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Hong Kong’s Express Rail Link: Totting up the cost of our new toy

Let us hail one unheralded record broken by the Express Rail Link: it has surely spawned more official mis-statements per kilometre than any previous railway project.

We are now expected to nurture the delusion that the new line may someday make a “profit”. This is a gross abuse of language. It will never make a profit in the normal sense of the word because in order to do so it would first have to repay the cost of construction. This is what making a profit means.

The Express Rail’s chances of making a profit are on a par with Carrie Lam’s chances of being elected the next Pope.

West Kowloon terminus Express Rail Link

Members of the public visiting the West Kowloon terminus of the Express Rail Link. Photo: GovHK.

The financial indicator which is now being watched with bated breath by fans of the new line is not whether it makes a profit or loss, but whether it covers its running costs. In other words will the MTR, which is operating the thing, actually take in enough in fares to cover the expenses involved in doing this, while the railway, stations etc. are donated free of charge by the taxpayers.

If this does not happen, then the line will have to be subsidised. Under the circumstances it is perhaps a pity that the Express Rail Terminus, unlike other MTR erections, is not surmounted by a luxurious housing estate.

Instead it has a flamboyant and quite unnecessary roof. Nineteenth century railway termini had huge roofs – considerable engineering achievements in their day – because the locomotives all contained a raging coal fire. The resulting smoke and steam had to go somewhere.

The Express Rail terminus has no such requirements. The trains are electric, and in any case are five floors down, separated from the surface by three layers of immigration desks, customs halls, ticketing counters, shops, shops and – this being a Hong Kong project – more shops. The conspicuous roof has no purpose except to remind us that our expensive toy is under it somewhere.

So with no subsidy from property, will it break even?

mainland port area West Kowloon terminus

The train waiting area inside the mainland port area of the West Kowloon terminus. Photo: HKFP.

Reading earlier predictions of how the railway would work does not inspire confidence.

In 2008 the “key project parameters” were that it would have 99,000 daily passengers, and cost $39 billion.

In 2009 we had the first appearance of the claim that the building of the station would create 10,000 jobs, which was repeated frequently over the ensuing nine years. The Legislative Council was also told that owing to changes in policy on the mainland “there will be a significant increase in the patronage”.

At the same time the “economic benefits” of the railway over 30 years were valued at $87 billion. Curious that a government which consistently fails to predict its own fortunes in the coming 12 months expects to be taken seriously when it offers a prediction for the next 30 years.

No doubt the figure is conservative. Still it became an alarming one as the cost of constructing the railway approached it, and then overtook it.

Express Rail Link train

Express Rail Link train. Photo: HKFP.

In 2009 the construction cost took its first upward leap, to $66 billion. At this point the figure was massaged back down by taking out $11 billion worth of “non-railway works” and treating them as an entirely separate item. So the official prediction became $53.7 billion.

In 2010 members of the Public Works Sub-committee were entertained with the notion that daily patronage “could go up to 116,000”, while a “less optimistic figure” would be 89,000.

Work started on this optimistic basis, and produced a stream of cheerful reports until 2014. By this time much work had been done. Cancellation was inconceivable. The cost to completion was revised up to $85 billion. At roughly the same time the “non-railway” items went up from $11 billion to $16 billion.

This leads us to the conclusion that the honestly stated cost of the whole project was $100 billion, which rather puts the estimated economic benefits in the shade. At the same time the expected daily traffic was increased to 109,200. Why the person responsible for this forecast thought it was accurate enough to be worth including the extra 200 remains a mystery.

The latest “best guess” of the daily traffic is 80,000. That could increase so we can wait and see on that one.

But now that the Great White Elephant is finished we can come to a solid conclusion about the repeated claim that the actual construction would create 10,000 jobs. This was a gross exaggeration.

mainland port area West Kowloon terminus

The boundary line between the Hong Kong port area and the mainland port area of the West Kowloon terminus. Photo: HKFP.

Every six months the government provided a report for the railways sub-committee of the Legislative Council on the progress of the project. And each report included the number of people currently employed on it.

In December 2010 this was about 3,000. By June of the following year it had crept up to 3,600.

By June 2012 it was up to 6,000. The report was still predicting a peak of 10,000 to come later. But come it did not. At the end of June 2013 the daily average was about 8,500. And that was as high as it got. The figure for June the following year was 6,400; in December it was up to 7,700. By the end of 2015 it was still 7,712, by the end of 2016 it was 7,637 and at the end of last year it was down to 6,349.

Readers may also recall that when cancellation of the project was proposed in 2016, MTR boss Frederick Ma complained that this was a threat to “7,000 jobs”. Another 4,000 or so had never materialised

Were any of the early predictions worth the paper they were written on? Well, the railway is still the same length.

Hong Kong's Express Rail Link: Totting up the cost of our new toy