What if we stopped the express rail project right now?

July 03, 2015 15:27
Practically all the construction work on the underground portion of the West Kowloon Terminus is done. Lai Kwong-tak suggests the site be turned into the world's biggest underground shopping mall and town hall. Photo: Bloomberg

The Mass Transit Railway Corporation (MTR) admitted this week that the Guangzhou-Shenzhen-Hong Kong Express Rail Link (XRL) will run over budget by HK$20 billion (US$2.6 billion), in part as a result of various delays.

Total expenditure on this project will now climb to at least HK$85 billion.

Anthony Cheung Bing-leung, who heads the Transport and Housing Bureau, said the revisions are unacceptable and that taxpayers should not be the ones to pay for the delays.

Meanwhile, lawmakers, academics and activists have voiced their concern about the spending abyss created by the project.

They are trying to persuade the government to press the stop button as soon as possible and turn the site of the rail link to better use.

Lai Kwong-tak, chairman of The Professional Commons, a public policy think tank, is one of the political activists who have called for a halt to the project.

Officials have been trying to figure out how to implement the “co-location of boundary control” at the West Kowloon Terminus.

The government says a co-location arrangement would allow passengers to go through immigration and customs procedures for both mainland China and Hong Kong in the same place.

This issue has hung around for more than five years, and yet no one is able to offer a feasible solution.

It is true that the co-location arrangement is a thorny matter that involves legal and constitutional issues.

Under the Basic Law, mainland law enforcement officers are not allowed to perform their duties within Hong Kong -- but that is exactly what a co-location arrangement would entail.

Interpreting the Basic Law to allow the arrangement to work could be rather sensitive at present, as it might be perceived as further blurring the line between the mainland and Hong Kong, Lai wrote.

But if this problem stays unsolved, the function and the economic value of the XRL will be largely reduced.

However, Lai noted, the proposed Northern Link of the MTR could perform the function of the XRL instead.

The Northern Link will link the Kam Sheung Road Station on the West Rail Line to Lok Ma Chau.

That link is expected to be completed by 2023. It will then take only 22 minutes for passengers to travel from Austin Station to Futian Port, only eight minutes longer than if they had taken the XRL.

Since the construction of the XRL officially began in 2010, taxpayers have already paid HK$45 billion for it so far.

If the government insists on continuing the project, a further HK$40 billion will have to be spent.

However, the Legislative Council will not easily approve the budget, and we foresee serious debate and protests.

It is expected that the MTR, meanwhile, will refuse to pay for the extra cost, so as to protect its shareholders.

Deadlock between the government and the MTR could cause a further suspension of the project, and the budget could rise even more as a result.

The whole XRL project was promoted as offering economic benefits over 50 years of HK$78 billion.

However, the cost of building the link will exceed the benefits received, so it is wiser for the government to stop building it before it is too late, Lai argues.

He said that once the government is willing to give up the project, construction workers and machinery can be released for other infrastructure projects.

The money saved from ending the project could then be used to support other social policies, such as medical, housing and environmental initiatives.

If the government chooses to end the XRL project, Lai said, about HK$15 billion would have to be spent to tie up the loose ends.

However, the government could take back the construction site and turn it into a valuable asset.

The total area of the terminus is about 380,000 square meters, and 90 percent of the construction work in the underground portion has already been completed.

The government could easily turn the site into the biggest underground shopping mall and town hall in the world.

Lai said 340,000 square meters of space in the terminus is available for use.

He suggested that the MTR set aside 200,000 square meters, or 59 percent of the available space,  for commercial and retail use.

His calculations, based on the MTR’s rental income last year, show that the rental return of that space could reach HK$3.7 billion each year.

The rental income could easily exceed the economic benefits promised from the XRL, Lai said.

The government could put the other 140,000 square meters to non-commercial uses.

For example, the space could be developed into a low-carbon, high-tech underground city.

The government could experiment with indoor hydroponics, aquaponics and vertical gardening there.

Meanwhile, the land gained from the Tsoi Yuen Village, which was demolished in 2010 for the XRL, can be used to build about 5,600 flats to help ease the city's housing shortage. 

The XRL project was estimated to cost about HK$65 billion when plans for the link were conceived in 2010.

Last year, MTR raised the budget to HK$71.5 billion and pushed back the completion date to late 2017.

It turns out that the cost of the project and the time required for its completion were greatly underestimated, and the MTR was ordered to submit its updated figures in the second quarter of this year, which show that things have got worse, not better.

Let's call the whole thing off.

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EJ Insight writer