A progressive tax on the development of large homes will be in line with public interest, argues Ho Lok-sang

Chief Executive Carrie Lam Cheng Yuet-ngor stressed at a Legislative Council session on May 3 that the administration's public policy serves only the public interest, and vested interests have no place in any consideration of public policy. She said this following the allegation from some legislators that her proposal for public-private partnerships in developing agricultural land was a case of government-business collusion.

Indeed, public interest should be the only concern of any government. Still, many people do not know what this means. A recent entry in the internet platform Conversation says: "The public interest is such a complex and tricky concept to navigate because it has intentionally evolved as ambiguous and mutable. It has no overarching definition because it is contextually determined in scope and purpose." The Australian Law Reform Commission even remarked: "Public interest should not be defined."

As a public policy scholar, I have long tried to dispel this "ambiguity doctrine". The public interest is well defined, and governments should only think about the public interest. Any apparent deviation can only be justified if it ultimately better serves the public interest over the long term.

The public interest is clear if we put down our personal identity and think about the consequences of the policy, imagining that we could be anyone who may be affected by it. If we keep thinking about our own interests given our identities and contexts, we will not be able to consider the public interest.

From the public interest perspective, slavery and the slave trade, discriminatory policies against minorities, policies that allow pollution and global warming to threaten human lives with climate change and diseases, policies that allow unsafe homes and unsafe working environments, are all impermissible. There is no ambiguity.

From this perspective, I would argue that the recent phenomenon of developers increasingly supplying nano homes goes against the public interest and should be stopped.

An entry in Wikipedia says: "The main purpose of building codes is to protect public health, safety and general welfare as they relate to the construction and occupancy of buildings and structures. The building code becomes law of a particular jurisdiction when formally enacted by the appropriate governmental or private authority."

Thus in Hong Kong we have specific requirements in our building codes to ensure adequate ventilation, safeguard against fire hazards, safeguard against collapse of parts or the entire building, etc. Dangers to people living in the building or to passers-by clearly undermine the public interest and must be prevented.

I would argue that excessively small homes are inhumane and are unfit for human homes. They also hurt Hong Kong's reputation as a caring society and a livable city. If our government is committed to meeting Hong Kong people's basic housing needs through public housing for those who cannot afford livable homes, such homes will have no future as an investment vehicle, when we eventually provide more public housing to meet our needs. Those who buy such homes will realize a huge loss at that time.

Unfortunately, the tendency for developers to build nano homes apparently has not abated despite the government's declaration of commitment to increase land supply and housing supply. A report last week says that the Building Department had approved flats with usable area of 43 square feet, 61 square feet, and 71 square feet in developments in Discovery Bay, Happy Valley, and Tuen Mun respectively. These usable areas, however, do not include a toilet, bathroom or kitchen. Accordingly, for these homes the respective usable areas announced in sales brochures are 90 square feet, 91 square feet, and 128 square feet.

What baffled me even more is that in some of these developments, there are flats with usable areas in excess of 5,000 square feet selling along with the nano flats. The contrast offers a sad case of coexistence of extreme excess and acute shortage in our city. Under normal circumstances I am a defender of the free market. But such extremes really do our city great harm and should elicit a policy response.

I believe that a progressive tax on the development of large homes in excess of, say, 2,000 square feet and a floor on the size of flats will be in line with the public interest. The tax will make the rich pay more for their mansions, but that will not undermine their welfare according to a theory by welfare economist Ng Yew-kwang, who argues there is a category of goods he calls "diamond goods", for which people are willing to pay a hefty price because they are a status symbol. Accordingly, if the huge size is a status symbol, paying more will enhance the sense of superiority. The tax can also be justified on grounds that the marginal cost of size increases rapidly beyond some threshold. Obviously the revenue raised can be used to procure more land and more public housing to meet the basic needs of Hong Kong people.

(HK Edition 09/04/2018 page15)