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LCQ4: Costs of Ten Major Infrastructure Projects

Following is a question by the Hon Albert Chan and a written reply by the Secretary for Development, Mr Paul Chan, in the Legislative Council today (April 30):

Question:

I have learnt that, owing to rising wages and prices of materials, the current actual costs of the Ten Major Infrastructure Projects proposed by the Chief Executive of the last term in 2007 are much higher than the originally estimated costs.  In this connection, will the Government inform this Council:

(1) of the respective and aggregate costs of the Ten Major Infrastructure Projects expressed at today's prices, and their rates of increase as compared to the originally estimated costs; and

(2) whether the authorities will consider assessing afresh the urgency of these infrastructure projects, and postpone the completion of those projects which are less urgent, so as to alleviate the pressure on construction manpower during peak construction period; if they will, of the details; if not, the reasons for that?

Reply:

President,

(1) Since 2007, the HKSAR Government has been implementing a massive infrastructure development programme, comprising the Ten Major Infrastructure Projects (TMIPs) and other public works projects of varying scales, in order to revive Hong Kong's economy and meeting the diverse needs of the community.  The TMIPs include projects that have already commenced works as well as those scheduled for later development to meet housing and other demands of Hong Kong's growing population in future.

To date, seven of the TMIPs have obtained funding approval from the Finance Committee and have commenced works, with a total capital investment of over $300 billion (see Annex).  Among these projects, only the Hong Kong Link Road of the Hong Kong-Zhuhai-Macao Bridge project needed to increase its approved project estimates (note: The approved project estimate is the project estimate in money-of-the-day prices as approved by the Finance Committee) from $16.2 billion to $25.1 billion.

(2) The Government is now reviewing and planning for the remaining TMIPs. All along, the Government has been taking forward infrastructure projects in an orderly manner.  As such, the TMIPs are now at different stages.  Moreover, the large-scale projects that extend over a longer time period, such as the Kai Tak Development, will be implemented in phases to facilitate more efficient allocation of resources. However, as unforeseen circumstances appeared during implementation, such as judicial review and consultation exercises that had taken longer than expected, some of these projects have suffered from delay.

To date, seven of the TMIPs have entered the construction stage.  We are pressing ahead with the works as scheduled with a view to completing the projects on time.  Suspending or deferring these projects that have been contracted out might incur significant economic losses or lead to claims for breach of contracts.

On the other hand, according to the projection of the Construction Industry Council as at end October 2013, the overall construction expenditure forecasts for both public and private sectors will continue to stand at a high level, ranging from $160 billion to $190 billion a year.  Postponing the TMIPs may run the risk of creating a more acute construction peak several years later, resulting in even higher project prices, giving rise to more intense labour demand and at the same time, deferring the realisation of the economic and social benefits of these projects.  Therefore, we do not consider it appropriate to defer the worthy TMIPs.  The Government would coordinate with relevant bureaux and departments to ensure they would co-operate closely to implement the remaining projects in an effective and orderly manner, with due regard to the merits of individual projects and the financial sustainability of the overall Capital Works Programme, in order to meet the public's aspirations and further Hong Kong's development.

Attachment:

Ends/Wednesday, April 30, 2014
Issued at HKT 15:35

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