January 16, 2013 9:19 am

Hong Kong commits $1.3bn to cleaner air

A boat enters Victoria harbour as a haze of pollution shrouds the Hong Kong skyline©AFP

The Hong Kong government will spend up to HK$10bn ($1.3bn) on subsidies to phase out old diesel commercial vehicles in a bid to improve the city’s appalling air quality, which has become a subject of growing concern among citizens and international companies.

The new measures, announced by Hong Kong chief executive Leung Chun-ying in his first policy address since becoming leader of the city of 7m in July, are designed to bolster public support for his embattled tenure.

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Mr Leung, the city’s de facto mayor, has struggled since he took office last July to articulate his agenda for tackling the city’s high property prices, shortage of affordable public housing and poor air quality because he has had to fend off repeated controversies including an unsuccessful attempt to introduce a civics course in the city’s schools that extolled the virtues of Communist China.

In addition to the new subsidies – directed at the owners of 80,000 older commercial diesel vehicles – the former surveyor said the government viewed the city’s shortage of housing as its “top priority”. Hong Kong’s property prices are among the highest in the world, meaning many citizens are unable to afford to rent, let alone buy, homes.

Mr Leung likened Hong Kong’s widespread problem of adults sharing flats divided into multiple cubicles to the squatter huts that were seen in the city in the 1970s and 1980s. Pointing to statistics such as 200,000 undergraduates in Hong Kong waiting to get into public rental housing, Mr Leung said the problem today “was hidden indoors but no less serious”.

He said the city would not retreat from moves such as the 15 per cent stamp duty imposed in October on foreigners buying property. The move, aimed at slowing purchases by wealthy mainland Chinese buyers, has reduced transactions but has also been criticised as contrary to the city’s laisser faire economic policies.

“In cases of market failure, the government must take appropriate action to address the problem,” he said.

In the short term, he said, the government plans to pursue a higher housing production target of 100,000 public rental housing units in five years starting from 2018, which compares with 75,000 completed over the past five years and only 9,800 private residential flats sold annually over the same period. Mr Leung said he expected 67,000 private housing units to come on to the market in the next three to four years.

Analysts in Hong Kong cautioned that Mr Leung still needs to win backing for his proposals in the city’s legislature.

Joseph Cheng, professor at City University of Hong Kong, said Mr Leung’s real challenge was to win adequate support from the local legislature’s pro-business camp to pass legislation. Earlier this month opposition legislators failed in an attempt to impeach the chief executive over a scandal involving structures built at a home he owns without appropriate planning permission.

Jennifer Wong, a partner at KPMG, said that reducing air pollution also required the support of mainland authorities, given how close Hong Kong is to the manufacturing and shipping hubs of neighbouring Guangdong province, the country’s industrial heartland.

The proposed subsidy of “HK$10bn is a big sum, but it’s just to replace old vehicles. You need the co-operation of your neighbours,” she said.

Mr Leung said he would ask the Guangdong government to explore the possibility of requiring ocean-going vessels to switch to low-sulphur diesel when they used ports in southern China. The Hong Kong government is proposing new legislation to mandate switching to such fuel when ships berth in Hong Kong.

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