ENG-1992 — Page 278

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economy will begin to suffer: for example, the economic disbenefits to Hong Kong of not going ahead with the airport have been estimated to be at least $420 billion over the period 1997-2010. This represents only quantifiable losses: it does not include indirect losses caused for example by declining effectiveness of Hong Kong as an international trading and financial centre, which could double the estimate.

The ACP was conceived in 1991 out of the Port and Airport Development Strategy (PADS) which had been unveiled in 1989 after years of study. PADS had been designed to provide, in the most cost effective way, for the growth of both the port and the airport. It includes major extensions to Hong Kong's container port and other develop- ments, which are going ahead separately, whereas the 10 ACP projects are all associated with the opening of the airport at Chek Lap Kok (with the first of two planned runways) in 1997.

Memorandum of Understanding

In September 1991, the Prime Ministers of Britain and China signed the 'Memorandum of Understanding Concerning the Construction of the New Airport in Hong Kong and Related Questions' (MOU). This memorandum recognises the 'urgent need for a new airport in Hong Kong in order to ensure and develop its prosperity and stability', and the 'need for the airport project to be cost effective'. It requires the Hong Kong Government to complete the ACP projects 'to the maximum extent possible' by June 30, 1997, and says that the Chinese Government will 'support the construction of the new airport and related projects'.

The MOU also provides for a joint Airport Committee which has been set up under the auspices of the Sino-British Joint Liaison Group. This committee has become the primary forum for discussions with China on the ACP. The main topics of discussion during 1992 were overall financing plans for the airport and airport railway.

The Consultative Committee on the New Airport and Related Projects (ACC), established under the MOU, held six plenary meetings and four special meetings in 1992 on various aspects of the ACP. Four sub-committees were formed relating to: the airport and its related land development projects; traffic and transport; financial matters and planning; and the environment and people's livelihood. A total of 18 sub-committee meetings were held in 1992.

Implementing and Financing the ACP

The ACP is being implemented by the government, two statutory corporations wholly owned by the government, and by a franchisee to be appointed for the Western Harbour Crossing (WHC). The government is carrying out direct capital works projects to reclaim land, and to build highways and a new town near the airport. The Airport Authority (AA), which is to replace the existing Provisional Airport Authority, is responsible for building and operating the airport. The Mass Transit Railway Corporation (MTRC) will build and operate the Airport Railway. The WHC will be wholly privatised.

The estimated cost of the 10 ACP projects was announced in April 1992 at $112.2 billion (in March 1991 prices). This equals $163.7 billion in money of the day. (Sometimes known as out-turn prices, money of the day takes into account the impact of inflation on the value of the dollar while projects are designed and built, thus providing a more realistic