Hong Kong is facing an acute shortage of land supply. The Government agrees with the Task Force on Land Supply that there is no single option that can solve the land problem. We will continue to adopt a multi-pronged approach to increase land supply. The Lantau Tomorrow Vision (the Vision) has put forward a proposal to develop artificial islands near Kau Yi Chau (KYC) to make available larger pieces of land, thereby making possible the planning for sites needed by the society and meeting the development needs of various sectors of Hong Kong. On Tuesday, the Government will consult the Panel on Development of the Legislative Council (LegCo) on conducting a detailed planning and engineering study that focuses on the KYC Artificial Islands of around 1 000 hectares (ha) and the related studies on strategic transport infrastructure. Here, I would like to respond to some queries raised by the public recently.

Expanding land resources to meet social development needs

With the newly created land of around 1 000 ha on the KYC Artificial Islands, the Government can build 150 000 to 260 000 housing units, 70% of which (i.e.105 000 to 182 000 units) will be public housing, to cope with the housing demand in the medium to long term. Given their proximity to Central and the Hong Kong International Airport, the artificial islands have the edge of developing into the third Core Business District that can supply about 4 million square metres of commercial and office floor area as well as 200 000 high-end and high value-added employment opportunities. At the same time, it will enable the Government to conduct comprehensive planning to establish liveable communities with compatible community facilities and public and greening spaces.

At present, many buildings in Hong Kong are ageing at a fast pace. The artificial islands can provide land closer to the urban areas for relocation of residents affected by urban renewal and facilitate a larger scale of redevelopment of old districts. Besides, the new strategic road and railway networks will increase the overall carrying capacity of the transport system in Hong Kong, which will also effectively relieve the existing heavy traffic loads in the Northwest New Territories.

Sufficient financial capability without exhausting fiscal reserve

We are aware that the public are concerned about the impact of the development of KYC Artificial Islands on the Government’s fiscal position. Generally speaking, we will not provide the construction cost of a large-scale development project before conducting a planning and engineering study. However, in order to address and allay concerns in the community, we have, on an exceptional basis, made a crude estimate of the construction cost at this initial stage. The ballpark estimate of the construction cost of the key projects under the Vision is around $624 billion (in September 2018 prices), to be paid over a period of 10 to 15 years (i.e. an average of $40 billion to $50 billion per year). In recent years, the Government’s annual expenditure on public works has reached $100 billion. Evidently, we are financially capable of delivering this project that will bring enormous social benefits.

High land value and huge economic contributions

From another perspective, according to the estimate of the Hong Kong Institute of Surveyors (HKIS) made earlier, the land revenue to be generated from private residential and commercial developments on the KYC Artificial Islands will be between approximately $974 billion and $1.143 trillion. The HKIS’s estimate is based on the upper-end of the preliminary planning parameter for private residential development (i.e. 78 000 private housing units). If the lower-end parameter (i.e. 45 000 private housing units) is adopted for the calculation, the land sale revenue will still be as high as $707 billion to $823 billion. This estimation has not taken into account the land value of the land used for public housing and other related development areas on the artificial islands. After examining the estimate of the HKIS, the Lands Department also considers the estimate reasonable. We roughly estimate that upon full operation of the commercial activities on the KYC Artificial Islands, these activities will bring around $141 billion of value-added to Hong Kong (in 2018 prices) per year, amounting to about 5% of our Gross Domestic Product.

We provide the above figures on an exceptional basis to illustrate that the Government will not “exhaust the fiscal reserve” or “become penniless” when pressing ahead this project – a project that will bring enormous social and economic benefits. However, I must stress that the Government has never meant to put forward large-scale development proposals for the sake of “making money”. When we provide land and transport infrastructure, our first and foremost consideration is whether our society is in need of such land or transport infrastructure.

Confidence in cost control

We are also aware of public concerns about cost overruns in infrastructure projects. In fact, in the past 10 years, only about 10% of public works projects costing over $30 million had cost overruns. The remaining projects (i.e. around 90%) were completed within their respective budgets. If we add up all the Approved Project Estimates given by LegCo and compare the sum with the total expenditure, there is still an overall surplus of around 13%. Of course, it is not ideal that there were cost overruns in about 10% of the projects. Therefore, the Government will continue to enhance the supervision standard and efficiency in public works projects. The Project Strategy and Governance Office about to be established will further strengthen cost management and project governance. The Centre of Excellence for Major Project Leaders under preparation will provide further training for public officers, equipping them with strategic and innovative minds in the delivery of public works projects. We are confident that the project costs can be kept under control.

Adequate supply of fill materials

Moreover, the public are worried whether there will be an adequate supply of fill materials for reclamation. Construction works in Hong Kong generate over 15 million tonnes of inert construction waste each year. At present, the majority of it has to be transported to Taishan from Hong Kong and has in accumulation reclaimed over 600 ha of land. With more than 10 years to plan and complete the reclamation of the KYC Artificial Islands, we anticipate that around half or more than half of the fill materials will be inert construction waste. The rest of the fill materials can be covered by manufactured sand or marine sand. In fact, the Tung Chung New Town Extension - Reclamation Works currently in progress has been using more and more manufactured sand. As the supply of manufactured sand has become more stable, we believe that the supply problem of fill materials can be coped with.

Resilience to extreme weather

All the proposed reclamation works will be implemented with reference to the Port Works Design Manual updated by the Civil Engineering and Development Department in early 2018, which has taken into account the Fifth Assessment Report of the Intergovernmental Panel on Climate Change set up under the United Nations. The land formed on the KYC Artificial Islands is expected to be at a level of at least six to seven metres above principal datum – slightly higher than that of the Chek Lap Kok artificial island. If, after the study has been conducted, it is revealed that the height has to be further raised, we can build taller seawalls, raise the site formation level with public fill, place dolosse, etc. Such measures will have minimal implication to the overall construction cost.

Furthermore, in taking forward the detailed engineering study for the project, we will conduct the requisite environmental impact assessments under the Environmental Impact Assessment Ordinance, and make specific proposals on respective mitigation measures, thereby ensuring that all relevant statutory requirements are complied with.

Seeking funding to conduct the study

The Lantau Tomorrow is a grand vision. It will create more land for Hong Kong, improve our living environment and quality, as well as meet the needs for social and economic development. We will do our best to illustrate to all sectors of the society the vision and the rationale of its planning and development, and hope to secure LegCo’s funding approval for the study. The public may have diverse views about the Vision, but I believe that as long as we share a common goal, all for Hong Kong’s future development, resolution of the land shortage problem and building a more liveable city, our differences can definitely be narrowed.