1 Financing for cultural hub queried
Helen Wu, SCMP 27 May 2008

Lawmakers have demanded that the government disclose information on how revenue from retail, dining and entertainment will cover operation costs at the West Kowloon Cultural District.

Members of the Legislative Council subcommittee that is overseeing the project also questioned whether the government had accurately assessed a possible increase in construction costs of the complex, which an independent study last week said had been underestimated.

The study by Versitech, a University of Hong Kong research company, raised doubts on the long-term financial sustainability of the district.

Under the government proposal, an upfront endowment of HK$21.6 billion would be used to finance the capital cost while earnings from retail, dining and entertainment would sustain the arts and cultural facilities. But the report said no allowance had been made for the cost of renovations beyond its first 50 years.

Lawmaker Kwok Ka-ki said estimates by the government's financial advisers were too rough and left out many crucial details.

"The government is proposing to spend HK$10 billion on an experiment to create a mega museum called M+. But what we see is a weak justification of how the taxpayers' money is spent," he said.

He also challenged whether M+ could buy anything worthy with the HK$1 billion fund. "A portrait of Mao Zedong ... could be sold for HK$1 billion. Are we going to just display only one picture in M+?"

Lee Wing-tat, of the Democratic Party, said he was worried about taxpayers having to fork out again in coming years if the government did not scrutinise the financial risks carefully before the project was launched.

Wong Kwok-chun, of Versitech, said the money set aside for the West Kowloon Cultural District Authority - HK$2.2 billion - was comparatively high but little information had been revealed.

The deputy secretary for home affairs, Esther Leung Yuet-yin, said the department's team of financial advisers had wide expertise and the estimates they made were prudent and practical.

She said the government would require the authority to set up an investment committee to oversee the management and investment of its financial resources. The chairman and members of the committee should possess relevant expertise and experience.

Government economist Kwok Kwok-chuen said it was difficult to estimate the fluctuating construction cost. "Although the construction cost has gone up [recently], it has dropped by 5 per cent in the past decade."

The subcommittee will meet again on Friday to discuss financial matters of the cultural hub.