allocation originally approved by the Legislative Council back in 2010.
Moreover, Leung and his bevy of hapless ministers had the bare-faced cheek to boast about how they had managed to reduce the new price tag from the HK$85.3 billion announced by MTR Corp. (00066.HK) in June.
This has zero to do with better planning but has been achieved by simply cutting some Phase 2 works out of the budget, namely reducing the number of tracks from 15 to 10 and cutting a bit of platform work.
As night follows day, these works will be reinstated once the public eye is busy focusing on some other government cock-up, because this is a classic government way of playing fast and loose with cost estimates.
When escalating figures become embarrassing, items are temporarily removed, then put back later.
In some ways, all this pales in comparison to the shameless claim that the increased funding to be provided by the government (HK$19.42 billion) will be balanced by a HK$19.51 billion dividend payout from MTRC.
Let’s pause there and consider a couple of things.
First, MTRC is supposed to be an independent, listed company accountable to all its shareholders despite the fact that the very biggest shareholder is the government.
Were the independent shareholders’ directors looking after their interests?
Who knows, since they have, as ever, remained silent.
Secondly, even the most wet-behind-the-ears markets reporter knows that dividends paid to shareholders are supposed to come out of profits.
In this instance, MTRC has not made enough profit to issue dividends totaling HK$25.76 billion and does not have fiscal reserves of that amount.
Therefore, it will have to borrow money to pay the dividend.
This is stark, staring bonkers.
Companies do not borrow to pay dividends, because it is a scandalous misuse of shareholder’s money.
The reality is that the money will be borrowed with what is in effect a government guarantee and MTRC will have to repay the money somehow or other.
That somehow or other will almost inevitably mean it will be given new tracts of land for property development, the well-tested method used in the past to boost its funds and pay for new investment.
Meanwhile, let us not forget that all this, one way or another, is public money and the lavish sums being poured into this project represent cash taken away from all manner of other pressing demands on the public purse.
And then, there are the other vanity projects queuing up for cash: the final bill for the West Kowloon Cultural District is far from being presented, and as for the Hong Kong-Zhuhai-Macau Bridge, well that’s one cash-hungry venture that still needs feeding.
To top it all is the airport’s proposed third runway project, which officials boast will be the most expensive infrastructure project ever undertaken.
They may well be right about that, if nothing else.
No wonder funds for social welfare, education and housing are under pressure.
The problem is that helping the less well off just does not have the glamor of a shiny new railway.
Thus the government busies itself shuffling the cards so that the same pair of aces always reappears, even if it requires the croupier to use sleight of hand.
The sums in question are so vast that they hardly seem real, but they are, and most of the money earned from the rail link project will flow rapidly out of Hong Kong.
And, by the by, if you are thinking of booking a ticket to use on the new railway for a trip to Guangzhou in the third quarter of 2018, the new completion target, be well prepared with copious food supplies and some decent reading matter, because you may be waiting a very long time at the shiny new West Kowloon Terminus, assuming that that, too, has been completed.
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