Ditch Lantau plan or sink warning

Pushing through with Lantau Tomorrow Vision's reclamation plans to create 1,700 hectares for up to 400,000 flats could drain Hong Kong's fiscal reserves in 11 years, Greenpeace warns.

The group projected 40 fiscal positions the government could face based on a 2014 planning report in a collaborative report with economist Andy Kwan Cheuk-chiu.

If officials pushed on with the HK$624-billion plan that includes swallowing islands, it states, reserves could be wiped out in 2031/32 even under the most optimistic assumptions.

The report is based on a revenue and expenditure projection model adopted by the Working Group on Long-Term Fiscal Planning's report released in 2014 as well as methods used in various analyses.

Kwan, director of ACE Centre for Business and Economic Research, came up with five revenue and four expenditure scenarios to calculate government revenue and expenditure between 2019-20 and 2041-42.

"All the projection findings show a structural deficit is looming or is even happening already," the report states.

"If the government willfully pushes through Lantau Tomorrow, fiscal reserves could be wiped out in 2031-32 even with the most conservative expenditure with high-revenue scenarios and spreading the cost of the reclamation over 10 years."

Kwan said as the Basic Law stipulates Hong Kong should adopt a low tax policy, government revenue accounts for less than 20 percent of GDP.

"We therefore projected the highest income scenario, which assumes revenue accounts for 20 percent of GDP.

"Even if we assume the government maintains its current service level, which is the most conservative scenario of the four we drew, Hong Kong's fiscal reserves will be exhausted in 2031-32."

Kwan also said the SAR faces challenges from an aging population, a shrinking workforce and more increases of recurrent expenditure on social welfare, health and education.

Measures stemming from the pandemic have also swollen the deficit to nearly HK$290 billion, while public reserves have plunged to about HK$800 billion.

"Along with the consequences of the pandemic, the government has to ensure optimal use of public funds to maintain the sustainability of public finance," he said.

"If the government insists on pushing through Lantau Tomorrow without proper public finance management, it will definitely speed up the exhausting of fiscal reserves."

Kate Lin Pui-yi, a senior campaigner for Greenpeace, called for planners to prioritize development of brownfield sites instead.

"Compared with Lantau Tomorrow, developing brownfield sites is more cost effective," Lin added, "and it could provide at least 139,000 new homes.

"If the government forces through Lantau Tomorrow against public sentiment not only will it damage the exquisite marine ecosystem it could also become the last straw for the Hong Kong economy."

However,the immediate official reaction to Greenpeace's plea was not a welcome one: Financial Secretary Paul Chan Mo-po said Lantau Tomorrow Vision should continue as planned, but officials will be prudent in expenditure for new projects.