The Public Purpose
Number 38 - July 2000

Hong Kong's Rail Expansion:
Avoiding Western Pitfalls

Published in Apple Daily, Hong Kong: 29 July 2000
(Largest Audited Daily Circulation in Hong Kong)
English Version Presented with Permission of Publisher

Chinese Version

By Wendell Cox

Hong Kong is a collection of superlatives. Kowloon and Victoria have perhaps the highest population densities in the world, and Central is the world's most dense commercial district, with nearly twice as many jobs per square kilometer as New York's Manhattan. Not surprisingly, therefore, Hong Kong also has by far the highest market share of personal travel on public transport of any high income region in the world. Finally, with the explosive growth in the area, the HKSAR is positioned as the hub of what is emerging as one of the worlds great mega-cities, stretching from Hong Kong through Shenzhen (perhaps the world's largest suburb) to Guangzhow.

A unique urban area requires unique transportation systems. The government's recent announcement of a 15 year, $100 billion program to build six new rail lines could be just what is required. With its exceedingly high densities, Hong Kong simply does not have the space to rely on automobiles to the same extent of other cities, whether Paris or Los Angeles. The key to keeping Hong Kong moving will be to provide mobility alternatives that can make extensive automobile use unnecessary. To accomplish this, high quality public transport must be available from within 0.4 kilometers of virtually every job and residence. Just as important, the system of rail and bus lines must work together in such a manner that most trips can be completed on this system at speeds that are competitive with or superior to the automobile. This is becoming increasingly difficult, as the population continues to spread into the new towns. Already nearly as many people live in the New Territories as in Kowloon and Hong Kong Island, and soon it will be more.

In most of the developed world's urban areas, automobile competitive public transport can only be provided for a small portion of trips, usually in or to the core. But Hong Kong is different. The exceedingly high population densities and strong commercial core make Hong Kong indisputably the most favorable environment in the world for urban rail. This makes it possible not only to effectively serve all of the development in the HKSAR, but also to do so with without requiring public subsidies.

This raises a crucial point. Hong Kong's public transport system is composed of commercial operations, from the public light buses to the conventional buses, MRT and KCR. The government's Railway Development Strategy 2000, however, suggests the possibility that tax support might be provided to "marginally viable projects." This is unnecessary and could be counter-productive. Today, Hong Kong bus companies provide both marginal and lucrative services under franchises granted by the HKSAR government. The same model should apply to the entire public transport system, including the new rail lines.

The idea of public support for marginal public transport projects has an unfortunate history. Subsidies lead to higher costs and even more subsidies --- so much so that even cities with high transit market shares must expend considerable amounts of tax funding to keep the trains running. For example, in the city of Paris, with a population density approximately one-half that of Kowloon and Victoria, public subsidies pay for nearly one-half of annual rail costs. International research has indicated that publicly subsidized urban rail systems tend to experience cost increases of 50 to 100 percent.

In many western nations there is a recognition that financial reform is needed, and efforts are underway to place public transport systems on a more commercial basis. The last thing that Hong Kong needs is to mimic the western social democratic subsidy policies that have relegated public transport to perpetual crisis and deterioration.

Operators, such as MRT, KCR and the growing international complement of international transport companies are prepared to build and operate the rail lines on a commercial basis. It is thus neither appropriate nor necessary to socialize all or even part of this risk. One of the greatest strength's of Hong Kong's public transport system is that its customers are the passengers. When subsidies are involved, the customer becomes government, and passengers take a "back seat."

Hong Kong can learn from the mistakes made by others around the world as it develops a public transport system for the future. Hong Kong can also demonstrate to the world the wisdom of its more entrepreneurial approach. Most importantly, however, by providing a comprehensive alternative to the automobile and doing so without public subsidy, the government will sustainably serve both the passengers and taxpayers of the HKSAR.

(c) 2000 --- Wendell Cox Consultancy --- Permission granted to use with attribution.
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