Post-hibernation catch-up

After a good 10 days’ retreat from seasonable boisterous throngs – grinning givers of glad tidings, mindless bearers of gifts, unconvincingly cheerful midnight revelers and massed photographers of fireworks – it is safe to come out: 2014 is here. And some interesting things have been going on.

The Hong Kong government gives up trying to squeeze a hefty land premium out of property developers for a particular site and asks them to propose their own. The newspapers’ angle is that this shows Chief Executive CY Leung’s housing targets are under threat. This may be so, but it’s not the real story. The real issue is this absurdity: the government says it wants to increase the supply of affordable homes but at the same time insists on maximizing its revenues from this up-front land development tax.

Let’s strip out several factors from the equation, like the global liquidity-driven asset-price bubble, construction costs distorted by white-elephant infrastructure projects and the local property cartel’s profit margins. What you are left with is ‘the unaffordable price of housing equals the high level of land premium’. If the government wants affordable housing, all it has to do is tax housing less (or differently), which it can easily do given its bulging budget surpluses and fiscal reserves.

Obviously, there are all sorts of vested interests and insurmountable ‘lack of consensus’ barriers to correcting this extreme illogicality (though nothing a few firing squads couldn’t fix), but on paper it’s that simple. Do you want a) affordable homes or b) ever-growing government reserves? (tick one only).

If developers are invited to offer land premiums, there is a theoretical possibility that they will collude behind the scenes to jointly bid low, in effect, and share the spoils in due course. Of course, in practice, the highly respected half-dozen families who control real estate would never do such a thing, would they?

Which brings us rather neatly to tycoon Li Ka-shing’s Cheung Kong Infrastructure, which, to the horror of thin-skinned Brits, makes mouth-wateringly high profits while paying very low tax rates in the power-cut-stricken UK. Hongkongers are also shocked, as they witness the South China Morning Post digging around the publicly available data and reporting that CKI enjoys an enviable degree of tax efficiency right here in the Big Lychee (and in Australia, while we’re at it).

There have been times when such forthright non-glowing coverage of the Li empire would, quite possibly, not appear in the first place. The conglomerates concerned comprise a big source of media ad revenues, and their proprietor is the tycoon to whom lesser magnates, whether or not they run shoe-shining newspapers, all defer. Maybe this article just slipped through the editorial net during the holidays (keep an eye out in case reporter Toh Han Shih falls from a window). In which case, expect some highly flattering stories about Cheung Kong and Hutchison before long. But maybe this is another of those tantalizing signs of the fading of an old order that has outlived its usefulness to our ultimate masters.

Beijing’s frustration with Hong Kong’s tycoons is presumably behind the recent suggestion that Mainland officials now blame disunity in the pro-establishment camp – not the pro-democrats – for the Big Lychee’s problematic/farcical governance. It is a telling example of Chinese leaders’ warped perceptions of the world beyond Zhongnanhai. Hong Kong’s problems will be solved if particular groups of shoe-shiners with grudges shut up and get on board with the local administration. As if the same Beijing-appointed administration’s crap policies (housing plus your top 10 other favourites) have nothing to do with it. All you have to do is appoint a government that puts the overall public interest first: it will win broad community support, and you won’t have to scrabble around trying to assemble a motley United Front of grasping billionaires and grubby Communist stalwarts. But of course that would be putting the led in charge of the leaders.

Which brings us to the pro-democrats’ annual January 1 march (not to be confused with their annual July 1, June 4, October 1 or other events), which was or wasn’t a test-run for Occupy Central. And which does or does not presage a long, hot 2014 as Hong Kong tries to introduce a version of universal suffrage that fits tidily into a paranoid one-party Communist state. The Standard takes the pro-dems’ mock-referendum on political reform surprisingly seriously, while its usually strident ‘Mary Ma’ editorial sounds half-sympathetic about the relatively low turnout at the demo, and even breaks with the United Front line that Occupy Central will mean the end of civilization. As with the SCMP’s coverage of KS Li, maybe it’s the hangovers, or maybe Beijing’s locally based spin-doctors have made some interesting New Year’s resolutions.

Typo of the Day suggests hangovers…