Budget Ideas? Breathe Deeply and Speak Up!


Financial Secretary John Tsang is appealing for ideas for his upcoming budget and already the newspapers are filled with the usual round of leaks. These strike an entertaining balance between solemn announcements that there won't be any sweeteners because this would be wrong in principle, and equally - or perhaps more - authoritative rumours about what the sweeteners will actually be.

Another subject dominating headlines is the perennial one of Hong Kong's air pollution. Throughout 2010 we had regular and frequent warnings from the Government itself that the air we breathe is hazardous to health. And the incoming chairman of the American Chamber of Commerce in Hong Kong said in his inaugural address two weeks ago that 93% of his members - look at that number again, 93% -- had named air pollution as their biggest concern.

Rob Chipman is unusually well qualified to confirm the seriousness of the situation because in his day job he runs a large relocation firm. He knows what is happening on the ground, and his customers tell him why they are leaving.

Is there any way we can link these two stories? Perhaps there is so let's give it a try.

Apart from pollution arising from power generation, which is being addressed via the new schemes of control, the biggest source of locally generated pollution is vehicular traffic. And within the traffic category the worst offenders are buses and heavy goods vehicles that only meet early Euro standards (from 1 - 4) or even - incredibly - are pre-Euro.

Let's start with the bus companies because our negotiating position is stronger as they operate under franchises granted by the Government. Starting immediately, the Government should introduce a programme to buy up all the old buses in phases and replace them with new ones which meet the highest environmental standards. The new buses would become part of the fleets of the bus companies but they would not be allowed to earn a return on these assets at the price actually paid by the Government (though they should be allowed to continue to earn the return that they could have received if the old buses had been operated and retired in normal turn).

So, there should be no adverse effect on shareholders' returns and no impact on fares. And all the haggling over who should make what contribution to the clean up kicked into touch. Some might argue that taxpayers should not be required to meet the entire burden but it's crazy to debate philosophical issues while sitting on a trillion dollars in reserves and simultaneously choking to death.

Now for the goods vehicles. Our hand is weaker here because there is no franchise, but we should keep in mind that our priority is to get these vehicles off the road if they cause serious pollution and use our imagination. The various voluntary schemes have not worked. Let us assume the working life of a vehicle is 20 years (the Transport Department can give us a more accurate figure and the exact programme can be adjusted accordingly, but we need to make some assumptions to sketch out the shape of what the scheme needs to look like).

If your vehicle is over 15 years old already, then we give you notice now that we will not re-license it for use on our roads starting in one year's time. You can either dispose of it in some way outside Hong Kong, or - if you come forward within the next year and surrender the vehicle- the Government will contribute two thirds of the cost of a new one (one third grant, one third interest-bearing loan). If the vehicle is 10 years old already, but not yet 15 years old, then you can enjoy the same package except the interest rate will be concessionary. It will not be relicensed on its 15th birthday.

The Government would then have the task of disposing of thousands of old vehicles. The really dodgy ones should simply be scrapped. Others with plenty of economic life left in them could perhaps still be put to use in other communities with a less urbanized setting and where they would replace even worse polluters currently operating.

This is just a conceptional outline and much work would need to be done to amplify and fine-tune the scheme. But it could be done if we put our minds to it.

How much would such a programme cost? Many billions of dollars no doubt, but compared to some of the other things we have spent money on recently and will no doubt be asked to approve in the budget, this would be money well spent.

Cough if you agree.


 
Mike Rowse
email: mike@rowse.com.hk