HK Infrastructure Public Authority

Henry C K Liu

This article appeared in AToL on August 30, 2002 under the title:
The New York of Asia: Port in a storm

A proposal for a 15 billion yuan (US$1.83 billion) linking Hong Kong, Macau and the mainland Chinese city of Zhuhai, which neighbors Macau, has sparked bickering among Hong Kong tycoons over their special interests.

The container-terminal industry, speaking through the powerful Hutchison Whampoa Group, opposes moves that may affect the current governmental arrangement of privately developed container terminals. The Hong Kong Container Terminal Operators' Association, which represents private terminal operators, including Wharf's Modern Terminals, CSX World Terminals and Hutchison Whampoa's Hongkong International Terminals, while claiming not to be against the bridge project, was quoted by the press as being opposed to "proposals that changed the government's port development policy so as to create an unfair situation for the existing players".

The proposed bridge would be a regional infrastructure that would be key in integrating Hong Kong and the Pearl River Delta into one vibrant regional economy. In that sense, would be vital to the economic survival of Hong Kong and beneficial to Guangdong province and China in general. As some 98 percent of the proposed 28-kilometer bridge would be built in Guangdong waters and the dominant economic basis for the proposed bridge would be the fast-growing Guangdong economy, it would appear that the principle of eminent domain - the right of a government entity to appropriate private property at fair market value for the purpose of constructing a public facility - would prevail.

In the event that the final arrangements of the bridge project should change the Hong Kong government's port-development policy, the current terminal operators have a right to seek fair compensation if they can show proof of being adversely affected unfairly. But the tail would be wagging the dog if private interests at one locality could oppose the development of a needed regional infrastructure project merely to protect the existing players whose high fees have been a major factor in retarding Hong Kong's and the region's global competitiveness.

Hong Kong tirelessly promotes itself as the New York of Asia. In New York, the Port Authority of New York and New Jersey, established in 1921, operates transportation facilities serving both states. It is a financially self-supporting public agency that receives no tax revenue from any state or local jurisdiction and has no power to tax. It relies almost entirely on revenue generated by its facilities' users - tolls, fees, and rents - to finance revenue bonds.

The governor of each state appoints six members to the Port Authority's board of commissioners, subject to state senate approval. Board members serve as public officials without pay for overlapping six-year terms. The governors retain the right to veto the actions of commissioners from that governor's own state. Board meetings are public. The board of commissioners appoints an executive director to carry out the agency's policies and manage day-to-day operations.

The Port Authority's creation was the result of an accident of political history that divided a common port area between what became New York and New Jersey, a division that inevitably resulted in disputes between the two states over use of the port. The states quarreled throughout the 19th century over their common harbor and waterways. A dispute over the boundary line through the harbor and the Hudson River, finally settled by the Treaty of 1834, once led state police to exchange shots in the middle of the river.

Eventually, the states found a governmental model for port management in the Port of London, which was then the only public port authority in the world. On April 30, 1921, the Port of New York Authority was established as the first of its kind in the Western Hemisphere and the first interstate agency created under a clause of the US Constitution permitting compacts between states. One area of jurisdiction was called the "Port District", a bi-state region of about 1,500 square miles (3,900 square kilometers) centered on the Statue of Liberty. The name was changed to the Port Authority of New York and New Jersey in 1972 to identify more accurately its status as a bi-state agency.

The Port Authority struggled financially until 1930, when the states gave the agency control of the newly opened Holland Tunnel. The authority began blazing new paths in transportation, engineering, law and administration. Bridges and tunnels were constructed in the late 1920s and into the 1930s; three airports were leased in the late 1940s. In the 1950s and 1960s came the Port Authority Bus Terminal, a second deck on the George Washington Bridge, the world's first container ports at Port Newark and Elizabeth, and acquisition of the Hudson and Manhattan Railroad, which became the Port Authority Trans-Hudson (PATH) rapid-transit system.

In the 1970s and 1980s, the Port Authority helped advance the region's interests through port and trade promotion and construction of the World Trade Center. Other achievements included development of industrial parks, a business park and a satellite communications center on Staten Island.

Crossings at the agency's tunnels and bridges increased to 123.6 million vehicles in 1999. Air passengers totaled 89.3 million, and the value of international trade through ocean and air-cargo facilities came to $181.8 billion.

To accommodate regional growth - and to plan for its continuance - the Port Authority's capital plan in 1999 amounted to $992 million in regional infrastructure. Some of the larger projects include the AirTrain light rail system to and throughout John F Kennedy International Airport, massive road and parking improvements at Newark International Airport, as well as the beginning of construction to connect the airport to the Northeast Rail corridor; and the renovation of PATH stations and a resource recovery facility in Newark. It was the owner of the now-destroyed World Trade Center towers, under long-term lease to a private developer.

It seems natural that the governor of Guangdong province and the chief executive of the Hong Kong Special Administrative Region should put their heads together and create a "Port Authority of Guangdong and Hong Kong" to plan, finance and operate the proposed Zhuhai-Macau-Hong Kong bridge as expediently as possible and to undertake other regional plans and coordination, such as a regional air-traffic and airports plan and a regional water-transportation, rail and highway plan.

Such an important regional project should not be left to the bickering of local special interests. There is no need to rely on the private sector to develop and finance public infrastructure. Privatization of public monopolies would only permit unnecessary private profit to keep users fees high and sap the region's cost-competitiveness.