Webb-site Reports

C Y Leung tells 3 media from democratic countries that the Nominating Committee should be "broadly representative" of wealthy people, not the general public, who would otherwise wreck the economy, and explains how he has to pander to vested interests in the committee to get elected. Yet the lack of a popular electoral mandate has resulted in populist handouts anyway, as well as wasteful infrastructure spending to favour vested interests. Could a democratically nominated and elected CE really be any worse? We also look ahead to what the students should realistically be asking for tonight.

Broadly representative of wealth
21 October 2014

On Monday evening (20-Oct-2014), HK Chief Executive Leung Chun Ying held a joint interview at Government House with three international media - the Financial Times, New York Times and Wall Street Journal. Hit the links to see their reports (subscriptions may be needed).

Pandering to various sectors

The most telling part of this interview was when he explained how candidates have to pander to the vested interests in the 1200-member Election Committee (which Beijing proposes shall become the Nominating Committee) in order to get elected (nominated). The NYT quotes him:

"The chief executive said that in seeking the top job, he had exhaustively wooed the 20 members of the committee who had been chosen by coaches and others in the city's athletics sector. "If it was an entirely universal suffrage election," in which anyone could appear on the ballot, Mr. Leung said, "then the sports community would not count, they would not feature on my radar screen - I would not spend hours sitting down with them."

Actually the Sports sector has 15 seats on the committee, not 20. That would be the same sports community to whom he gave a speech last week, welcoming them back from a regional sports gathering and saying:

"This morning I made an effort to find time to inspect the site in Kai Tak where the new sports complex is being built. This will be the largest sports facility in Hong Kong ever. The construction cost is estimated, and this is an early estimate, to be around at least $20 billion, and this is just the construction cost. And if you divide 7 million into 20 billion, even I can come up with a figure of at least three to four thousand dollars for every man, woman and child in Hong Kong, and it signifies a huge undertaking on the part of my Government to support the sports sector in Hong Kong.

Now, $20 billion doesn't count land costs, and we know how valuable, precious, that land is in Hong Kong. And, I have to be honest with you, at one stage the Government did consider the possibility of not building the sports complex on this site and using the site instead for housing units, which are very much in short supply."

In other words, "we made a choice, and are spending HK$20bn and a vast chunk of land on sports instead of housing". Incidentally, he or his speech-writer can't do basic arithmetic: $20bn divided by 7m people is not "at least three to four thousand dollars", it is about $2,857, but it is still a lot of money, and its about $14,000 for each of the 1.4m people who earn enough to pay salaries tax in HK. Alternatively, he means that they now expect it to cost between $21bn and $28bn, plus land value. If he had only built homes, then that would have helped the Real Estate and Construction sector (18 votes) but not Sports (15 votes) - so this gets him more electoral bang for your bucks - and let's be clear, this is not a project that could be funded by the private sector, unlike housing.

The Sports sector is actually a sub-sub-sector of the Election Committee, under the 60-seat "Sports, Performing Arts, Culture and Publication" sub-sector, under the 300-seat "Labour, social services, religious and other sectors" sector. There were 2,358 registered electors for the 60 seats in 2012 (or 39.3 electors per seat). The number of electors in the Sports sector is not disclosed separately. Of these 2,358 electors, only 209 were human, and 2,149 were "bodies" (associations, companies, etc). So, how many of them voted? None. In an indication of how rigged these constituencies are, there was no contest for any of the 60 seats in 2011. All of the 4 sub-sub-sectors were nominated uncontested. The 15 duly elected candidates in the Sports sector are at this link. Several of them are tycoons, or children of tycoons, not so many athletes and coaches.

The meaning of "broadly representative"

On the subject of the "broadly representative nominating committee" required by the Basic Law if universal suffrage is to be introduced, Mr Leung told the 3 reporters last night:

"[If] you look at the meaning of the words 'broadly representative,' it's not numeric representation... You have to take care of all the sectors in Hong Kong as much as you can...if it's entirely a numbers game and numeric representation, then obviously you would be talking to half of the people in Hong Kong who earn less than US$1,800 a month. Then you would end up with that kind of politics and policies."

In other words, he claims that if the Election Committee was a fair cross-section of the population, then we would be economically doomed, so we must instead ensure that tycoons or at least wealthier people have disproportionate weight and that poor people are under-represented on the committee. There are several counter-arguments to this:

Leung and previous Chief Executives have substantially increased welfare spending anyway - lacking a popular mandate results in trying to buy popularity with hand-outs, such as the infamous Scheme $6000 handout to every permanent resident, electricity subsidies for all, repeated waivers of rates and waivers of (already low) public housing rentals, the increase in non-means-tested "fruit money" for over-70s, the $2 fare scheme for anyone over 65, and loan guarantees for small businesses, to name just a few.
Article 107 of the Basic Law requires the HKSAR to both balance the budget and keep the budget commensurate with the growth rate of its GDP - in other words, spending as a proportion of GDP should not rise. Any deliberately spendthrift or tax-and-spend socialist Government would thus expose its budget to judicial review;
The current electoral structure tends to result (as illustrated in sports above) in massive infrastructure spending to favour vested interests in the Election Committee, much of which spending is economically questionable, such as the HK$72bn Express Rail Link to Shenzhen, the road bridge to Zhuhai and Macau, the likely HK$150bn for the third runway and associated infrastructure at HK Airport and the HK$8.2bn Kai Tak Cruise terminal. Oh and let's not forget the Cyberport and the massive waste of land that is HK Disney-landfill. Would a democratically-elected CE be any worse?

The talks

Leung's comments yesterday makes clear that the two Governments have no intention of rebalancing the Election Committee to make it some kind of proportional representation nominating committee. Even if they propose that corporate voting should be replaced with director voting, it will continue to be stacked in favour of tycoons and business interests. It is to be "broadly representative" of tycoons, not of the general public. The Government is not going to give every registered construction worker a vote in the construction sector, for example, or every shop assistant a vote in the retail sector, nor are they going to create a sector representing retired people, house-spouses and adult students.

However, as we said in our article One HK, two possible outcomes (9-Oct-2014), the composition of the committee and the way it is elected are secondary issues, because if the NPC Standing Committee does not review its decision of 31-Aug-2014 to require a 50% nomination threshold (in effect, a pre-election), then no amount of fiddling with the committee in local legislation will make it possible for a popular pro-democracy candidate to advance to the general election. The NPCSC decision raises the nomination threshold from its previous level of 12.5% (1/8), making it four times harder to be nominated than it was in 2012. That would not be gradual and orderly progress, but a great leap backwards. In both 2007 and 2012, a pan-democratic candidate was successfully nominated, but had no chance of winning, and now, he or she would have no chance of being nominated.

The Basic Law, passed in 1990 and effective since 1-Jul-1997, has never been amended; by comparison, the US constitution was amended 3 times (with 12 amendments) in its first 15 years from 1789 to 1804. There are a number of Basic Law areas that can and should be cleaned up and clarified (right of abode, for example), but for now, the prospect of admitting that there is a single flaw in the Basic Law is beyond Beijing's contemplation. To amend the Basic Law under Article 159 would need a 2/3 majority of both the Legislative Council and the 36 HK delegates to the National People's Congress, as well as the approval of the full NPC, not just its Standing Committee.

The Basic Law makes clear that a nominating committee is required, so introducing civic nomination to bypass this would involve Basic Law amendment and is practically a non-starter. However, that does not completely rule out the idea of civic recommendation, where a name with sufficient subscribers could be submitted to the Nominating Committee.

The students in today's talks would be well-advised not to keep pushing for civic nomination but instead they should insist on reducing the nomination threshold. The mechanism is simple: the Chief Executive must restart the so-called 5-step process by sending a new report to the NPCSC on the "actual situation in Hong Kong", with the recommendation of returning to the 1/8 nomination threshold or possibly 1/8 plus 1 vote (that is, 151 nominations). Under the previous system, each member can only nominate one candidate, so that way, there will not be more than 7 candidates, and very likely there will be fewer. A compromise between these thresholds might be 20% plus 1 vote (that is, 241 nominations), in which case there cannot be more than 4 candidates.

Having resolved the primary issue with the NPC, HK can then move on, through local legislation, to the secondary issues of making the Nominating Committee more broadly representative (however you define it), and providing for Instant-runoff voting in which the candidates are ranked on the public ballot in order of the elector's preference.

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Broadly representative of wealth 21 October 2014