The Govt’s new environmental initiatives: yet more cases of form over substance
Our analysis of each Government proposal is beneath the relevant copied and pasted portion of John Tsang’s address:
Pilot Green Transport Fund
91. To encourage the transport sector to test out green and low-carbon transport technology, I propose to set up a $300 million Pilot Green Transport Fund for application by the industry, initially by the public transport operators. I hope that this Fund will encourage the industry to introduce more innovative green technologies, such as the use of buses, public light buses, taxis, and ferries that employ green technologies, and help nurture the budding of green technology in Hong Kong.
92. The use of low-emission and energy saving transport will not only help improve roadside air quality, but also reduce carbon emissions and promote a low-carbon economy. I hope that the transport industry will actively try out innovative green technologies, contributing to better air quality and the health of people living in Hong Kong.
CAN: There is very little detail in this proposal. But the amount of money set aside is a pittance considering that a single bus costs $4.5 million. In short, the program SOUNDS great, but there’s nothing behind it. For the sake of comparison, let me contrast this paltry allocation to some other new budget items: Tsang will seek Legco’s approval for HK$730 million to build an annex at Ko Shan Theatre dedicated to Chinese opera, which will consist of a medium-sized theatre and training facilities. Moreover, HK$3 billion will be injected into the Arts and Sport Development Fund. Now, what’s the point of having more art and culture in this city if we’re choking in smog fumes? We make the point that the “Pilot Green Fund” is more of a PR and marketing ploy than anything else.
Phasing Out Old Diesel Commercial Vehicles
93. In 2007, the Government launched a scheme to subsidise the replacement of the more polluting pre-Euro and Euro I diesel commercial vehicles with newer models producing fewer emissions. The scheme will end this March. To continue to accelerate the phasing out of old diesel commercial vehicles, I will provide a 36-month subsidy scheme for the replacement of Euro II diesel commercial vehicles. The scheme will involve expenditure of about $540 million.
CAN: A few points here, the main one which we’ve made repeatedly –
Carrots without sticks won’t work. Civic Exchange made the point well in its press release of 25 February: “[U]nless the cost of ownership of polluting vehicles is increased, or they are banned, past experience suggests that the take-up rate may be disappointing … Mandatory measures to reduce roadside emissions could include introducing progressively higher licence charges or setting mandatory retirement dates for the most polluting vehicles.” http://www.civic-exchange.org/eng/press_pressrelease_100225Budget.aspx
The amount of subsidy PER VEHICLE is crucial if it is to constitute a genuine financial incentive to commercial vehicle owners, as well. The failure of the previous subsidy was largely attributable to the low dollar sum per vehicle creditable towards purchases of newer ones. This point is highlighted in our previous critique of the existing subsidy.
We don’t understand why the subsidy extends to Euro II vehicles only when a substantial number of older, dirtier vehicles will still be on the streets after the expiration of the current replacement scheme? The present subsidy, expiring 31 March 2010, applies to pre-Euro and Euro I vehicles only. Only ¼ of such vehicles were replaced under the current scheme to date, leaving us with almost 40,000 of them still in use. Obviously, the Government is afraid of a repeat of this failure. But that attitude is clearly wrong-headed. Rather, the Government should refine the subsidy for these older vehicles so as to get them off our streets for once and for all instead of excluding them wholesale from the present proposal. After all, the oldest vehicles are always the most dangerous. Thus, it is a major disappointment that the proposed subsidy does not include ALL pre-Euro III vehicles. We have yet another case of form over substance: the Government is clearly more interested in saving face rather than public health.
94. I also propose to accelerate the tax deduction for capital expenditure on environment-friendly vehicles. Enterprises can enjoy a 100 per cent profits tax deduction in the first year under the proposal. This will encourage the business sector to purchase more electric vehicles, hybrid vehicles and other environment-friendly commercial vehicles.”
CAN: This measure is very good and will function as a genuine economic inducement to purchase green vehicles.
Related Posts
- HK Government: Comprehensive list of new environmental budget items including air pollution
- Legco: Environmental Affairs Panel meeting on Pilot Green Transport Fund
- LegCo unanimously passes Motion to Improve Air Quality laying groundwork for tougher government initiatives on Hong Kong air pollution
- Watch out for govt red herrings!
- WHY the Government’s subsidy to encourage early replacement of HK’s dirtiest vehicles failed
In 2008 I was involved in a business for which we needed to buy a 5.5 tonne refrigerated truck. We visited the showrooms of 3 major truck manufacturers to see what they had to offer. Without our asking, as we had no idea it existed, each of the showrooms were very quick to point out that they could get us the government’s old diesel vehicle replacement subsidy. When we pointed out that we were not replacing a vehicle, again each one said that this was not a problem. They could provide the ownership document for an old vehicle which we could have for free, that we could then transfer to our business name and immediately “replace” with the new one that we wanted to buy. Each showroom said that they would expect HK$10,000 of the government’s HK$29,000 (from memory I think it was for a 5.5 tonne truck) subsidy for arranging this for us, suggesting there is an understanding between the showrooms and a market rate for this service. Whether this still goes on I have no idea, but knowing how the government works I would say it probably does.
There are to me a couple of interesting points here. It’s a typical example of potentially a good government idea badly executed. It would be so simple to stop this – off the top of my head to benefit from the subsidy an owner would have had to have owned the old vehicle for at least one year and have to hold the new vehicle for one year (or have to rebate). There are probably other ways.
It’s impossible to say how much is being wasted here, but as each of the 3 showrooms immediately offered this loophole, we can assume that in most cases where a new truck is being purchased. If that loophole was plugged and the money went instead to real cases how much could the subsidy be – 2 or 3 times as much? That would start to be very, very attractive to drivers of old vehicles.
If CAN require further details with which to take action please feel free to get in touch with me.