Tackling Hong Kong's housing problem is a monumental task. Experts say the HK$27-billion "housing reserve" only serves as a short-term aid, while the genuine long-term solution is to increase housing supply. Asia News Photo

Reserve to be set up to support 10-year public homes target

A HK$27-billion ($3.5-billion) "housing reserve" will be set aside to back up the government's new 10-year public housing supply target of building 290,000 public homes, Financial Secretary John Tsang Chun-wah said on Thursday.

The decision is in line with the Long Term Housing Strategy, which aims to increase total housing supply to 480,000 residential units in the next decade, with 200,000 units for public rental housing (PRH) and 90,000 subsidized apartments for sale.

"The Housing Authority (HA) is the major supplier of public housing in Hong Kong. The government will ensure that the authority has adequate funding to meet the target. Given the huge financial commitment, we have to make advance planning. We will make provision by installments to reduce fiscal volatility," Tsang said.

The reserve will come from the investment return on the government's fiscal reserves of about HK$27 billion - equivalent to approximately 7 percent of the government's estimated closing balance of HK$403 billion in its general revenue account for the 2014-2015 financial year.

Tsang said the Hong Kong Monetary Authority will also be responsible for setting up the reserve. The reserve and its cumulative investment return will be used to support the development of public housing and related infrastructure.

Money from the reserve will be used with the approval of the Legislative Council, after the HA has agreed with the government on the quantum and a timetable for funding injection by the government.

Tsang said the HA has to "adopt every possible measure to ensure the cost effectiveness of the public housing development program".

The decision to establish the "housing reserve" has drawn mixed reaction from lawmakers and economic experts.

Lawmaker Ann Chiang Lai-wan was astonished, saying she was confused why a particular reserve has to be set up while the government should have an annual budget for building public housing and related infrastructure.

"The establishment of the reserve could possibly restrict the government's appropriation for housing construction," she said.

Andy Kwan Cheuk-chiu, director of the ACE Centre for Business and Economic Research and also a member of Long Term Housing Strategy Steering Committee, said he thought the reserve would only be effective in the short term, while the core solution lies in building more homes at a faster speed.

He cited Singapore's experience in housing, saying the government can sell some of the HA's newly built PRH apartments to those using them at a discount. "Not only will it increase the HA's revenues, but also make way for people signing up to rent PRH units," Kwan said.

Marco Wu Moon-hoi, chairman of the Hong Kong Housing Society, welcomed the government's decision, saying it's the government's duty to help the HA deal with the housing shortage problem.

"It also depends on whether we have enough land supply if the government is to meet its housing target," he said.

agnes@chinadailyhk.com

(HK Edition 12/19/2014 page5)