Accountability in Establishing

Public Private Partnership:

A Case Study of
West Kowloon Cultural District, Hong Kong

2006
 3.6 Reasons for Using Public Private Partnerships 38
3.6.1 Political Motives 38
3.6.2 Financial Motives 39
3.6.3 Managerial Motives 40
3.7 Potential Benefits and Problems of Adopting Public Private Partnerships 42
3.7.1 Potential Benefits 42
3.7.2 Potential Problems 44
3.8 Examination of the Benefits of Service Delivery Using Public Private 46
Partnerships
3.9 The Concept of Accountability 49
3.10 Summary 53

Chapter 4 Conceptual Framework

4.1 Introduction 54
4.2 Will Accountability be Enhanced or Diminished in PPPs? 54
4.3 Accountability in PPPs 56
4.4 Public Accountability 62
4.5 Conceptual Framework for Studying Accountability III the West Kowloon 65
Cultural District PPPs
4.6 Maintaining Effective Accountability Relationships 67
4.7 Summary 72

Chapter 5 Development of Private Sector Involvement in Hong Kong

5.1 Introduction 73
5.2 Role of Government in Public Service Delivery in Hong Kong 73
5.3 Private Sector Involvement in Hong Kong 76
5.4 Development of Build-Operate-Transfer typed Public Private Partnerships Project 80
in Hong Kong
5.5 Accountability Aspect relating to the Start Up of Public Private Partnerships in 81
Hong Kong
5.6 Summary 86

Chapter 6 Accountability Secured Before the Invitation of Proposal

6.1 Introduction 87
6.2 Policy-Making Process 87
6.2.1 Role of the Executive Council 90
6.2.2 Role of the Legislative Council 92
6.3 Public Private Partnerships Establishment 94
6.3.1 Assessing Cultural Needs in Hong Kong 95
6.3.1.1 Reflecting the Cultural Needs? Views of the Arts and Cultural Groups 98
6.3.2 Market Testing and PPP Feasibility Study 101
6.3.3 Assessing Value for Money 102
6.3.4 Managing Community Expectations 109
6.4 Concluding Discussion: Accountability Secured in the Pre-Invitation for Proposal 113
period
6.4.1 Communal Accountability 113
6.4.2 Managerial Accountability 114
6.4.3 Public Accountability 115
6.5 Summary 115
Chapter 7 Accountability Secured in the Post-Invitation for Proposal Period under
Tung's leadership
7.1 Introduction 117
7.2 Development of the West Kowloon Cultural District 117
7.3 Invitation for Proposal 118
7.3.1 Output Specifications in the Invitation for Proposal 119
7.4 Stakeholders' Involvement 121
7.4.1 Role and Major Concerns of the Arts and Cultural Groups 121
7.4.2 Role and Major Concerns of different Pressure Groups 128
7.4.3 Role of the Legislative Council 133
7.5 Involvement and Role of the Proponents 140
7.6 Government Approach in Handling the Project and Integrating Different Views in 143
the Community
7.6.1 Stand Taken by the Government 144
7.6.2 Public Consultation 146
7.6.3 Information Disclosure 149
7.7 Concluding Discussion: Accountability Secured After the Invitation for Proposal 153
period in Tung's Era
7.7.1 Contractual Accountability 153
7.7.2 Managerial Accountability 154
7.7.3 Public Accountability 155
7.8 Summary 158

Chapter 8 Accountability secured in Tsang's Era

8.1 Introduction 159
8.2 Development of the West Kowloon Cultural District 159
8.3 Policy Change: Revised Proposal in October 2005 161
8.3.1 Interaction of competing advocacy coalitions within a policy subsystem 162
8.3.2 Impact of the stable parameters on constraints and resources of subsystem 164
actors
8.3.3 External Changes towards the Subsystem 166
8.3.4 Advocacy Coalition Framework Explanation on Revised Proposal in 168
October 2005
8.4 Revised Proposal: Accountable to the Public? Stakeholders' Views 170
8.4.1 Arts and Cultural Groups 170
8.4.2 Other Pressure Groups 173
8.4.3 Legislative Council 175
8.4.4 Proponents 178
8.5 Concluding Discussion: Accountability Secured in October 2005 179
8.5.1 Contractual Accountability 179
8.5.2 Managerial Accountability 181
8.5.3 Public Accountability 182
8.6 Policy Change: the February 2006 Decision to 'Delay' the Project 185
8.6.1 Interaction of competing advocacy coalitions 186
8.6.2 Impact of the stable parameters on constraints and resources of subsystem 190
actors
8.6.3 External Changes towards the Subsystem 191
8.6.4 Advocacy Coalition Framework Explanation on the February 2006 193
 Chapter 1
Background and Purpose of the Study

1.1 Introduction
Since the 1980s, an international trend in new public management (NPM) reforms
has been the increasing implementation of private sector ideas in the management of
public agencies and in the delivery of public services (Lane, 2000). In particular,
outsourcing has emerged as a key NPM strategy for enhancing private sector involvement.
Recently, new approaches to outsourcing have led to increased blurring in what were
traditionally regarded as public and private sector responsibilities and to greater
inter-sectoral linkages (Ferlie and Steane, 2002). Thus, for example, as private and third
sector involvement in public service delivery is being enhanced, a new framework for
government-business relationships, frequently termed as 'Public Private Partnership
(PPP), has arisen. Under such arrangements, private and third sector parties, as partners
with the government agencies concerned, are given responsibilities and a say in the
planning as well as in the operational stages of service development and delivery.
Faced with budgetary pressures and increased demands for better services, countries
worldwide have shown their interest in PPPs. In particular, Australia, Canada and the
United Kingdom are the three main pioneers (Public-Private Partnerships Office, 2001;
Public Private Partnerships Programme, 2003; Department of Parliament, Australia, 2003)
while both the United Nations and the World Bank also actively promote PPPs (United
Nations Development Programme, 2003; World Bank, 2003). In Asia, Hong Kong is fully
committed to adopting PPPs wherever feasible (Efficiency Unit, 2003) and Singapore,
India and the Philippines have also expressed increasing interest in this strategy.
Recently, the Hong Kong Special Administrative Region Government (HKSARG)
has adopted a PPP strategy as a means for the Development of the West Kowloon Cultural
District. According to the original plan of the government, this 40-hectares site would
probably be one of the largest 'build operate transfer' (BOT)-type of PPPs in Hong Kong
in which the private partner would build and operate the facility before its long-term,
eventual transfer back to the government (Housing, Planning and Lands Bureau, 2003a).
Since the announcement of the project, however, many residents have expressed concerns
about how accountability will be achieved in the PPP project.
This research will investigate the development of PPPs in the Hong Kong
government's provision of public goods and services. It will build a systematic evaluation

1
model for studying accountability for BOT-type PPP projects, that can also be tested in the
context of the West Kowloon Cultural District PPP.

1.2 Role of the Government in Providing Goods and Services

Human beings need different type of goods and services. Some of them are provided
by the government whilst others are offered by the market and the third sector. The nature
of the goods frequently determines the role of the government, the market and the third
sector in service delivery. Exclusion and consumption are two criteria that help to identify
the nature of the goods. Goods have the property of exclusion if potential users can be
denied access by the supplier. The other characteristic is consumption-related. Goods can
be categorized according to their modes of consumption (individual consumption vs joint
consumption). Based on these two criteria, four kinds of goods are generalized (see Table
1.1).

Table 1.1 The four kinds of goods in terms of intrinsic characteristics

Easy to exclude Difficult to exclude
Individual Individual goods (e.g. food, clothing, Common-pool goods (e.g. fish in
consumption shelter) the sea)
Joint Toll goods (e.g. cable TV, telephone, Collective goods (e.g. national
consumption electric power) defense)
Source: Savas, 2000: 62

Individual and toll goods are generally best provided by the market whilst the rest
require government intervention to overcome market failures in their provision. For the
former group, the state may be responsible to provide a framework for the market to
operate. Hence, it is an arbitrator to oversee the provision of individual and toll goods.
Whilst for the common-pool goods, like fish and transport network, collective action
is needed as these goods will be consumed continually until exhaustion. In order to
preserve these resources, government intervention is required (Savas, 2000).
Collective action is also necessary for providing collective goods due to market
failure. Market failure presents in three ways. First, although the market is one of the
potential public goods providers, it fails as people have the economic incentive to be 'free
riders' and try to understate their needs or consumption on collective goods. When more
and more people choose to be free riders, the attraction for market production will
decrease and the goods will finally be underproduced. Thus, market failure takes place and
collective action is needed to ensure an appropriate supply. Second, increasing returns to

2
scale may lead to market failure. This phenomenon usually happens in the case like water
and electricity, which require large investment in developing the service and thus, a
monopoly is usually the result. The monopoly will increase the price to maximize profits
and the total public welfare will be reduced (Savas, 2000). Moreover, externality is
another form of market failure. It arises when not all the costs and benefits of the
production decisions are covered by the producers or consumer (Walsh, 1995). Take an
example, when pollution is not taken into account as a cost in producing a particular
product by the producers, over-production and over-consumption may result with social
costs (i.e. pollution) understated. Based on the above three reasons, the market fails to
provide the quality or quantity (or both) of collective goods required and hence,
government is responsible for ensuring the provision of these goods, possibly through
coerced contributions.
However, the government has its limitations on delivering some collective goods, too.
As the democratic government is mutually 'owned' by the people, government actions
usually require majority support. Hence, governments face difficulties in providing
collective goods which are not for the interest of all citizens. In response, the third sector,
including the civil society, non-governmental organizations and voluntary bodies, is often
a viable solution as it can address the needs of a smaller group of people (Salamon, 2001).
Moreover, government actor faces additional constraints (see Table 1.2) and often

Table 1.2 Sources of Constraints on Governmental Action

Constraints Description
Categorical Results from the necessity of governments to provide goods and services on a
constraint uniform and universal basis. This constraint implies that the demands of
individuals whose preferences for public services differ from the norm will go
unsatisfied. Moreover, since government must provide its services universally to
all its citizens, it is limited in its ability to experiment on a small scale with new
program
Maj oritarian There may be multiple conceptions of the public good and what government
constraint should be doing in a diverse population.
Time The relatively short tenures of government officeholders and their consequent
horizon incentive to focus on short-term issues and results leave long-term societal issues
and concerns unattended
Knowledge Government bureaucracies are organized in a relatively monolithic, hierarchical
constraint way and, hence, cannot be expected to generate all of the relevant information,
ideas and research needed for intelligent decision-making on public issues.
Size Difficult for ordinary citizens to engage government whose bureaucracies is large
constraint and intimidating
Based on Young, 2001: 190-191

3
criticized for being cumbersome, unresponsive, and too bureaucratic in meeting public
needs (Young, 2001). As a result, the third sector is preferred to perform some public tasks.
Since the 1980s, owing to the rise of NPM (a global reform movement characterized by
increased market orientation, managerialism and result-oriented approach), the for-profit
sector has been increasingly recognized as a potential public service provider.
As the government has its limitations in meeting the public needs and the private
sector has been increasingly accepted as a potential partner of the government in public
service delivery since the emergency of NPM, PPPs have been regarded as a feasible
means to employ private funding for public purposes. Although PPPs relieve governments
from the budgetary pressures and the criticisms of being cumbersome, unresponsive, and
too bureaucratic, they pose other challenges to governments, for instance, how to achieve
both public and managerial accountability.

1.3 Accountability in the Public Private Partnerships Context

In order to achieve accountability, the question as to who should give accounts to
whom, for what and how must be answered. Hence, in a broader sense, accountability is a
relationship with variable mechanisms by which the accountor is held accountable to the
accountees for his or her action or performance (Hayllar, 2000a, b). To be specific,
accountability mechanisms are usually adopted 'to ensure that resources are used in the
most efficient and transparent manner' (Demeke, 2002).
Accountability has long been recognized as an important public ethos because it is 'a
device as old as civilized government itself; it is indispensable to regimes of every kind. It
provides the post-mortem of action, the test of obedience and judgement, the moment of
truth' (Normanton, 1971: 312). Furthermore, it is a precondition for trust building which is
crucial for effective government. As Wolf (2000) suggests, 'trust in government is what
makes democratic government effective. Without trust no living democracy and no real
citizenship, without trust no compliance with rules and regulations and no willingness to
pay taxes, without trust no civil service of high standards and without accountability no
trust in government'. Hence, accountability plays a significant role in the formation of a
harmonious society and effective government.
Although the private sector is increasingly involved in public servIce provlSlon,
accountability should not be sacrificed in exchange for lower costs and better performance.
Public services have implications for users and citizens. However, unlike those provided
by the market, users of public services cannot sieve out the inefficient providers or

4
producers through their choices. Hence, it is legitimate for the public to expect that the
providers, including those who provide services through PPPs, are accountable for their
performance and the outcomes to the government or to the service-recipients via the
government (Kay and Reeves, 2004). On the other hand, as the state usually has to
contribute some public resources into BOT-type PPPs, proper accountability mechanisms
for the stewardship and management of public resources is required. As a result,
accountability is an important issue in PPPs and will form a central focus for this study
both in general and in relation to the West Kowloon Cultural District case study.

1.4 Background Information to the West Kowloon Cultural District Project

In order to promote Hong Kong as a world class city and an entertainment capital in
Asia, the Chief Executive announced in his 1998 Policy Address (Hong Kong Special
Administrative Region Government, 1998) that a new state-of-the-art performance venue
would be built on the West Kowloon reclamation site. The proposed 40-hectare West
Kowloon Cultural District would be located at the southern tip of West Kowloon
Reclamation. Originally, the site was planned for a variety uses: commercial (5.02 hectares),
residential (0.77 hectares), government, institution and community (1.45 hectares). Open
spaces (7.94 hectares) and regional park (13.79 hectares) would constitute a large part ofthe
site (Panel on Planning, Lands and Works and Panel on Home Affairs, 2003a).
In April 2001, The Concept Plan Competition for the Development of an Integrated
Arts, Cultural and Entertainment District at the West Kowloon Reclamation Hong Kong
was launched. Among 161 local and overseas participants, the team led by Foster and
Partners of the United Kingdom won. In October 2002, the Steering Committee for
Development of the West Kowloon Cultural District announced that the Foster and
Partners' submission would be used as the conceptual basis for the West Kowloon Cultural
District's masterplan.
The Hong Kong Special Administrative Region Government (HKSARG) launched
the invitation for proposal (IFP) for the Development of the WKCD in March 2003.
Several compulsory requirements were listed. The IFP stated clearly that core art and
cultural facilities including a theatre complex (three theatres with at least 2000, 800 and
400 seats respectively), a museum cluster with four museums, a water amphitheatre, an
exhibition center, a performance venue and at least four piazza areas and the canopy
proposed by the Foster and Partners must be constructed. Also, the chosen tenderer will be
responsible for constructing, financing and operating the developments for 30 years

5
(Housing, Planning and Lands Bureau, 2003a).
According to the IFP document, this 40-hectares site will probably be one of the
largest 'build operate transfer' (BOT)-type of PPPs not only in Hong Kong but also the
world in which the private partner will build and operate the facility before its long-term,
eventual transfer back to the government (Housing, Planning and Lands Bureau, 2003a).
Since the announcement of the project, it has been strongly criticized by different
parties on several issues, including the single-developer approach and construction of the
canopy. In response to the heated debate in the community, the government eventually
revised the mandatory requirements of the IFP by introducing an additional set of
development parameters and contract conditions. Unfortunately, it seems that the revised
proposal fails to generate sufficient public support for project. In February 2006, the
government finally announced that the project would be put 'on hold' as the bidders
indicated that they would not stay in the race for the changed project.

1.4.1 Stakeholders of the Project

In the development of the West Kowloon Cultural District PPP, all Hong Kong
citizens should be regarded as the stakeholders. In a narrow sense, the WKCD is an arts
and cultural project. Thus, arts and cultural groups are the key stakeholders. At the same
time, it is also an urban planning project and a property development project. Hence,
professionals like designers, architects, urban planners, surveyors and other related
pressure groups should also be regarded as key stakeholders. Broadly speaking, as the end
user of the WKCD is the general public, therefore, representatives of the public, i.e. the
District Council and Legislative Council, and the public itself should also be included in
the list. Finally of course, the government and its related departments are also stakeholders
too.

1.5 Aims and Objectives of the Study

This research aims to investigate the development of PPPs in the Hong Kong
government's provision of public goods and services. It seeks to build a systematic
evaluation model for studying accountability for BOT-type PPP projects and to
subsequently test this in the context of the West Kowloon Cultural District PPP. Key
objectives are as follows:
1. to identify and explore the definitions, objectives and types ofPPPs;
2. to investigate the different types of accountability associated with PPPs;

6
3. to reVIew the current approaches/ models used to evaluate different types of
accountability in each stage ofPPP projects;
4. to study the ranges of dominate forms of accountability which are used to study
accountability in each stage ofPPPs;
5. to develop a framework to study accountability for West Kowloon Cultural District;
6. to examine, within the context of the WKCD case, the extent to which the dominate
forms for achieving accountability in PPPs have been achieved and how effective the
related accountability mechanisms are;
7. to study issues affecting the relationship between accountability and the development
ofPPPs in Hong Kong;
8. to refine the evaluation model of accountability in the light of the experience gained
from its application to the WKCD case and to make recommendations for further
research and development in this field of study.

1.6 Methods
In order to develop a qualitative framework for studying accountability in BOT-type
PPPs, both primary and secondary data collection methodologies have been adopted.
A cross-national-based literature and documentary review based on the analysis of
materials including, books, journals, official documents and articles from the Internet
served as the major source of ideas for theoretical conceptualization and the development
of framework for studying accountability in PPPs. In particular, to gain a deeper
understanding of accountability in BOT-type PPPs, and to explore the applicability of the
framework being developed by this research, 15 fieldwork interviews are conducted with
key stakeholders in the West Kowloon Cultural District PPP. Key research informants
included screened-in private sector bidders (potential private partners), elected councilors,
representatives of arts and cultural groups, pressure groups and an advisory body. These
interviews were conducted from October 2005 to April 2006. Moreover, as the research
theme, accountability in establishing the WKCD, is regarded as a highly sensitive issues
by some key stakeholders, in particular, by the government. Observation is adopted as
another data collection method so as to gain a better understanding the views of the
government, the pubic and different stakeholders on the development of the WKCD.

1.7 Conceptual Framework

To aid the examination of the development and accountability of the West Kowloon

7
Cultural District PPP, two major frameworks are adopted. First, an amended version of
Sabatier's Advocacy Coalition Framework is employed to help explain the policy making
process of the West Kowloon Cultural District PPP.
According to the Advocacy Coalition Framework, in most policy arenas, there are two
to four advocacy coalitions, who coalesce around a similar set of core values and beliefs, to
compete and compromise in each of the policy subsystems. Conflict between these
coalitions is mediated by policy brokers, who aim to minimize the conflict by generating
some reasonable compromises (see Figure 3.4).
There are, however, some difficulties with the definition of advocacy coalition offered
by Sabatier (1993) as it ignores the distinction between insiders/ outsiders in regarding the
membership of coalitions and the possible occurrence of groups with the same core values
but different strategies/ organizational structure which prevent them from engaging in
long-term cooperation. Hence, in this research, the working definition of an advocacy
coalition is revised. Groups who share a particular belief system and take part in the
partnership building process will be regarded as a single advocacy coalition. Thus, while
different groups, who share the same core values and beliefs, may still be different in
accordance with their nature, organizational structure and the strategies/ approaches they
adopted, they are grouped together and titled here as 'a single advocacy coalition'. This
reflects John's (1999) concept of 'policy memes', a term which is borrowed from his
Evolutionary Theory to describe actors who' operate and compete through political interests
as if they have a need to survive in a similar way to genes in the organisms they inhabit'
(John, 1999). Thus both their needs to cooperate and to emphasize their fundamental
differences are recognized. Hence, competition occurs between coalitions and within a
coalition.
Second, in order to study accountability in PPP, and, in particular, the West Kowloon
Cultural District PPP, a conceptual framework is developed by drawing upon ideas gained
from the literature review. In general, five main dominant forms of accountability are
adopted, including communal, contractual, managerial, market and public accountability.
The implicit values and behavioral expectations of each type of accountability are listed in
Table 4.2. As a result of the specific nature of different stages of PPPs, different dominant
forms are utilized to study accountability at different stages (see Table 4.3).
Although the West Kowloon Cultural District PPP is still at the set up stage, there are
several aspects of communal, contractual, managerial and public accountability that can be
adopted for examining developments during four different periods of the WKCD

8
development, including the pre- and post- Invitation for Proposal periods, the revised
proposal formulated in October 2005 and the decision to put the project 'on hold'.

1.8 Structure of the Dissertation

There are nine chapters in this dissertation. This introductory chapter has provided
some background information to the study, including that on the role of government in
providing goods and services, accountability in the PPPs context and the case - the West
Kowloon Cultural District PPP. Moreover, the objectives, methods and conceptual
framework of this research have also been highlighted.
Chapter Two discusses the methodology that is adopted, and explains the rationale
for choosing a qualitative approach. Core concepts and related issues in PPPs and
accountability are explored through examining the international and local literature in
Chapter Three. In particular, the policy model adopted to explain the policy making
process of the WKCD is introduced. Chapter Four embarks upon the debates on the
various approaches to and impacts of PPPs on the rationales for and means of, securing
accountability are studied. After reviewing frameworks currently used in the UK. to study
accountability in PPPs, a new model is presented, and is subsequently, adopted in this
research. Chapter Five examines the developments of Public Private Partnerships in Hong
Kong.
Chapters Six to Eight present findings obtained from documentary reviews, in-depth
interviews and observation. Accountability secured in the development of the WKCD is
examined in accordance with the historical timeframe. In general, there are two main
turning points: the announcement of the IFP and the resignation of the first Chief
Executive, Tung Chee-wah. Chapter Six, therefore, examines the accountability secured in
the pre-IFP period. The following chapters, Chapter Seven and Chapter Eight, study the
issue under Tung's and Tsang's leadership respectively.
The final chapter will summarize the findings of this dissertation. Moreover, based on
the conclusion drawn from the case study, both factors that undermined or facilitated the
accountability secured and theoretical lessons on the utility of the conceptual framework
are discussed. Suggestion for further studies is also included in the concluding chapter.

9
 Chapter 2
Research Methodology

2.1 Introduction
Selecting an appropriate approach and specific methodology is vital in all research. It
determines what kind of information or data, for instance, qualitative or quantitative, is
going to be collected. In this research, a qualitative approach is adopted to develop a
framework for studying accountability in PPPs. The rationale will be explained first.
Reasons for choosing the holistic, single-case study design follows. Then, the methods
adopted for data collection - documentary review, in-depth interview and observation -
will be discussed. Finally, limitations of the research will be stated.

2.2 Qualitative Research: Why and How

In the literature, quantitative and qualitative approaches are usually regarded as the
two major paradigms in research design. These paradigms are fundamentally different
from each other (See Table 2.1). Hence, they are non-comparable in the sense that they
work under different assumptions and circumstances. In choosing the research approach,
the nature of the research topic/ research questions is the determinative factor.

Table 2.1 Quantitative and Qualitative Paradigm Assumptions

Assumption Quantitative Qualitative
Ontological Reality is objective and singular, apart
Reality is subjective and multiple as
from the researchers seen by participants in a study
Epistemological Researcher is independent from that Researcher interacts with that being
being researched researched
Axiological Value-free and unbiased Value-laden and biased
Methodological Deductive process Inductive process
Cause and effect Mutual simultaneous shaping of
factors
Static design - categories isolated Emerging design - categories
before study identified during research process
Context-free Context-bound
Generalizations leading to prediction, Patterns, theories developed for
explanation, and understanding understanding
Accurate and reliable through validity Accurate and reliable through
and reliability verification
Source: Based on Creswell (1994)

With the intention of providing a holistic picture of accountability in PPPs, a

qualitative approach is adopted as the main research methodology. Accountability is a
value-laden concept and context-bounded in that it is 'shaped by social norms or
aspirations' (Sinclair, 1995). Additionally, accountability is an ill-defined problem with

10
numerous stakeholders and relationships involved. Different people, including scholars,
public officials and managers, have different ways in defining and understanding
accountability. As a consequence, the focus of this research topic - accountability in the
West Kowloon Cultural District - best fits with the qualitative paradigm onto logically,
axiologically and methodologically. Furthermore, this research aims to further
understanding as to what extent accountability is being achieved in the West Kowloon
Cultural District. The storytelling characteristic of this research also makes it difficult to
apply a quantitative approach.
Four types of qualitative approaches are often used in human and social science
research, including ethnographies, grounded theory, case studies and phenomenological
studies (Creswell, 1994) (see Table 2.2 for details). In some researches, a combination of
these methods is used to gain a better understanding on research questions.
In this research into accountability in the West Kowloon Cultural District, case study
is the most appropriate method. Hence, only a single entity or phenomenon within a
real-life context is included. Moreover, as the research questions are not aiming to derive a
theory and do not involve an 'intact cultural group in a natural setting' (Creswell, 1994),
other qualitative methods are of limited value in this research. Consequently, this research
adopts the case study method.

Table 2.2 Four types of Qualitative Approach

Types Description
Ethnographies The researcher studies an intact cultural group in a natural setting during a
prolonged period of time by collecting, primarily, observational data.
Grounded theory The researcher attempts to derive a theory by using multiple stages of data
collection and the refinement and interrelationship of categories of
information.
Case studies The research explores a single entity or phenomenon ('the case') bounded
by time and activity (a program, event, process, institution, or social
group) and collects detailed information by using a variety of data
collection procedures during a sustained period of time
Phenomenological The researcher 'brackets' his or her own experiences in order to understand
studies those of the informants. Thus, in phenomenological studies, human
experiences are examined through the detailed descriptions of the people
being studied. As a method the procedure involves studying a small
number of subjects through extensive and prolonged engagement to
develop patterns and relationships of meaning.
Source: Based on Creswell (1994)

2.3 Case Study

Case study IS an ideal strategy for research in which holistic and in-depth
investigation is required (Feagin et aI., 1991). In the literature, several typologies are

11
offered to classify different types of case study. Among these, Yin's (2003) classification
which identifies four major types of case study designs based on a 2 X 2 matrix is usually
adopted (see Figure 2.1).

Figure 2.1 Basic Types of Designs for Case Studies

Single-case designs Multipl~ase designs

Holistic

(single unit
of analysis)

Embedded

1m ultiple units
of analysisl

Source: Yin, 2003: 40

2.3.1 Single-Case and Multiple-Case Designs

Case studies can be in single-case or multiple-case designs, and each type can either
be holistic or embedded (Yin, 2003). Hence, understanding the rationale for single-case
and multiple-case designs is of critical importance in choosing the appropriate design for
the research.
According to Yin (2003), a single-case approach should be adopted when the case
either typifies a critical test of existing theory or a rare or unique circumstance, or it is a
typical case. A single-case study is also ideal for a revelatory or longitudinal case. While
for the multiple-case design, a replication, instead of a sampling, logic must be followed.
Therefore, cases should be chosen with care in that cases should be predicted to show
either analogous results (for literal replication) or dissimilar results (for theoretical
replication) precisely at the beginning ofthe research (p. 39-53).
Single-case design is an ideal approach in this study as the case - West Kowloon
Cultural District PPP - is unique in nature. The principle of adopting PPP in this case is to
finance the construction and operation of a large scale cultural site via commercial and
residential development profits. In traditional public administration, culture is regarded as

12
a collective good in which government intervention to overcome market failures is
required. Hence, the idea of using profits generated from commercial and residential
developments to subsidize the construction and operation of a non-pro fit-making
component - cultural facility - for a long period of time (i.e. 30 years) is exploratory.
Hence, from this perspective, no other case is comparable to the West Kowloon Cultural
District PPP. Consequently, a single-case design is adopted.

2.3.2 Holistic and Embedded Case Studies

Another perspective to classify case study in Yin's model is the number of units of
analysis. Holistic case study refers to investigation with a single unit of analysis. While for
those with multiple units of analysis, irrespective of the total number of unit selected, is
regarded as the embedded design.
Both variants of single-case studies have their own strengths and weaknesses.
Holistic approach is of great value when no logical subunits can be distinguished or when
the theory that is being tested in the research is holistic in nature. However, the approach
has its shortcomings, too. First, via adopting a global and holistic approach, investigators
may 'avoid examining any specific phenomenon in operational detail' (Yin, 2003: 45).
Hence, the research may be deficient in any clear measures or data. Furthermore, using a
holistic case study may lead to slippage of research question. Although the initial
interview questions may aim at reflecting a particular orientation, a different orientation
may emerge during the course of the study. Embedded study can fill this gap as a set of
subunits can increase the sensitivity of the researchers to such slippage (Yin, 2003).
Although an embedded case study can prevent slippage of research questions during
the course of study, it also has pitfall. The major one is the possibility of neglecting the
larger unit of analysis as the researcher's focus becomes too concentrated on the subunit
(Yin, 2003). Consequently, the nature of the case study may change.
Owing to the specific nature and development of the WKCD case, the holistic
approach is chosen as no logical subunits can be identified at this moment. As a result, this
research will adopt a holistic, single-case design in conducting the case study on the West
Kowloon Cultural District PPP.

2.4 Data Collection Method

In order to develop a qualitative framework for studying accountability in BOT-type
PPPs, both primary and secondary data collection methodology are adopted, including

13
interviews, observation, cross-national-based literature and documentary review.

2.4.1 Documentary Review

In general, documentary review is relevant to every case study topic. Materials can be
drawn from different sources, including books, journals, newspaper articles, articles from
the internet and official documents. Through documentary review, researchers can gain a
better understanding towards the background of the research area and topic. Further, this
most convenient and least costly data collection method usually provides corroborating
and augmentative evidence from other sources (Yin, 1989).
In this research, a cross-national-based literature and documentary review, based on
the analysis of materials including, books, journals, official documents and articles from
the Internet serves is carried out. The review serves as the major source of ideas for
theoretical conceptualization and for the development of a framework for studying
accountability in PPPs, which is then used to examine the extent to which the dominant
forms for attaining accountability in PPPs have been achieved.
Through reviewing materials drawn from newspaper articles, articles from the
Internet, official documents like the papers, minutes and reports of the Legislative Council
and District Council, and press releases of the government, the writer has gained a better
understanding on the background of the West Kowloon Cultural District PPP, the opinions
and positions of the government, different stakeholders and the public on the issue. This
knowledge has provided a foundation for the examination of the accountability secured in
theWKCD.

2.4.2 In-depth Interviews

In-depth interviews are one of the essential sources of information collection in a
case study. Primarily, this face-to-face interaction between interviewers and interviewees
is usually used to gather fact and opinion. During interview, interviewees can express their
attitudes and emotions in detail. Hence, the truthfulness of interviewees' response can be
testified through their gestures or facial expressions. Further, by asking follow up
questions, interviewers can explore thoroughly the interviewee's insight on areas that the
former deem important (Babbie, 1998; Berg, 1998).
In order to gain a deeper understanding of accountability in BOT-type PPPs, and to
explore the applicability of the framework developed by this research, fieldwork
interviews were conducted with key stakeholders in the West Kowloon Cultural District

14
PPP. In carrying out in-depth interviews, a semi-structured approach has adopted. This
approach ensured that fundamental questions were answered and the flexibility for asking
follow up questions was retained (Berg, 1998).
In this research, 15 interviews were conducted by using purposive sampling. Such
non-probability sampling selects samples 'on the basis of [the researcher's] own
knowledge of the population, its elements, and the nature of [the] research aims' (Babbie,
1998: 195). As it is difficult to define and identify all stakeholders in the WKCD for
probability sampling, and different groups possess different perspectives on the degree of
accountability secured in the development of the project, studying a sample of
stakeholders from different categories can provide sufficient data for analysis. With the
adoption of semi-structured, open-ended questions, 15 interviews were conducted (see
Table 2.3 for the distribution of key informants)! from October 2005 to April 2006.

Table 2.3 Distribution of Key Informants

Category Number
Screened-in Proponents/ Potential Private Partners 2
Arts and Cultural Groups 5
Pressure Groups 5
Advisory Groups (on Public Private Partnerships) 1
Elected Councilors 2

Moreover, it is worth noting that the researcher was not able to conduct a face-to-face
interview with government officials who are in charge of the project. This might be related
to the highly sensitive nature of the project at that time. To bridge this gap, the researcher
attended some meetings of the Legislative Council to gain a better understanding on the
role and stand taken by the government.

2.4.3 Observation
Observation is another data collection method that is adopted in this research. As the
research theme, accountability in establishing the WKCD, is regarded as a highly sensitive
issues by some key stakeholders, in particular, by the government, observation of
decision-making meetings was not really possible. However, the researcher has able to
attend some meetings of the Legislative Council to gain a better understanding of the roles
and stands taken by and the accountability relationships between the government and

1 As the topic is sensitive to some interviewees, in particular, the screened-in proponents, all information of
the interviewees, including their personal particulars, have been kept confidential.

15
legislators. The researcher also attended the exhibition and 6 public forums 2 organized by
the government. As all government-organized forums were held from December 2004 to
January 2005, the researcher later attended three other public forums that were organized
by the community at the later stage. These were of particular importance as the
government had revised its proposal in October 2005 and through attending these forums
or seminars, the researcher gained a better understanding on the views of the government,
the public and different stakeholders on the development of the WKCD. Data collected
through both direct and participant-observation has provided a foundation for the
examination ofthe accountability secured in the WKCD.

2.5 Limitations of the Research

This research, like all other researches, contains several limitations. First, the result
of this research cannot be generalized. By nature, case study usually involves a detailed
investigation of a particular case. Hence, to some extent, case studies 'trade detail for
generalizability' (Jensen and Rodgers, 2001). Although the research findings are not
generalizable, rich details of the case are of great value to the meta-analysis of case studies.
With appropriate modifications, findings of this research can contribute to developing a
more complete database and meta-analysis can then be applied (Jensen and Rodgers,
2001).
Additionally, the data collection methods have their inherent weaknesses which affect
the reliability and validity of findings. Although there are six sources of evidence,
including documentation, interviews, direct observations, participant-observation, archival
records and physical artifacts for case study (Yin, 1989: 79), only the first four sources of
evidence are used. Owing to the nature and the development of the case, no archival
records and physical artifacts can be examined. The selection affects the reliability and
validity of findings adversely.

2.6 Summary
This qualitative research aims to develop a framework for studying accountability in
PPPs. It seeks to examine the extent to which the criteria for effective accountability in
PPPs have been achieved through the use of cross-national-based documentary reviews,

2 The government had organized 8 public forums altogether. The researcher attended six of these. Two were
designated for the arts and cultural groups, two for the professionals whilst the rest were designated for the
general public.

16
in-depth interviews and observations with the stakeholders of the case - West Kowloon
Cultural District PPP project. 15 in-depth interviews were conducted with different key
informants, including screened-in proponents, elected councilors, representatives of arts
and cultural groups, pressure groups and an advisory body.

17
 Chapter 3
Conceptualizing Public Private Partnership and Accountability

3.1 Introduction
Understanding of PPPs and related concepts is crucial in assessing accountability in
PPPs. This chapter explores first the core concepts and related issues in PPPs through
examining the international and local literature. It is organized into two major sections.
First is the conceptual discourse on PPPs. In this section, the nature of the public and
private sector and the tenn PPPs are defined, while typology and partnership building
process are elaborated. The focus then shifts more specifically to the application of PPPs.
Issues like the drives for governments to adopt PPPs, and its potential benefits and risks
are discussed. Lastly, the concept of accountability is examined.

3.2 Public and Private Sector

Society is generally divided into three well-institutionalized sectors, namely the
public, private and the third sector. The state and public sector are interchangeable in the
sense that they both refer to legitimate institutions which exercise authority over
populations (Osborne, 2000). Therefore, government institutions at various levels (such as
national, provincial and local levels) are included in the public sector.
Institutions outside the public sector are private. They can be classified as either
being for-profit or not-for-profit. Commercial enterprises and business comprise the
profit-oriented private sector. Non-profit organizations, non-governmental organizations,
voluntary and religious groups, and households belong to the third sector.
Generally speaking, the third sector locates between the private (for-profit) and the
public sector (Anheier and Seibel, 1990). Some academics use the tenn 'nonprofit' or
'voluntary' or 'non-governmental' to describe this sphere. According to Etzioni (1973), the
third sector is developed to match and balance the role of the market and the state through
'combining "the best of both worlds" - efficiency and expertise from the business world
with public interest, accountability, and broader planning from government' (Etzioni, 1973:
315). Salamon (2001) identifies six key features of this sector, namely fonnal, private,
non-pro fit-distributing, self-governing, voluntary and of public benefits (see Table 3.1).
Organizations with these features belong to the third sector.

18
Table 3 1 Key Characteristics of the Third Sector
Key Characteristics Description
Formal Institutionalized; with a formal charter of incorporation
Private Institutionally separate from government; although the third sector
organizations may receive government support, they must be
fundamentally private institutions in basic structure
Non-profit-distributing Although the organizations may accumulate profits in a given year, the
profits must not distributed to the organizations' 'owners' or governing
board
Self-governing Equipped to control their own activities with internal procedures for
governance and are not controlled by outside entities
Voluntary Involving some meaningful degree of voluntary participation, either in
the actual conduct of the agency's activities or in the management of its
affairs
Of Public Benefits Serving some public purpose and contributing to the public goods
Based on Salamon (2001)

The major distinction between the public and private sector is that the market seeks
efficiency and offers competition whilst the state plays a major or even monopoly role in
most public service delivery. Hence, civil servants usually lack market driven incentives to
work efficiently and effectively. On the accountability issue, the for-profit organizations
are generally accountable only to their stockholders or owner. Conversely, as the
legitimacy of government comes from the consent of the people, in order to be responsive
and accountable to all interests in the society, decision-making in public sector is usually
slow and may be subject to intense public scrutiny (Schaeffer and Loveridge, 2002). Other
key differences between the public and private sector are listed in Table 3.2.

Table 3.2 Differences between public and private sector organizations

Key distinguishing Private Public
features
Principal .. Equity holders .. Local community
stakeholders .. City institutions .. Direct service users/ clients
.. City analysts .. Elected representatives
.. Parliament
Key outcomes .. Shareholder value .. Economic, social and environmental
.. Profit well being of the community
.. Market share .. Honest and impartial advice to the
.. Share prices elected representatives
Scope (range of .. Determined by business .. Determined by statutory
products/ services, imperatives requirements and! or social
sectors, geographic .. Managers exercise high considerations
spread) levels of discretion .. Managers exercise low levels of
discretion

19
Key distinguishing Private Public
features
Scale (range of *
Determined by business * Partially dictated externally
vertically linked imperatives * Managers exercise low/ medium
activities) *
Managers exercise high levels of discretion
levels of discretion
Time horizons *
Short-term * Long-term
Re-invention *
High * Low
frequency
Entry/ exit *
Flexible * Inflexible
opportunities *
Managers exerCIse a high * Managers exercise low levels of
level of discretion discretion
*
Decisions based on tangible * Decisions based on intangible social
economic considerations consideration
*
Ease of exit! entry * Exit! entry inflexibility, social
encourage taking risk on responsibility and fiduciary duty
new ventures discourages taking risk on new
ventures
Targets * Determined at the discretion * Predominately established externally
of managers by politicians
Opportunity for * High * Low/ medium
aligning the interest
of principal/ agent
Customer focus * Highl moderate * Moderate/ low
Pursuit of quality * Yes if it makes commercial * Yes if it makes social sense
sense and no if it does not
External! internal * External m the case of * Internal in most cases
focus progressive organizations * Supply driven
* Demand driven
Working practices * Flexible * Dominated by job description!
* Subject to management tradition
discretion or local * Often subject national bargaining/
bargaining medium level of management
discretion
Main cultural traits * Competitiveness * Fairness
* Efficiency * Loyalty
* Entrepreneurialism * Respecting traditions
* Encouragement of initiative * Respecting hierarchy
* Achieving agreement * Reliability
* Honesty * Honesty
* Offer goods/ service it * Offer services at all costs
makes economic sense
Sources: Ghobadian et aI., 2004: 297-298

Clearly, the public and private sector differ fundamentally. However, in light of the

20
inherent weaknesses of the public sector in public servIce delivery, for instance, the
bureaucratic 'red tape' and also the international trend in New Public Management,
collaboration between the sectors, in particular, Public Private Partnerships, has emerged
as a key strategy in service delivery.

3.3 Public Private Partnership

In order to define PPP, it is important to know first the meaning of partnerships.
Unfortunately, in the existing literature, the concept of partnership is ambiguous. Although
definitions of partnership vary, several underlying assumptions are usually adopted in
defining the term in relation to public and private sector joint action. First, partnership is in
a form of synergy through which 'the sum is greater than the parts' (Brinkerhoff, 1999).
Second, partnership requires involvement of the participants in both service development
and delivery stages, although the participants may not necessarily be equally involved in all
stages.
These shared assumptions, however, fail to construct a formal definition for
partnerships. Some academics define partnership in a broad sense with the meaning of
partnership varying from 'simple coordination and coalition to more participatory terms
such as mutual collaboration, common goal and shared responsibility' (Haque, 2004: 272).
In response, Cigler (1999) develops a continuum of partnerships which include
networking, cooperative, coordinative and collaborative ventures depending on the
examination of complexity of purposes, intensity of linkages and the formality of
agreement reached.
Academics attempt to define partnership in terms of an ideal. For Brinkerhoff (2002),
'partnership is a dynamic relationship among diverse actors, based on mutually agreed
objectives, pursued through a shared understanding of the most rational division oflabour
based on the respective comparative advantages of each partner. Partnership encompasses
mutual influence, with a careful balance between synergy and respective autonomy, which
incorporates mutual respect, equal participation in decision making, mutual accountability
and transparency' (p. 21). However, as this type of definition may fail to reflect the
partnership in practice and may not be universally applicable, this is not a good way to
define partnership.
Instead of developing a formal definition for the term, several features of partnerships,
which are commonly found in the literature, will be used to describe 'partnership'. Peters
(1998) identifies four general characteristics of a partnership: 1. it involves two or more

21
actors; 2. each participant in partnership is a principal; 3. there is an enduring relationship
among the actors involved in a partnership, with some continuing interactions; 4. a
partnership implies some shared responsibility for outcomes oftheir joint activities.
In the literature, two other characteristics are usually used to describe partnerships.
First, a partnership is usually cooperative in nature, with the objective to bring the strengths
of the participants together and with weaknesses minimized. Carroll and Steane (2000)
define partnerships as 'cooperative ventures that rely upon agreement between actors in
return for somt? positive outcome for each participant, which could be some economic or
social goal or potential for synergy' (p. 37).
Mutuality is another fundamental feature of partnerships. There are multiple meanings
of mutuality. First, mutuality means mutual dependence and entails the rights and
responsibilities of each actor (Brinkerhoff, 2002). Organizations which are regarded as
'embedded in mutuality' have a strong mutual commitment to the shared goals and
objectives. Moreover, when partners involved are able to benefit equally from partnership,
the relationship tends to be more enduring and high performing (Austin, 2000; Kanter,
1994). To be specific, interdependence is a core value in mutuality. In partnership, a greater
degree of process integration and frequent interaction and communication are usually
observed. Whilst for the decision-making power, it is equally shared among the parties.
Thus, both of them have the chance to influence their shared objectives.
As PPPs can include a range of contractual relationships and structures for different
purposes, the concept of PPPs is somewhat ambiguous. In particular, the view on whether
privatization should be regarded as a type of PPPs varies. Privatization, broadly defined, is
using the private sector to meet partially or wholly public needs which originally were the
responsibility of the state. The term embraces a wide range of activities, ranging from
selling government-owned enterprise to contracting out public services (Savas, 2000; Klijn
and Teisman, 2000; Linder and Rosenau, 2000; US General Accounting Office, 1998; The
Ontario Secondary School Teachers' Federation, 2000). Therefore, some governments and
academics define privatization as a category of PPPs by placing it at one end of a
spectrum with conventional procurement at the other (Leighton Holdings, 2004; Hagger,
2004; Ghobadian et aI., 2004). Moreover, some scholars argue that PPP 'is just
privatization (a process with pejorative connotations in some places) "by the back door'"
(Harris, accessed in 2004).
In contrast, several scholars propose that privatization is fundamentally different
from PPPs which they seek to define more narrowly. Middleton (2000) suggests that PPPs

22
are the successor of privatization (as cited in Li and Akintoye, 2003). On the other hand,
as institutional setting may be altered by PPPs, some claim that PPPs are completely
different from privatization (Faulkner, 1997; Collin, 1998) (as cited in Li and Akintoye,
2003). If taking a practitioner, rather than an academic, view, privatization and PPPs are
distinctive in fields such as responsibility, ownership, service nature, service level and
quality, risk and reward, and service monitoring. Table 3.3 illustrates how such differences
are perceived by the Singapore Government. Hence, in this dissertation, privatization is
regarded as being fundamentally different from PPPs.

Table 3.3 A Comparison between privatization arrangements and Public Private

Partnerships

Privatization Public Private Partnerships

Responsibility The private sector is responsible for
the delivery and funding of the
services. Consumers generally buy
these services using their own
resources and the individual service
providers are responsible for making
resource allocation decisions
Ownership Ownership rights or interests In
public sector assets are sold to
private sector investors and the
benefits and responsibilities
associated with asset ownership are
vested in private shareholders
Service nature The nature and scope of service
provided by a privatized enterprise is
determined largely by that enterprise
itself and the public sector retains a
purely regulatory role
Service Level The level and quality of service
and Quality delivered is shaped by the degree of
competition In the market, with
market forces dictating prices,
volumes and quality
Responsibility for services remains with
the public sector, which then delegates
the service delivery to the private sector.
The public sector remains in control of
the quality and amount of services
purchased
Legal ownership of any assets can be
retained by the public sector
The nature and scope of sefV1ce
provided by the private sector IS
determined by the public sector as client
on the basis of contractually specified
outputs
The level and quality of servIce
delivered is shaped by the contract and
output specification. Service pricing,
volumes and quality are specified in
detail and the public sector client then
holds the private sector contractor
responsible for the delivery of these
specified outputs over the term of
arrangement

23
 Privatization Public Private Partnerships
Risk and The private sector accepts all the Risks are shared between the public and
Reward risks inherent III a business and private sectors, with individual risks
shareholders are exposed to the being allocated to the party best able to
profits and losses arising from that manage them. Rewards and benefits are
business shared between the public and private
sectors.
Service The ability of the public sector III The public sector retains the ability
Monitoring monitoring and influencing the through the contract to monitor and
nature and quality of service delivery influence service delivery over time.
over time is limited.
Sources: The Office of the First Minister and Deputy First Minister, 2002

According to a broad definition, contracting out, which describes the phenomenon

that an organization (principal) delegates its responsibility for service delivery or the
provision of goods to another organization (agent) through contracts, is another type of
privatization (Ascher, 1987). Again, some fundamental differences exist between the terms
and make them different from one another. Details of their differences are listed in Table
3.4.

Table 3.4 A Comparison between contracting-out arrangements and partnerships

Contracting out
Government and company (or consortium)
are involved in principal-agent relationship
Government defines the problem, specifies
the solution and selects a private company
that can produce results in a cost-efficient
way
Benefits of contracting out arrangements
especially concern efficiency (quicker and
cheaper)
Keys to success are unambiguous definitions
of goals, projects, rules of tendering, rules of
selection and rules of delivery
Based on the principles of project
management because there IS a clear
principle, clear goals and well-defined
project specifications
Contractual transparency regarding rules of
tendering, selection and delivery and rules of
inspection are crucial for a good relationship
..
Source: KhJn and Telsman, 2000: 86
Partnership
Government and company (consortium) are involved
in joint decision making and production
Both parties are involved in joint processes early on in
order to develop joint products that contribute to both
their interests
Benefits of partnership arrangements especially
concern increasing effectiveness (synergy and
enrichment of output)
Keys to success are an interweaving of goal,
establishing rules for ongoing interaction, developing
rules and tailor-made assignments concerning joint
effort and production commitments
Based on the principles of process management
because the joint goals, the art of financing,
realization and utilization remain subject to joint
decision making
Mutual trust is crucial for lasting relationships
between partners who maintain their own interest,
ways of working, accountability and financing
principles

24
 There is no formally agreed definition ofPPP in the existing literature. Thus, different
organizations and countries define PPPs differently. For example, the United Nations
defined PPPs as 'an effective means of establishing cooperation between public and
private actors and to bundle financial resources, know-how and expertise to address ...
needs. PPPs offer alternatives to full privatization, combining the advantages of both the
public and the private sector' (United Nations, 2002).
Similarly, 'a co-operative venture between the public and private sectors, built on the
expertise of each partner, that best meets clearly defined public needs through the
appropriate allocation of resources, risks and rewards' is embraced as the definition ofPPP
by the Canadian Council for Public Private Partnerships (2004).
Furthermore, the National Council for Public-Private Partnerships (2004) of the
United States stated a PPP to be 'a contractual agreement between a public agency (federal,
state or local) and a for-profit corporation. Through this agreement, the skills and assets of
each sector (public and private) are shared in delivering a service or facility for the use of
the general public. In addition to the sharing of resources, each party shares in the risks
and rewards potential in the delivery of the service and/or facility'.
As the 'heart of the government's attempts to revive Britain's public services' (BBC
News, 2003), PPP is defined as bringing the 'public and private sectors together in long
term partnerships for mutual benefit. The PPP label covers a wide range of different types
of partnerships ... ' in Britain (HM Treasury, 2000).
In Hong Kong, PPPs have been defined as the 'approach where the public and the
private sectors both bring their complimentary skills to a project, with varying levels of
involvement and responsibility' (Efficiency Unit, 2003).
Of the definitions cited above, several elements are commonly found. First, a PPP is a
co-operative venture between the public and the private sector. According to Carroll and
Steane (2000), PPPs, in a broad term, are 'agreed, co-operative ventures that involve at least
one public and one private-sector institution as partners'. Partnerships of two different
actors would bring the strengths of actors together and their respective weaknesses would be
minimized in a synergetic fashion. Nowadays, most governments are faced with budgetary
pressures, social and technological changes, and increased demand for better services.
However, bureaucracy, which is usually criticized as inefficient, rigid and bulky, could
hardly meet these growing demands. Instead, with the profit-making and market-oriented
nature, the private institutions of society function more efficiently and effectively, with
more innovation and flexibility. Thus, the co-operative nature of PPPs would finally

25
enhance the efficiency and effectiveness of public service delivery with public interest
safeguarded.
Secondly, there is an endurable and stable relationship between actors, with continuing
interactions. Large investment from the private sector is usually experienced in PPP. In
order to provide an attractive and reasonable return, medium to long-term tenders are
usually issued. Hence, in defining what is PPP, Hanss (2001) states that it is 'a form of
project specific or long-term cooperation between public institutions and private service
providers'. With the long-term relations, continuing interactions, like bargaining and
negotiation are common in daily management of the project. Participants in PPP are not in
principal-agent relation. Instead, both of them are the principal with some share of authority.
Trust, flow of information and cultural compatibility are crucial in developing a close
relationship between partners (Ghobadian et aI., 2004).
Moreover, each actor should contribute something, for instance, resources and
expertise, to the project with an agreed degree of involvement. The Ontario government
highlights the importance of contribution by defining PPPs as '[gJovernment provides
services with another party where each contributes resources and shares the risks and
rewards' (Whorley, 2001). In the PPP agreement, clear role and contribution of each partner
are usually stated. Each actor would bring some resources to the project. Clear transfers of
material resources, like capital and land, are usually found in the project too. Whilst
transfers of immaterial resources, including authority and experience, are less obvious
(Peters, 1998).
Furthermore, shared responsibility is another common element. In identifying the
basic requirements ofPPPs, Grant (1996) lists four elements including shared authority and
responsibility. As the relationship between the public and private sector is as partners in
PPPs, decisions should be made through negotiation and both actors should have a say in the
process. Therefore, shared responsibility and risks are the products of negotiated decisions
(Peters, 1998).
Overall, PPPs can thus be seen as medium to long-term arrangements which aim to
bring the public and private sector together on an equal basis - albeit with different levels of
involvement and responsibility - but in a way that will enable the PPP project to deliver
benefits from the complimentary skills, expertise and finance of both partners.

3.4 Types of Public Private Partnership

In order to gain a better understanding on the relationship between the public and

26
private sector in a particular PPP project, it is necessary to know what combination of
functions the project has undertaken. Allan (2001) suggests there are 10 key functions:
Design; Build; Finance; Operate; Maintain; Own; Transfer; Lease; Develop; and Buy
(Allan, 2001). The following types ofPPPs reflect different mixes ofthese 10 functions and
the terms are explained below (Legislative Council Secretariat, 2004).

(a) Build-Develop-Operate (BDO)

Under a BDO-type partnership contract, the private sector renovates, modernizes, or
expands the existing facility which they are obligated to lease or buy from the
government.
(b) Build-Operate-Transfer (BOT)
The contractor is responsible for building, financing (or part of the financing),
maintaining and operating a facility for a period of time, before finally transferring
its ownership back to the public sector. The private counterpart will collect user fees
to cover the cost of the project and make a reasonable return.
(c) Build-Own-Operate (BOO)
The private party constructs, owns and operates a public facility. Ownership of the
facility will not be transferred back to the government.
(d) Buy-Build-Operate (BBO)
For those existing public-owned facilities which need rehabilitation or expansion, the
BBO-type PPP may apply. The private sector will buy the asset from the government
and run the facility more cost-effectively. Several agreed specifications over pricing,
safety, and quality, for example, can be listed in the franchise agreement.
(e) Design-Build (DB)
The private counterpart is responsible for designing and constructing the facilities
while the responsibilities for the operation and maintenance are in the hand of the
public sector.
(f) Design-Build-Finance-Operate (DBFO)
Projects will be designed, constructed, financed and operated by the private sector.
The state will pay specific payments to compensate the operator.
(g) Design-Build-Maintain (DBM)
The responsibilities allocation of DBM is similar to that of DB, except that the
responsibility of maintaining of the facilities is sent to the private sector.

27
(h) Design-Build-Operate (DBO)
Although the legal ownership remams on the public agency, the single private
tender-awarder will be responsible for designing, constructing and operating the
public facility.
(i) Developer Finance
Through financing the construction or expansion of a public facility, the private
partner is granted permission for building residential, commercial stores, and! or
industrial facilities at the site. The developer may even operate the facility under the
supervision of the state and earn money through charging the users.
G) Operations, Maintenance and Management Services Contract
Although the Operations, Maintenance and Management Services Contract is similar
to the service contract, the private partner of the former is solely responsible for
operating and maintaining a public facility and making day-to-day decisions.
(k) Tax-exempt Lease
Through providing loan to the public sector, the private party acquires title to the
asset, but has to transfer it to the state at the beginning or end of the lease term. The
payment towards interest paying is tax exempt.
(1) Turnkey Transaction
The contract of turnkey transaction states clearly that the private sector entity has to
design and build a facility in line with the agreed and specified performance
standards for a fixed price. Either the public or the private sector is the financer and
the owner ofthe facility (Legislative Council Secretariat, 2004).
Although the relationship between the public and private sector varies in accordance
with the types of PPP, all PPP projects undergo largely similar processes of partnership
building.

3.5 Partnership Building Processes

Conceptualizing the dynamic process of partnership building is essential for
understanding PPPs. In the existing literature, there are several ways to describe and
conceptualize this process. Among them, most are in sequential stages. Sullivan and
Ske1cher (2002) put forward a life-cycle paradigm. Development of partnership is
described as a series of sequential stages: pre-conception, initiation, formalization,
operation and termination (see Table 3.5).

28
Table 3.5 Life-Cycle Paradigm
Stage Description
Pre-conception where the various parties become aware of the advantages of or
requirement for co-operation
Initiation III which discussions and negotiations build a commitment for

co-operative activity
Formalization where a governance structure is agreed and the collaboration establishes
an identity
Operation the undertaking of whatever activities are within the remit of the
collaborative venture
Termination the closure, transfer or transformation of the collaboration
Sources: Sullivan and Skelcher, 2002: 119

Through observing micro-level social interactions of partnerships, Ring and Van de

Ven (1994) generate the social process paradigm to conceptualize the dynamic of its
development. This cyclical framework contains three stages: negotiating expectations,
making commitments, and executing plans. Assessments on efficiency and equity are
made at each stage to determine the continuity of partnership (see Figure 3.1).

Figure 3.1 Social Process Paradigm

NEGOTIATIONS COMMITMENTS

of joint expectations lor future action througb

risk 8< tms! through

01 commitment. through

c: role interactions
personal interactions
)

Source: Ring and Van de Ven, 1994: 97

In practice, partnerships building process is usually more complicated. In the United

Kingdom, the HM Treasury identifies fourteen steps in the Private Finance Initiative (PFI)
procurement process 3 (Demirag et aI., 2004b) (see Table 3.6).

3 In the United Kingdom, BOT-typed PPPs is named as Private Finance Initiative (PFI).

29
Table 3.6 The PFI procurement process identified by the HM Treasury, the United Kingdom
Steps Description
1. Establish business needs Procurement proceeds only after a rigorous examination of business
objectives, needs and constraints including that of affordability.
2. Appraise options The cost and benefits of the various options including do nothing, do
minimum, traditional procurement and PFr are examined.
3. Prepare an outline An OBC, supporting the case for investment and for the PFr approach,
business case (OBC) and a based on the options appraisal, is prepared. It specifies the output
reference project specification rather than 'how' the service is to be delivered. A reference
project, usually a public sector comparator (PSC), is prepared for
benchmarking purposes.
4. Create a project team A procurement team, led by a full-time project manager, and a project
and proj ect board steering board to which it reports and which can take decisions, are
appointed. The project team needs to include people with the relevant
skills required in the PFr negotiation process and users.
5. Decide tactics This involves deciding how much information to request at the
pre-qualification, when to seek fully costed proposals and when to select a
preferred bidder.
6. Invite expreSSIOns of Advertisement includes explanation of project, indication of the
interest; publish Official information required for any assessment of the potential supplier's
Journal of European economic and financial standing and technical capacity, and the criteria
Community (OJEC) notice for award.
7. Pre-qualify bidders The general competence of the interested suppliers is assessed. Proposals
for the particular project are not covered.
8. Shortlist bidders Bidders are short-listed based on specific competence (e.g. risks
management). Bidders not taken forward are informed and debriefed
quickly on why they were not selected.
9. Refine the appraisal The OBC and any PSC are further refined in the light of new information.
The affordability and funding arrangements are reaffirmed.
10. Invitation to negotiate The rTN specifies the services required in output terms; the constraints on
(ITN) the project scope; the proposed contractual terms (lengths and payment
mechanism); the criteria for evaluation of bids and the scope for variant
bids (such as variations on proposed contracts duration, risk allocation)
11. Receipt and evaluation Bids received are evaluated in accordance with the principles and criteria
of bids set out in the !TN document. From the best and final offers received, the
preferred bidder is then chosen.
12. Selection of the The preferred bidder is selected and the PFI proposition is retested against
preferred bidder and the the key VFM and affordability criteria. Risks transferred to the private
final evaluation sector under PFr are costed and added to the PSC. The expected
accounting treatment of the contract is reconfirmed with the client's
auditors.
13. Contract award and Once the contract is signed and a contract award notice placed in the
financial close OJEC, the contract is implemented.
14. Contract management New processes, systems and management systems are put in place.
Based: Demlrag et aI., 2004b

30
 As the advocate ofPPPs in Hong Kong, the Efficiency Unit of the Hong Kong Special
Administrative Region also details eight main steps (see Table 3.7) in the procurement
process in its introductory guide to PPPs.

Table 3.7 The PPPs establishment procedures identified by the Efficiency Unit of the Hong
Kong Special Administrative Region
Step Actions involved
1. Mobilisation and » Conduct needs analysis, market testing and PPP feasibility study
Development of a Business » Establish an Intelligent Client Team (lCT) comprising civil
Case servants as well as outside expertise if required
» Establish whether a site is available, if a physical site is required
» Establish what services/ facilities are required
» Prepare a draft Statement of Requirements
» Consider whether to accept proposals for enhanced or other
commercial 'non-core' facilities/ services on the site
» Assess risks
» Prepare Public Sector Comparator (PSC) with the assistance of
other government departments, e.g. a works department, and seek
policy endorsement (this step can be skipped if qualitative or
policy predominate, or the project is financially free-standing)
2. Funding » Submit a bid via the policy bureau for funds through the Resource
Allocation Exercise process
3. Consultation and Land » Conduct consultations
Requirements » Seek necessary authorities' agreement on land use
4. Expression of Interest » Initiate an Expression of Interest exercise
Exercise
5. Policy and Financial » Consult and seek approvals of Public Works Subcommittee and
Approvals Finance Committee of the Legislative Council
» Determine detailed commercial arrangements
» Seek draft land grant conditions
6. Procurement and Selection » Instruct Department of Justice on drafting of Request for Proposal
document! contract
» Finalise Request for Proposal documents and seek approval from
the relevant bid evaluation committee to be approved by
Secretary for Financial Services and the Treasury
» Establish bid evaluation committee including the necessary
departmental/ technical/ financial experts
» Issue Request for Proposal
» Evaluate proposals
» Negotiate with bidder(s)
» Award contract
7. Service Commencement » Commence construction, if construction is required
» Commissioning of facility and commence service delivery

31
Step Actions involved
8. Payment and Contract ~ Make payment for the facilities/ services provided
Management ~ Defer or reduce payment, if performance is unsatisfactory
~ Institute investigations and issue warning, if there is continuous
serious non-performance
~ Terminate contract, if the bidder fail to perform
~ Conduct joint inspection towards the end of the contract
~ Hand over facilities (at the end of the contract)
Based: EffiCIency Umt, 2003

These frameworks are different in certain aspects so as to fit their local context. For
instance, in the United Kingdom, an Official Joumal of European Community notice should
be published to invite expressions of interest towards the proposed PFI project. Whilst in the
introductory guide published by the Efficiency Unit of Hong Kong, the role of the
Legislative Council is highlighted, for example, Public Works Subcommittee and Finance
Committee should be consulted and the project should be approved by these committees
before the procurement and selection process begin.
However, they are also similar in the sense that four main stages are identified:

1. Initiation (The Public Private Partnership Decision)

The feasibility study, project team establishment and the preparation of project
documents, like project brief, pre-qualification and tender documents are included in
this stage.
2. Set up (Award of Tender)
This is the stage for selecting the qualified contract bidder. Thus, pre-qualification and
shortlisting, tender evaluation, negotiations and award are the main elements of this
stage.
3. Design and construction
This stage includes optimization of inputs, design and work checks.
4. Operations and services
Other than service delivery, possible performance-based payments, penalties for low
standards and dealing with long-term changes are the major components here.

As defined previously, the contractor of BOT-type PPPs is responsible for building,

financing (or part ofthe financing), maintaining and operating a facility for a period of time,
before finally transferring its ownership back to the public sector. In order to develop a
detailed and holistic support framework for PPP's development and implementation, the

32
final stage ofPPP - transfer and post-transfer management - is included below.

5. Transfer and post-transfer management

This is the final stage ofthe project which includes the smooth transfer of properties and
personnel and the selection of a new operator, if applicable (Zhang and Kumaraswamy,
2001).

This five-staged framework is adopted in the study so as to structure the analysis of key
phases of the PPP's development and implementation.

3.5.1 Policy Making Model

As utilizing PPPs is a policy, a policy making model can be adopted also to help
illustrate the process. Through the adoption of the policy making model, the political
process for formulating a PPP policy will be visualized. In the literature, there are six
commonly agreed-on stages in policy making. For example, Theodoulou (1995) suggests
stages that include 1. Problem Recognition and Issue Identification; 2. Agenda Setting; 3.
Policy Formulation; 4. Policy Adoption; 5. Policy Implementation; and 6. Policy Analysis
and Evaluation (see Table 3.8).

Table 3.8 Six commonly agreed-on stages of policy making

Stages Description
1. Problem Recognition This stage draws the attention of policy makers to a problem that might
and Issue Identification require governmental action; problems, if legitimate, then become
issues.
2. Agenda Setting The issue is given the status of a serious matter.
3. Policy Formulation Proposals are developed for dealing with issues
4. Policy Adoption Efforts are made to obtain enough support for a proposal to make it to
the government's stated policy.
5. Policy Implementation The policy mandate is aimed at through public programs and the federal
bureaucracy, often with citizen, state, and local government
cooperation.
6. Policy Analysis and This involves examining the consequences of policy actions, including
Evaluation whether the policy has worked.
Source: Theodoulou, 1995: 86

From the many models available for studying the policy process, the policy lenses
proposed by Easton's black box model, Kingdon's Streams Model and Sabatier's Advocacy
Coalition Framework, will be introduced one by one in the following section. Among them,

33
Sabatier's Advocacy Coalition Framework appears to be the best fit for helping to analyze a
PPP's development.

3.5.1.1 Easton's Black Box Model

David Easton's Black Box Model is of particular importance in the development of
more sophisticated policy-making models. By systemically analyzing the public policy
making process, Easton (1979) suggests a 4-staged cyclical model: input (demands and
support), the political system (the black box), the output (decisions and actions), and a
feedback loop. As public policy is the product of a system, he further proposes that the
process is influenced by the structural, social, economic and political environments in
which it operates. In this framework, the complex political phenomenon of public
policy-making is conceptualized into a simple model which includes all potential
institutional factors (for instance, the structure of the government and the division oflabour
between the federal and state government are regarded as part ofthe structural environment)
and practical issues (such as the demands or pressure from interest groups) which may arise
in the process. The simplified version ofthe Model is shown in Figure 3.2.

Figure 3.2 Easton's Black Box Model

Inputs:
Electi()n results
Public opinion
Communications to elected officials
Medin coverage of issues
Personal experiences of decision makers

THE POLITICAL SYSTEM or

"THE BLACK BOX" Outputs:
Laws
The political system, translates inputs Regulations
into outputs. The structural, social, I----~... Decisions
political, and economic environments
influence political and policy making
activhies.

Feedback influences the pOlitical system

and the nature of the demands that continue
the cycle.

Source: Birkland, 2001: 196

3.5.1.2 Kingdon's Streams Metaphor

Instead of analyzing the agenda-setting process in a linear manner, John Kingdon
(1995) views the public policy-making process as consisting of moving and merging

34
streams (see Figure 3.3). He proposes that in order to place a particular issue on the
government agenda, the three streams in his model should come together to create a 'policy
window'. The three streams are the politics stream (politics and public opinion), the policy
stream (existence of potential solutions to a problem), and the problem stream (the attributes
of a problem) (Birkland, 2001). When these streams join together, the 'policy windows',
which are defined as 'opportunity[ ies] for advocates of proposals to push their pet solutions,
or to push attention to their special problems' (Kingdon, 1995: 165), will be opened. Policy
entrepreneurs who are willing to devote their 'time, energy, reputation, money - to promote
a position for anticipated future gain in the form of material, purposive or solidary benefits'
(Kingdon, 1995: 179) then have to seize the opportunity offered to initiate action as
otherwise they will have to wait for another opportunity once this is lost.

Figure 3.3 Kingdon's Streams Metaphor

Problem Stream

Window of
Opportunity
Po liey Stream

Politics Stream
Time

Source: Birkland, 2001: 225

3.5.1.3 Advocacy Coalition Framework

Sabatier's Advocacy Coalition Framework aims to explain policy change through the
integration of individual interests and values, organizational rules and procedures,
socio-economic factors and policy subsystems (Sabatier, 1993). Originally, the model was
intended to search for an alternative to the stages heuristic. It integrated the best features of
the top-down and bottom-up approaches to policy implementation, and generated technical
information to enhance our understanding of the policy process (Sabatier and Jenkins-Smith,
1999: 117). According to Sabatier, policy change is the product of interactions between
advocacy coalitions, which are defined as 'people from a variety of positions (elected and
agency officials, interest group leaders, researches, etc) who share a particular belief

35
system - that is, a set of basic values, causal assumptions, and problem perceptions - and
who show a nontrivial degree of coordinated activity over time' (Sabatier, 1993: 25). In each
of the policy subsystems of the Advocacy Coalition Framework, there are two to four
advocacy coalitions, who coalesce around a similar set of core values and beliefs, to
compete and compromise. Conflict between these coalitions is mediated by policy brokers,
whose aim to minimize the conflict by generating some reasonable compromises (see
Figure 3.4).

Figure 3.4 Advocacy Coalition Framework

Degree of
consensus
RELATIVELY STABLE needed for POLICY SUBSYSTEM
PARAMETERS majorpoJicy
change CoalHionA Policy CoalHion B
1. Basic attributes of Brokers
the problem area a; Policy Beliefs a. Policy Beliefs
(good) b. Resources b. Resources
2•. Basic distribution of
natural resources
3. Fundamental
sociocuttural values Strategy Al Strategy Bl
and social structure " re guidance re guidance
4 Basic constHutiooal Constraints instruments instruments

De~SiOnSbY
structure (rules)

..
and "-. /
Govemmental Authorities

EXTERNAL (SYSTEM)
EVENTS
Resources

of
!
-+- Institutional Rules, Resource
...__A_'_J ...~_en_tS_-I~
1. Changes in
socioeconomic
condHions Subsystem
2. Changes in public
opinion
3. Changes in
systemic governing
coalHion
Actors P'TP.'
4. Policy decisions Policy Impacts
and impacts from other
subsystems

+
Source: Birkland, 2001 :226

Among three policy-making models as reviewed above, the Advocacy Coalition

Framework is the best for enhancing an understanding of the partnerships building process,
especially the political process as included in formulating the PPP policy. Since Easton
fails to 'open up' the black box, the political processes entailed in formulating policy, the
model is of limited value in enhancing our understanding toward the partnerships building
process in full. On the other hand, although Kingdon's Streams Metaphor is a

36
sophisticated and useful model in analyzing agenda setting and the processes to open up
the 'policy window', it does not structure another essential aspect in partnership building-
namely the process of negotiation and policy implementation after the policy entrepreneurs
seize the chance, i.e. the opened policy window, to initiate action. Owing to the long-term
contract and the specific nature of PPPs, especially the business mode of providing public
services, various actors and stakeholders are involved at different times in the process of
making and implementing PPP policy. Hence, long term integration of individual interests
and values, organizational rules and procedures is vital in the process. Relatively speaking,
the Advocacy Coalition Framework provides the best framework in analyzing the
partnership building process in full. However, the Framework has its own inadequacies too.
As the Framework is adapted in this research to help explain partnership building
processes, two relevant criticisms will be mentioned. First, the model is strongly criticized
for the problematic definition of 'coalition'. In the Advocacy Coalition Framework, an
advocacy coalition is defined as 'people from a variety of positions (elected and agency
officials, interest group leaders, researchers) who (1) share a particular belief system - i. e., a
set of basic values, causal assumptions, and problem perceptions - and who (2) show a
nontrivial degree of coordinated activity over time' (Sabatier and Jenkins-Smith, 1999).
Some academics, such as Caimey (1997), criticize Sabatier for ignoring the distinction
between insiders/ outsiders in regarding the membership of coalitions. Furthermore, long
term coordination within coalitions is doubtful. In response, Sabatier and Jenkins-Smith
(1999) claim that although fluid and amorphous coalitions are found in the initial stage, they
tum to be stable once the policy subsystem becomes mature. Second, the proposed absolute
division between coalitions is problematic (Caimey, 1997). It may be difficult to
differentiate coalitions just according to core values or beliefs. For instance, although the
core values of Friends of the Earth and Greenpeace may be the same, their different
strategies or approaches to deal with the government may prevent them from long term
cooperation (i.e. to form a coalition). Hence, modification on the definition of advocacy
coalitions is needed.

In this research, groups who share a particular belief system and take part in the
partnership building process will be regarded as a single advocacy coalition. As previously
mentioned, even though some groups of people share the same core values and beliefs, they
may be different in accordance to their nature, organizational structure and strategies/
approaches adopted. Although these different sub-groups (such as interest groups, pressure

37
groups, journalists and academics) are grouped together and are titled as 'a single advocacy
coalition', they are regarded as 'policy memes'. This term, which is borrowed from John's
Evolutionary Theory to describe actors who' operate and compete through political interests
as if they have a need to survive in a similar way to genes in the organisms they inhabit'
(John, 1999), is used so as to emphasize their fundamental differences. Hence, competition
occurs both between coalitions and within a coalition. This revised Framework is adapted
and modified to provide a new outline for analyzing partnership building processes.

3.6 Reasons for Using Public Private Partnerships

In the contemporary review of partnerships between the public and the private sector,
the concept was first developed in the United States in the 1970s. Since the ideology of
President Ronald Reagan - 'reduce big government' and 'reinvent government' - was in
line with the idea, pUblic/private collaboration was further heightened (Moulton and
Anheier, 2001; Colman, 1989). In the United Kingdom, the practice of using the private
funding for public purposes has long been established also. In 1981, Sir William Ryrie of
the Treasury Committee announced a set of rules to govern private funding. And the
Private Finance Initiative, which further encouraged the collaboration between the public
and the private sector, was formally introduced in 1992 (Allan, 2001). Globally, PPP
spread to other countries, including Australia, Canada, Germany, Korea and the
Philippines, at various rates (Osborne, 2000).
Different countries have different reasons for adopting PPP. In some countries, a
mixed rationale is found. In general, there are three main drivers for the growing interest
inPPPs.

3.6.1. Political Motives

~ Investment in Infrastructure
There is a causal relationship between economic growth and infrastructure
development or its enhancement. Furthermore, as some countries have limited government
budgets yet face growth demands for new infrastructure like roads, hospitals and prisons
(Office of the First Minister and Deputy First Minister, 2002), infrastructure building is an
area where PPP is increasingly adopted worldwide.
~ Emergence ofneo-liberalism
The advent of neo-liberalism IS usually claimed to be a factor leading to the

38
increasing private involvement in public service delivery. Since the late 1970s and early
1980s, the public sector was strongly criticized for its monopolistic and bureaucratic
inefficiencies (Linder and Rosenau, 2000). Neo-liberalism, which is driven by the beliefs
that the free market is the 'best regulator and engine of economic growth' (Jauch, 2002)
and that the state 'should play only a minimal role in society' (Smith and Lipsky, 1992),
then became the dominant ideology at that time. This ideological stance brought Margaret
Thatcher, the former Prime Minister of the United Kingdom, and Ronald Reagan, the
former President of the United States, to seek to reduce big government by involving the
private sector in public service delivery.
~ Globalization
The growth of transworld governance mechanisms, which is brought about by
globalization (Scholte, 2000), has led some national governments to adopt PPPs as a
means to deliver public services. In order to be a member of some suprastate bodies,
national governments have to give up part of their autonomy and are compelled to
implement policies or directives of the suprastate bodies. For instance, member states of
the European Union (EU), an advocate of PPPs (European Union, 1999), are obligated to
promote PPPs in their national policies.

3.6.2. Financial Motives

~ Leveraging of Public Funds
With the adoption of PPPs, available private sector capital would be injected into the
construction and provision of public goods and services. Therefore, projects would not be
so directly affected by the financial condition of governments and they would not
aggravate the burden of the public sector when the government is facing budgetary
pressures (Allan, 2001). At the same time, PPPs add value to the financial flexibility of the
administration. Therefore, PPPs are usually placed high on the agenda when there is a
budget deficit.
~ Alternative revenue sources
With the capital injection from the private sector, tolerance to the introduction of
some pricing initiatives, such as toll or user-pay systems, may be increased. Hence,
revenues can be drawn from third parties and the PPP arrangement may allow government
to access the proceeds of some projects which would otherwise be impossible (Allan,
2001). Expensive, but valuable services can also be made available more quickly or more

39
widely under PPP.
~ A Business Opportunity for the private sector
In a PPP, the private sector can take part in public service delivery (including design,
construct, operate and maintenance) which is traditionally the responsibility of the
government. This creates new business opportunities for the private sector.

3.6.3 Managerial Motives

~ Better incentives to perform
When compared to public-sector procurement, the profit-making nature of the
private partner will act as an incentive for performing more cost-effectively. Some
additional incentives, for example, payment will only be made conditionally upon
achieving desired service quality, can be provided in the PPP contract (Allan, 2001).
~ Optimal Responsibilities Sharing
Under PPP, there can be optimal sharing of responsibilities so that each partner in the
PPP can work according to their expertise and add value to the provision of the public
good. The government usually has expertise in recognizing the public needs and
formulating public policies with clear objectives. Therefore, the public sector would be
responsible for defining objectives and desired outcomes without sacrificing the public
interest. Whilst for the market-oriented private sector, it is better equipped with the
management disciplines and functions needed to operate more efficiently and effectively,
and with more innovation and flexibility. Hence, it would be responsible for the
construction and daily management of the services. With the optimal responsibilities
sharing pushed for in PPPs, sectors will bring their strengths (such as skills, knowledge and
expertise) together while weaknesses are minimized (Ministry of Finance in Singapore,
2004).
~ Optimal Risk Management
Optimal risk management is expected to be achieved in a PPP project. In order to
secure value for money, even risk is usually allocated to the party who, through its actions,
could best manage and minimizing it (De Bettignies and Ross, 2004). Therefore, under a
PPP contract, government is usually freed from asset-based risks, for instance, design,
construction and operation risk, and 'becomes the purchaser of a product that is risk-free
in the sense that government does not pay if the service is not delivered or not delivered to
the specific standards' (Lewis, 2002). However, it is worth noting that some risks, for

40
example, project default risk and political risk, cannot be completely transferred to the
private sector. Owing to the fact that the private partner can quit the PPP project whenever
it is not profitable, project default risk cannot be completely shifted to the business (De
Bettignies and Ross, 2004). For the private sector there is also often a question of political
risk shouldered by the public sector when the government changes its strategy, policies or
in ways that impinge upon the PPP, including the cancellation of a project.

Different countries and governments have their own rationale for developing PPPs.
For instance, the rationale for adopting PPP in the water supply and sanitations sector of
Yemen, a water-scarce country, is purely managerial. The centralized national water
delivery agency was criticised for its 'very slack implementation of projects, inadequate
coverage by services, inability of branches to operate and maintain facilities, extreme
wastage of financial, human and water resources and a widespread frustration and low
morale among employees and customers' (Sahooly, 1999:10, as cited in Sahooly, 2003). In
response to the poor management of the agency, the government of Yemen introduced
PPPs in the water supply and sanitations sector. Whilst for the Irish government, PPP is
used to cope with the infrastructure deficit arising under the fiscal constraints (which were
imposed by its membership of the single European currency) (Reeves, 2003). Hence, the
approach to Irish PPPs is underpinned by both financial and political rationales.
In the United Kingdom, a shift of rationale in adopting PPP is observed. As
mentioned previously, the practice of using private funding for public purposes has a long
history. With the ideology of 'reducing big government' and 'reinventing government',
this concept was first introduced by the Thatcher Government in the early 1980s through
the Market Testing Initiative - a process to examine which, the state or the private sector,
is the most appropriate agent in delivering a particular public service. The Major
Government then expanded the program and renamed it as Competing for Quality in 1991.
Under this program, the public and private sector has to compete to offer service and
government-owned-contractor-operated arrangements might be resulted (Pint, Bondanella,
Cave et aI, 2001). Later, in response to the growing demands for upgrading the pubic
infrastructure and services under fiscal constraints (Pollitt, 2002), another market-oriented
programme called Private Finance Initiative was launched. This differed from the previous
two approaches in that private partners are involved in financing, managing and operating
the assets under long-term contracts (Kee and Forrer, 2002).
In 1997, the Labour Party won the General Election. According to the ideology of the

41
left, the market should not be allowed to enter the public domain as social cohesion
aspects will be weakened and public services will finally be turned into consumer
commodities (Corry, 2004). However, in reality, the Private Finance Initiative was further
expanded and renamed as Public Private Partnerships by Tony Blair. To explain the
phenomenon, Corry (2004) suggests that the Labour Government needed money for the
infrastructural developments it had pushed for. Furthermore, the Labour Party had
undergone its ideological transformation. With the influences of the New Public
Management, 'literature on public sector failure' and 'fresh understanding of the power of
incentives and organization in promoting change and innovation', the ideology of the New
Labour was characterized as 'embracing the market and getting closer to 'what works"
(Corry, 2004: 25). By involving the private sector in public service delivery, the New
Labour government can show its transformation to the electorate.
A shift of rationale was thus found to have taken place in the United Kingdom.
Originally, the Private Finance Initiative (renamed later as PPPs) was introduced by the
Conservative Government on financial grounds - upgrading public infrastructure and
service under fiscal constraints. Whilst for the Labour Government, PPPs were led by both
the financial and political reasons.

3.7 Potential Benefits and Problems of Adopting Public Private Partnerships

Supporters of PPPs usually focus on the benefits they may bring, whilst the
opponents identify the potential risks and criticize the for-profit sector as being unable to
deliver public goods. This section, therefore, will discuss the issue in depth, by first,
introducing the potential benefits and problems associated with PPPs; and then examining
the benefits of service delivery via PPPs in relation to the criticisms ofPPP.

3.7.1 Potential Benefits

In the literature, several impressive benefits are claimed to accrue from PPP.
1. Increased Innovation
Usually, government will only list out the service it needs and its output
specifications in a PPP contract. Therefore, room for innovation will be provided 'in
terms of funding packages, delivery of services and construction of the asset' (Ball,
Heafey and King, 2000: 101) In order to save costs, most private partners may make
good use of their innovative capacity and thus innovation may be enhanced.

42
2. Access to new resources
With the adoption of PPPs, the scale of available resources will be increased. The
then Chancellor Kenneth Clarke (1995) of the United Kingdom stated that 'The PFI
is unlocking new resources and will increasingly replace old-style public sector
capital spending, delivering far more on the ground than what went before it' (Clarke,
1995:4). Different types of new resources, including information, expertise and new
technologies (which are usually unavailable in public agency), may be brought by the
joint venture (Osborne, 2000).
3. Improved Efficiency and Effectiveness
Efficiency and effectiveness will be improved through the creation of synergy
between the sectors. Participation of the private sector will enable projects to break
from the bureaucratic 'red tape' and political intervention model (Allan, 2001). Also,
risk, a real project cost, will be borne by both partners (Allan, 2001). For instance,
Arthur Andersen and Enterprise LSE (2000) (commissioned by Treasury Task Force)
found out that 60% of the total cost saving for 17 PFI projects examined comes from
risk transfer. On the other hand, through reviewing 11 PFI school projects, the Audit
Commission (2003) learned that the economic feasibility of most examined schemes
is dependent on the risk transfer as the risk transfer percentage is greater than that of
the value for money. Additionally, having a broader base of expertise and knowledge
will add value to the service delivery. Therefore, greater output might be achieved
with less cost.
4. Better Management and Allocation of Risk
Risks are usually structurally managed (such as formally identified, quantified and
allocated) from the early stages of a PPP project. Also, with the optimal sharing of
responsibilities and costs (each partner will work on areas in which he works best),
some risks will be transferred to the private sector. Thus, costs related to risk
management may be minimised (Allan, 2001). Risk management is a key issue in
Canada. For example, on the Confederation Bridge PPP project, in order to attractive
private sector investment, the Canadian government has guaranteed 'a revenue
stream equivalent to the revenues of the then existing ferry system which the Bridge
replaced' (Pearson, 2001). The government guarantee has not only reduced financial
pressure on both the private partner and the government, but has also ensured that
operating and maintenance risks could be transferred to the private partner.

43
5. Improved standards of service delivery
As mentioned previously, involving the private sector in public service delivery may
enhance innovation and introduce new technologies. The new technologies and
economics of scale often improve the standard and the quality of services (Ministry
of Community, Aboriginal & Women's Services, British Colombia, 1999).
6. Better Asset Utilisation
Operators will be allowed to generate income by sharing public assets with the third
party for commercial use (The Office of the First Minister and Deputy First Minister,
2002). Potentially, sharing government facilities can raise the revenue. With the
expertise (in terms of management) of the private sector, optimal sharing and
utilizing public asset will be achieved with the gain of economic and social benefits
(The Ministry of Finance in Singapore, 2004).

3.7.2 Potential Problems

Like the two faces of a coin, in addition to the benefits identified above, PPPs have
their own problems. Although different forms of PPP are associated with different
problems, loss of control, increased cost, increased political risks, inadequate
accountability and limited competition are those most usually found in literature.
1. Loss of Control
The contractual rights in a PPP arrangement usually entitle the private sector to take
part in decision-making. They may even be involved in making decisions concerning
how services are delivered and priced. Hence, government, to a certain extent, loses
control.
2. Increased Cost
In PPP arrangements, transaction costs can be much higher than that of the
conventional public service delivery. These costs are usually related to the bidding
process, including the costs to seek financial, legal and technical advice, and the costs
of complex negotiations (Ball, Heafey and King, 2000). Some academics even
estimate that the bidding costs spent by the private sector under PPP are seven times
higher than that under conventional tendering (Steward and Butler, 1996). The total
transaction costs incurred in both sectors can outweigh the money saved. As a result,
the true costs of service provision may increase.
3. Increased Political Risks
As PPP is a relatively new concept in public administration, few states have extensive

44
 experience. Hence, the state, stakeholders and the community are unfamiliar with
PPPs. Political risks may be raised (Minister of Community, Aboriginal and Women's
Services, 1999). On the other hand, PPPs can also impose more political risks to the
elected officials. As public services have implications for citizens, it is legitimate for
the public to expect that the providers, including PPPs, are accountable to their
performance and the outcomes (Kay and Reeves, 2004). Therefore, elected officials
may be asked to explain in what way the PPP can generate clear benefits that are
unavailable from the traditional methods of service delivery and they may also need to
explain the behavior of their counterparts in the PPP (who are not under their direct
control) (Ministry of Municipal Affairs and Industry Canada, 2003).
4. Inadequate Accountability
PPPs, by nature, are a joint venture of the public and the private sector which involve
sharing responsibilities, risks and decision-making power. As the state is no longer the
sole player in public service delivery, boundaries between and among sectors became
blurred. Hence, the lines of accountability for the service provision are less clear and
the responsiveness to public demands may become lower than that under the
conventional delivery.
5. Limited Competition
Competition is an important element in PPPs. With competition, efficiency, innovation
and cost saving can be achieved (Minister of Community, Aboriginal and Women's
Services, British Colombia, 1999). However, if there are only a few potential private
partners with expertise and ability to bid for the contract, limited competition will
result. As a consequence, the government and the community, as a whole, may be
unable to benefit from the PPP and a 'private monopoly' (The Government of Nova
Scotia, 2001) might arise. For instance, limited competition occurred in a United
Kingdom's PPP project that provides radio services to the police forces. Although the
project was initially well received with more than 70 companies' preceding an
expression of interest, only three bidding consortia submitted their proposals. Later,
two of these merged but then finally dropped out. Hence, only one real bidder was left.
With no doubt, the competitive tension was largely reduced in this project. However,
given that the radio system in use at that time could not meet the required operational
standards, early implementation of the project was preferred. Thus the authority
decided to continue the tender awarding process even without competition. Several
measures, including supplementing the Value for Money exercise by a 'should-cost'

45
 model and a fallback option, were adopted so as to safeguard the public interest in
light of the absence of competition (National Audit Office, the United Kingdom,
2002).

3.8 Examination of the Benefits of Service Delivery Using Public Private

Partnerships

The potential benefits of PPPs are usually used by the governments to justify their
involving the private sector in public service delivery. For instance, the Chief Secretary to
the UK Treasury claims that ' ... the search for new opportunities to develop profitable
business provides the private sector with an incentive to innovate and try out new ideas -
this in tum can lead to better value services, delivered more flexibly and to a higher
standard' (HM Treasury Private Finance Taskforce, 1999). Hence, the performance of
PPPs, i.e. whether the potential benefits can be materialized with potential problems
minimized, is of significant concern.
In the United Kingdom, most government reports for assessing the performance of
PPPs are positive. The report by the consultant firm Arthur Anderson and Enterprise
(2000), which was commissioned by the government, found that the 29 Private Finance
Initiative projects it examined had achieved monetary gain with, on average, 17% cost
savings over the traditional model (Arthur Andersen and Enterprise LSE, 2000). Hence,
value for money is secured.
Furthermore, in assessing the performance of PPPs in terms of potential delivery
benefits in completed procurements, HM Treasury (2003) concluded the performance of
the 61 operational Private Finance Initiatives projects of varied service areas are, In

general, good as:

** all88%Private
ofprojects were delivered on time or early;
Finance Initiatives projects were delivered within public sector budgets;
* no Private Finance Initiatives project was found where the unitary charge had changed
following contract signature - other than where user requirements changed;
* 77% of public sector managers stated that their project was meeting their initial
expectations;
* there is scope to reduce procurement times, although there is evidence that new
initiatives to tackle this problem are having an impact.
* over 75% of clients reported that the Private Finance Initiatives projects have met their
expectation.

As the watchdog of government spending, the National Audit Office was largely
involved in the assessment exercise. Although the office has been critical of several

46
Private Finance Initiatives projects, most reports remain positive (Ghobadian et aI., 2004).
On the other hand, several reports are cautious about the use of PPPs. Some even
argue that the potential benefits cannot be materialized (Gaffney and Pollock, 2001;
UNISON, 2002; Robinson et aI., 2000) and thus the label PPP as a 'deal with the devil'. In
the United Kingdom, the opposition even regard PPPs as 'yet again screwing the taxpayer
as public fraud and false accounting, and a sham ... commissioned and directed by the
Treasury with private sponsors being evil bandits running away with all the loot and sons
of Fat Cat' (Hodge, 2004). Whilst in Canada, PPP has been renamed as 'Problem,
Problem, Problem' (Bowman, 2000).
PPPs are suspected of being of dubious value on several grounds. First, they receive
criticism from the 'traditional public administration'. From this perspective, there are fears
that political control over policy-making and service management will be diluted by PPPs
(Bovaird, 2004a). In the 'traditional public administration' model, it is mainly politicians
who are involved in policy-making process and ministers intervene and supervise service
management through day-to-day administration (Mulgan, 1997). However, in PPPs, the
roles of politicians and ministers are reduced in that the decision-making power is shared
with the private company and ministers can no longer supervise the daily operation of
service delivery.
Although the concept of private sector involvement roots in New Public Management,
PPPs receive criticisms from the field too. According to the New Public Management,
resources will be allocated most efficiently through the market as competition will lead to
a lower cost for improved services. Hence, consumers/ end-users will benefit from this
practice. Put it simple, 'competition provides the path to true enlightenment' (Bovaid,
2004). However, PPPs themselves and the long-term service delivery contract pose a
threat to competition. If PPPs are the means for the public sector to maximize its revenues
through the granting of the business as a monopoly, competition among potential private
service providers may be harmed. Furthermore, the statement that end-users will be
benefited from the long-term partnerships with monopolists because the private sector
bears the long-term risks is questionable (Parker and Hartley, 1997).
Third, there are some fears that the public service ethos will be eroded in PPPs. Some
antagonists claim that as 'public sector is the unique repository of the virtues of
selflessness, service and caring' (The United Kingdom Parliament, 2002), it is the only
actor who can deliver public service properly (Corry, 2004; UNISON, 2004). However,
this claim was under strong attack as public organizations failed to meet the public needs

47
and its management was often poor. Thus, some people concluded that public sector may
not be the only sector who can deliver public service effectively. The report titled 'The
Public Service Ethos', published by the United Kingdom Parliament, shares this view by
claiming that 'the profit motive [of the private sector in PPP] may put it [public sector
ethos] under strain' (The United Kingdom Parliament, 2002). Hence, good supervision and
recognition of the need for secure accountability relationships and means is necessary. If
not, the private sector will be the master in public service delivery, but not a servant.
Another common criticism is that public finance is actually nearly always cheaper in
the sense that PPP is a government practice of 'mortgaging the future' (BBC News, 2003).
According to the Department of Finance and Administration, Australia (2001), 'it is
generally more expensive for the private sector to raise capital through private capital
markets, than for the Commonwealth to do so directly'. In practice, the private sector
usually has higher borrowing costs and set up costs when compared with their public
counterparts (UNISON, 2002). These 'extra' costs may finally lead to a large cost of the
PPP project. The first New Labour PFI's hospital in Britain - new £87 million Cumberland
Royal Infirmary in Carlisle - is one example. In total, the for-profit partners will receive
£900 million (£30 million per year for 30 years) for its obligation to operate the hospital
for 35 years 4 , whilst the cost for public finances would be £180 million. Although £900
million include all related costs, like the availability and service costs, it is still hard to
defend the large figure (UNISON, 2002).
Value for money is one of the major incentives to develop PPPs, especially for
governments which are facing fiscal problems. However, opponents discredit this. The
National Audit Office of the United Kingdom has concluded that the value for money
mechanism - the theoretical public sector comparator - in Private Finance Initiatives!
Public Private Partnerships are 'pseudo-scientific mumbo jumbo where the financial
modelling takes over from thinking and it becomes so complicated that no one, not even
the experts, really understands what is going on' (The Union for Growth, 2003:2). The
discount rate and the value of risk are two main components of the theoretical public
sector comparator, which are used to determine the potential monetary cost or gain. The
discount rate adopted by the government, which is crucial in accessing whether a better
value will be achieved in Private Finance Initiatives when compared to conventional
procurement, is 6% (figure in 2002), which is criticized for being too high by the

4 The contract originally lasts for 30 years. However, it has been extended to 35 years (UNISON, 2002).

48
antagonists (UNISON, 2002; Pearce, 1995). They also claim that there will be a totally
different view on value for money once the discount rates change. Although the discount
rate adopted by the United Kingdom's government was lowered to 3.5% in 2003
(Davidson, 2003), high discount rates are still adopted in other countries, for instance, the
discount rate adopted by the Partnerships British Columbia of Canada, the corporation that
promotes Public Private Partnerships, is up to 8% (Dobbin, 2005). According to the
request for proposals of the Britannia Mine water treatment project, the adopted discount
rate was even higher - 8.12% (partnerships British Columbia, 2004). Similarly, Australia
adopts a high discount rate, 8.65%, in public sector comparator evaluation (Hodge, 2004).
The other indicator for accessing the overall value in Private Finance Initiatives and the
traditional mode of public service delivery is risk transfer. The value for money test
usually supports the private sector involvement once the price on risk transfer is placed.
However, in reality, the value of risk transferred may not necessarily be in favour of PPPs.
Pollock, Shaoul and Vickers (2002) found that 'the value of risk transferred is remarkably
close to the amount needed to close the gap between the public sector comparator and the
PFI [Private Finance Initiatives]'. To conclude, although the government has implemented
a system to estimate the value for money, it fails to calculate the potential value for money
accurately due to the notional nature of the mechanism.

3.9 The Concept of Accountability

Accountability has been regarded as an important attribute in both the public and
private sector. Generally, the private sector adopts accountability mechanisms 'to ensure
that resources are used in the most efficient and transparent manner' (Demeke, 2002).
Whilst for the public sector, accountability is of great value as it serves to achieve a wider
range of objectives. Particularly:
* Control of abuse, corruption and misuse of public power;
* Assurance of well-performing public institutions and that public resources are being
used in accordance with publicly stated aims and that public service values (impartiality,
equality and fairness in citizen treatment) are being adhered to;
* Improvement of the efficiency and effectiveness of public policies;
* The enhancement ofthe legitimacy of government (Rahman, 2005).

Accountability has long been recognized as an important public ethos because it is 'a
device as old as civilized government itself; it is indispensable to regimes of every kind. It
provides the post-mortem of action, the test of obedience and judgement, the moment of
truth' (Normanton, 1971: 312). Furthermore, it is a precondition for trust building which is

49
crucial for effective government. As Wolf (2000) suggests, 'trust in government is what
makes democratic government effective. Without trust no living democracy and no real
citizenship, without trust no compliance with rules and regulations and no willingness to
pay taxes, without trust no civil service of high standards and without accountability no
trust in government'. Hence, accountability plays a significant role in the formation of a
harmonious society and effective government.
Although accountability is regarded as an important attribute of good governance and
effective government, the concept of accountability is multifaceted in the existing
literature (Sinclair, 1995; Robinson, 2002). Accountability, in a broad sense, is a
relationship in which the accountor must render an account to the accountees for his or her
action or performance (Hayllar, 2000a; Hayllar, 2000b). The Governmental Accounting
Standards Board of America shares this view. It defines accountability as 'being obliged to
explain one's actions, to justify what has been done' (Governmental Accounting Standards
Board, 1987: 21). Hence, accountability is associated with 'the right to receive
information and the duty to supply it' (Gray, 1992: 413). Accountors are usually required
to provide information and owe a duty of explanation to the accountees.
On the other hand, as accountability is usually considered to be achieved through
mechanisms, some scholars define the term by listing the formal requirements and
conditions that establish such mechanisms. Kogan (1986) lists two formal requirements
for the operation of accountability mechanisms: institutional authority and institutional
sanctions. In an accountability relation, accountees should be empowered to hold the
accountors accountable and impose institutional sanctions, such as 'pay, promotion,
continued employment or professional membership' (Kogan, 1986: 26).
To highlight these two dimensions of accountability, some scholars have categorized
them into ex-ante and ex-post accountability (Moncrieffe, 2001). Ex-ante accountability
'allows for a continual check on policies; it also aims to enhance the responsiveness of
agents to those whom they are expected to serve and, by these mechanisms, improve the
quality of representation' (Moncrieffe, 2001:27). Put simply, the emphasis of ex-ante
accountability is on the answerability of the agent. Relatively, ex-post accountability is
straight forward in that public officials are liable to sanction for their malperformance.
Hence, effective appraisal and sanctioning institutional systems are necessary in upholding
the ex-post accountability. In democratic countries, election is the ultimate means to
sanction the executive branch for wrong-doing. No further punishment would be posed on

50
the officials unless they are found guilty of criminal offences 5 (Elster, 1999).
In understanding an accountability relationship, three basic questions have to be
answered first: Accountability to whom? For what? How? Owing to manifold sources of
legitimate authority and competing expectations for performance that the accountors face,
the answer to these questions are not simple. In order to answer the question of
Accountability to whom, recognizing the legitimate authorities for whom the accountors
work for or report to is necessary. Whilst the second question urges for a clear
specification of performance expectations, the third question, seems to identify the means
for enacting existing reporting relationships so that the accountors can be held accountable
to the accountees for their actions or performance (Romzek, 2000a).
Like a chameleon, accountability emerges in various forms, including political,
public, legal, parliamentary, managerial, professional, bureaucratic and personal (Romzek
and Dubnick, 1987; Sinclair, 1995; Johnston and Romzek, 1999; Hayllar, 2000b; Demirag
et aI., 2004a). In understanding accountability, the typology offered by Romzek and
Ingraham (2000) is usually adopted. This approach segregates different types of
accountability according to the internal or external source of control and the degree of
autonomy, possessed by the accountors (see Table 3.9).

Table 3.9 Types of Accountability Relationships

Source of Expectations and! or Control
Internal External
Degree of Low Hierarchical Legal
Autonomy High LProfessional Political
-_ _ _ _ _ _ _ _ _ _ _ _- L_ ___________
~
Source: Romzek and Ingraham, 2000: 242

For each type of accountability, it is associated with different values and behavioral
expectations (see Table 3.10).

Table 3.10 Values and Behavioral Expectations of Different Accountability Types

Accountability Value Emphasis Behavioral Expectation
Hierarchical Efficiency Obedience to organizational directives
Legal Rule of Law Compliance with external mandates
Professional Expertise Deference to individual judgment and expertise
Political Responsiveness Responsive to key external stakeholders
Source: Romzek and Ingraham, 2000: 242

5 However, this would then be the responsibility of the court for punishing the relevant officials.

51
Hierarchical Accountability
Hierarchical accountability refers to the accountability relationships between
supervisors and subordinates. This type of accountability usually entails close supervision
from a higher authority through internal audit, stated regulations and organizational
directives (Romzek, 2000b). Hence, it has long been regarded as a feature of
bureaucracies.

Legal Accountability
For legal accountability, comprehensive external oversight of performance, which is
compatible with legislative and constitutional structures, is usually desired. Typically,
oversight of performance is usually carried out by external reviewers who are outside the
chain of command. Although these reviewers cannot necessarily impose any sanction,
their reports can trigger disciplinary action.

Professional Accountability
Professionals are accountable to their professional or licensing body. Hence, they are
usually guided by the codes of practice and norms. In case of violations of professional
conduct, professional or licensing bodies may impose sanctions according to their
disciplinary mechanisms. Professionals who are working in the public sector may need to
exercise their discretion in order to strike a balance between the demands in accordance
with their professional and public interest, especially if these are competing against one
another (Romzek and Ingraham, 2000).

Political Accountability
Through being responsive to concerns of key stakeholders, administrators are
accountable to them politically. Key stakeholders here broadly include elected officials,
clientele groups and the general public (Romzek, 2000b). Under political accountability,
the public officials, the accountors, 'anticipates and responds to someone else's agenda or
expectation - ones that are beyond the scope of supervisor-subordinate obligations or
professional expertise' (Romzek, 2000b: 27). In democratic countries, the executive
branch is usually held accountable to the legislature. To be specific, ministers are held to
account regularly to the parliament for their performance. Hence, ministerial
responsibility, parliamentary questions, votes of no confidence, budget appropriations and
customers' satisfaction surveys, or even some unwritten regulations to call for the

52
resignations of the ministers are regarded as the instruments of political accountability to
control and pose sanctions on the accountors.

3.10 Summary
This chapter has introduced key concepts and issues of PPPs, for instance, the
definition and typology of PPPs, the partnership building process, the rationale of
adopting PPPs, and their potential benefits and risks, which serves a foundation for
understanding accountability in PPPs. Further, the concept of accountability has also been
studied. In the next chapter, related issues of accountability in PPPs will be introduced. In
developing a framework to study accountability in the West Kowloon Cultural District, a
BOT-typed PPP, these concepts and models are of great value. Other than introducing the
key issues of accountability in PPPs and developing the framework, the next chapter will
also examine the impacts on accountability in PPPs.

53
 Chapter 4
Conceptual Framework

4.1 Introduction
Accountability has long been recognized as an important public ethos because it
'provides the post-mortem of action, the test of obedience and judgement, the moment of
truth' (Normanton, 1971: 312). Moreover, it is a precondition for trust building which is
crucial for effective government. As accountability should not be sacrificed in exchange
for lower cost and better performance, studying accountability in PPPs is vital. In this
chapter, a literature review on whether accountability will be enhanced in PPPs or not will
first be mentioned. Then, the amended framework used to study accountability in PPPs in
this research will be presented.

4.2 Will Accountability be Enhanced or Diminished in PPPs?

Although differences lie between PPPs and the traditional notion of public service
delivery, accountability, as it always is, is a core issue. As public services have
implications for users and citizens, it IS legitimate for the public to expect that the
providers, including those involved in PPPs, will be held accountable for their
performance and the outcomes (Kay and Reeves, 2004). The Commission on PPPs in the
United Kingdom (Institute of Public Policy Research, 2001) further argues that 'public
accountability is the pre-condition for the legitimate use of public authority. It is the basis
on which citizens are willing to delegate power to others to act on their behalf... Without
proper accountability mechanisms organizations delivering services are not subject to
democratic oversight and control, the rights of citizens are uncertain, and services are
unlikely to reflect the needs of service users' (Institute of Public Policy Research, 2001:
231). Hence, a proper accountability system can ensure the fulfillment of public needs and
legitimatization of the use of public authority. Accountability is, as a result, 'an ends as
well as a means' (Institute of Public Policy Research, 2001: 231). In this view, public
accountability is not just an essential issue in PPP at the final stage, but at all stages.
However, it is less straight forward than is usually envisaged in the traditional notion (i.e.
top-down authority held responsible to the public through elected officials (Ketti, 1997)).
On this issue, some academics attempt to argue that PPPs may actually increase
accountability. In a democratic society, political authority lies with the citizens. In order to
be re-elected, politicians often have short-term horizons with little consideration on the

54
accountability of their decisions in the long run. Hence, low-cost bidding, which may
ignore the best life-cycle cost, is often found in outsourcing practices. Under such
arrangements, as the facilities are often under-maintained and the possibility of change
arises, sometimes as the result of political pressures, costs may finally rise above original
estimates as problems have to be dealt with (Kee and Forrer, 2002). PPPs solve this
problem by defining the level of acceptable service and penalties for low standards at the
early stage when formulating the PPP policy. Bidders will need to give a high priority to
long-run, other than to just short-term performance. Thus, from this aspect, the project
itself (PPP) will be prevented from falling into one of the 'public accountability gaps',
which is created by the short-sighted politicians.
In the traditional mode of service delivery, government usually relies on 'continuing
supervision and adjustment to achieve successful results' (Mulgan, 1997: 111). However,
as the government has to work with other organizations in PPPs, an effective controlling
mechanism with well-defined objectives, tasks and expected standards of output is needed.
Accountability will be enhanced with the establishment of the new standards of
performance monitoring and with clarified short, intermediate and long term objectives.
In practice, PPPs usually open up new channels for public participation and
mobilization (Mohr, 2004). The public, in particular, the stakeholders, are usually involved
and actively participate in the policy-making process of PPPs. As a consequence, Pierre
and Peters (2000) suggest that in the context of PPPs, the original hierarchical approach to
public service delivery is now replaced by the policy of negotiation and cooperation.
Undoubtedly, the enhanced public participation in PPPs promotes transparency, openness
and accountability.
Although the adoption of PPPs may enhance accountability, some writers dispute this.
Hughes (2003) argues that ministerial accountability, an effective means to enforce
compliance, may be diminished by the PPP practice. Ministers are responsible for both the
political performance and commercial performance of a PPP program. Even though these
performances may not be in conflict, it is difficult to strike a balance between them.
Moreover, as supervising principals (i.e. ministers or the government) are restricted to
enforce the terms of PPP contracts, they can no longer supervise and intervene into
day-to-day administration, which is the practice in the traditional mode of service delivery
(Mulgan, 1997). Furthermore, the long period of contract in PPP (i.e. 30 years contract for
WKCD) may also reduce the capacity of elected officials or representatives of the public
(e.g. members of the Legislative Council in Hong Kong) to affect the policy direction

55
(Mohr, 2004). Once the contract is signed, elected officials would have only a limited say
in this 'contract-based policy'. Hence, it is suspected that there will be less legislative
scrutiny and ministerial supervision and finally reduced accountability will result (Haque,
2000).
Other than that, certain characteristics of BOT-type PPPs pose more challenges for
accountability. Although there are shared goals in a PPP project in the first place, the
different sectors and different professionals involved have different underlying
orientations and organizational cultures. This may lead to a great variation of underlying
values, operating goals and accountabilities. Eventually, difficulties and challenges can be
created 'in the process of determining the means and ends of the accountability system'
(Acar and Robertson, 2004).
Moreover, asymmetrical power allocation among partners can make accountability
difficult. In PPPs, partners usually hold· different types and amount of power (Acar and
Robertson, 2004). Hence, it may be difficult for some participants, who are less influential,
to take part in the decision-making processes on various policies (including
accountability-related matters).
To conclude, the existing literature has not yet reached the conclusion on the impacts
of PPPs on accountability. However, as accountability is vital in public service delivery,
accountability should not be sacrificed in exchange for lower costs and better performance.
Hence, studying accountability in PPPs is of particular value as this is a means to protect
the public interest.

4.3 Accountability in PPPs

Although differences lie between PPPs and the traditional notion of public service
delivery, accountability, remains, as always, a core issue. In examining accountability in
the United Kingdom's PFI projects, Demirag et al. (2004a) propose to use four dominant
forms of accountability - communal, contractual, managerial and parliamentary
accountability (see Figure 4.1).

Communal Accountability6
Communal accountability alms to seek legitimacy and consensus through

6 In this dissertation, communitarian and communal accountability are interchangeable as both terms aims to
seek legitimacy and consensus through consultation and involving the stakeholders in the policy-making
process ofPPPs, as defmed in Demirag et al. (2004a) and Demirag et al. (2004b) respectively.

56
 Figure 4.1 Accountability Processes from the Public Sector Perspective

Types of 1. Communitarian 2. Contradua 3. Manageriaf 4.Padiamentary

Accountabilitv acc'Ountability accountability acc,()untability acc'Ountability
Processes •

General aim of the Reaching consensus among Fulfilment 'OfPFI 'Objectives Efficiency and Achievement ofp'Olicy
acc'Ountability stakeholders by incOIporating them in effectiveness in service goals
process cootracts provisi'On

Specific objecfu--e 'Of Determining general Translating general Implementing and Reporting to Parliament
the accountability perf'Ormance standards by standards into more specific evaluating achievement of en the 1egitima1e use 'Of
process consulting all relevant interest and binding legal standards outcome against standards public funds.
groups

Definition 'Of ResP'Onding t'O the level and quality 'Of seMce Service quality: Economy
pel"f'Ormance in the expectations and needs 'Of Unita!}' Payments and - Respensiveness Efficiency
proc-fss stakeholders pena1ty clauses -Inn'Ovation Outc'Ome
Change 'Oroer and flexibility
built

Parties invol\'ed in Project Board Project Team (mostly) Pr'Oject Monitoring Team Public sector auditors
the pr'Ocess Pr'Oject Team C'Ontractors (Private and Public sector) Ministers (representing
User Assurance Group I Consultants public)
public

Mechanisms! Consultati'On
activities linking Preparing Outline Business
acc'Ountability and Case, Public Sector
ped'Ormance Comparator, Selection 'Of
Bidders
--
Source: Demirag et aI., 2004a
Final Business Case Internal reporting: External reporting t'O
Writing Contractual - M'Onthly review meetings Parliament and. public
- Quarterly review
meetings
~~
-- dba
---.
-

VI
-....l
consultation and involving the stakeholders in the policy-making process of PPPs.
Through the dialogue with stakeholders, the government can understand and respond to
their needs (Demirag et aI., 2004a).

Contractual Accountability
Contractual accountability processes require the parties involved to 'enter into a
legally binding agreement over standards of performance by laying them down in writing
and in specific enforceable terms' (Demirag et aI., 2004a). In short, PPP participants are
accountable for their performance according to liabilities and obligations which are listed
in the contract.

Managerial Accountability
Managerial accountability is usually found in hierarchical relationships within an
organization and is the procedure to make 'those with delegated authority answerable for
producing outputs or the use of resources to achieve certain ends' (Sinclair, 1995:222). To
be specific, mangers have to ensure that efficiency and effectiveness can be achieved in
service delivery through certain means, for instance, internal structures on implementation,
performance monitoring and evaluation (Sinclair, 1995).

Parliamentary Accountability
Parliamentary accountability is common in liberal democratic countries where government
officials are held responsible for policies under their respective areas. This is an external
means to ensure that the PPP project is on the right track. Parliamentary institutions, such
as the legislature and Audit Commission, examine the performance of projects III

accordance with the agreed terms in contracts and report them to the members of
parliament.

Although these accountabilities can be found at all stages of a PPP project, Demirag,
et ai. (2004b) have clearly indicated the dominated forms of accountability at different
stages of Private Finance Initiative in the United Kingdom (see Table 4.1).

58
Table 4.1 Accountability and the Private Finance Initiatives (PFI) Process
PFI stage Description of the stage Forms of
Accountability
1. Initiation • Procurement proceeds only after a rigorous examination Communal
of business objectives, needs and constraints including
that of affordability
• The costs and benefits of the various options are
examined
• An outline business case based on the options appraisal is
prepared. It specifies the output specification rather than
'how' the service is to be delivered. A reference project,
usually a public sector comparator, is prepared for
benchmarking purposes.
2. Set-up • Create a project team and project board and decide Contractual
tactics.
• Then advertisement which invites expressions of interest
is posed.
• Interested business parties will be pre-qualified and
shortlisted.
• In the light of new information, the outline business case
and public sector comparator are further refined. The
affordability and funding arrangements are reaffirmed.
• Invitation to negotiate takes place
• Receipt and evaluation of bids
* Selection of the preferred bidder and the final evaluation
* Contract awarded
3.Implementation * New processes, systems and management systems of the Managerial
contract are put in place
4. Internal • Progress of PFI contracts is monitored through Managerial
monitoring operational review meetings with public-sector project
managers, private sector facilities managers and users of
the service
5. External * PFI contracts are assessed for value for money by the Parliamentary
monitoring Audit Commission and findings are reported to
parliament, representing public interest
Based: Demlrag et aI, 2004b

The framework presents a preliminary effort in understanding the accountability at

different stages of PPPs. Through reviewing the literature, it is evident that communal,
contractual, managerial and parliamentary accountability play a dominant role in PPP
projects.
The ideas of Demirag et aI's PPP accountability framework have been more or less
used to examine accountability in PPP projects in various studies. Kay and Reeves (2004)
criticize that the lack of consultation with stakeholders has undermined the legitimacy
and in turn hindered the degree of accountability secured in Ireland's PPP projects. Other
than communal accountability, Mayston (1999) argues that poor managerial
accountability has also undermined the potential advantages of adopting the PFI in the

59
 National Health Service (NHS) of the United Kingdom. He finds that users' need is not
clearly identified and hence future financial commitments on the NHS are not 'properly
planned for or accounted for' (Mayston, 1999). Further, secrecy and the lack of
accountability, high tender costs are other weaknesses of the NHS PFI project, which in
turn pose challenges to efficiency and accountability.
Bovaird (2004b) identifies reduced parliamentary accountability as a potential
problem of PPP in international perspective and argues that this occurs as a consequence
of the increased complexity of the PPP configuration. Similarly, after examining the PPP
projects in New Zealand, Australia and the United Kingdom respectively, Newberry and
Pallot (2003), English and Guthrie (2003) and Mayston (1999) share the view that less
parliamentary scrutiny is found in PPP projects.
In the Melbourne's City Link road infrastructure project, one of the largest PPP
projects in Australia, there is a lack of parliamentary and communal accountability. After
reviewing the project independently, Russell et al. (2000) recommend that 'such projects
should in future be subject to stronger Parliamentary scrutiny, public consultation and
disclosure prior to implementation' (as cited in Hodge and Bowman, 2004: 210).
Experience of the United Kingdom in developing PPPs has also highlighted the
importance of managerial accountability. In establishing a PPP project, the HM Treasury
of the United Kingdom (2006) recommends that managerial accountability should better
be secured via improving the monitoring mechanism so as to shorten the procurement
timescales and costs. Establishing a clear monitoring and progress report mechanism is
also regarded as a recommendation in Arthur Andersen and Enterprise LSE's report
(Arthur Andersen and Enterprise LSE, 2000). Further, in Managing the Relationship to
Secure a Successful Partnership in PFI Projects, published by National Audit Office, the
United Kingdom (2001), it states that positive changes were brought through the adoption
of performance review processes - a mechanism to secure managerial accountability - at
the operational stage.
Contractual accountability also plays an important role in PPP projects. Maintaining
good contractual relationships with contractors is usually regarded as a key to success. The
National Audit Office of the United Kingdom (2001) has made it clear that ensuring value
for money 'requires careful project management and a close attention to managing the
relationship with contractors ... development of a successful relationship ... will be assisted
by the right contractual framework which will include allocating risks correctly and
clearly defined areas of service quality' . Similar finding is found in Ministry of Defence

60
and Central IT Unit, the United Kingdom (1996) and PricewaterhouseCoopers (2001).
On the controversy, the inadequacy of these forms of accountability has led to the
failure of the project or non-materialization of the potential benefits of PPP. Hence, they
could also be regarded as factors leading to the success of a PPP project. For instance, the
independent review of the Berwick Hospital project in Australia found that 'a sound level
of community consultation has been undertaken. Various rights are recognized in a public
interest test and protected through provisions of the contract' (Grimsey and Lewis, 2004:
122). The well secured communal and contractual accountability, to a certain extent, lead
to the success of the project.

However, not enough attention has been paid to the importance of public voice in
PPPs in Demirag et aI's framework. As PPPs usually involve pubic service delivery, which
may affect the interests of the public, public voice either direct through e.g. public
consultation or indirect through representation should be incorporated in the whole
process in PPPs, both before and after the tender is awarded. Although parliamentary
accountability is adopted in Demirag et aI's framework, the public-private partners are
held accountable to the public indirectly and it is not for individual remedy. Further,
though the public is usually regarded as stakeholder in PPPs, and communal
accountability aims to seek legitimacy and consensus through consultation and involving
the stakeholders in the decision-making process, public voice which is why public
representation in governance bodies has became an important issue may only be assured in
the stage of PPPs initiation. In order to bridge the gap and to fit the Hong Kong context -
the legislature in Hong Kong is not as powerful as its counterpart in other democratic
countries in that it lacks institutional power to invoke sanctions where deemed appropriate,
the element of public accountability is adopted as a dominant in studying accountability in
PPPs in this research (see 4.4 for details).
Moreover, Demirag et aI's model as developed lacks due attention to market
accountability that emphases the fact that the market itself can reward or punish market
actors. Market accountability 'includes the responsiveness of service providers to a body
of 'sovereign' consumers. This requires a choice of suppliers as well as a choice of quality
and quantity of service with the ability for the consUmer to opt out of the purchase'
(Hodge, 2005). With the emphasis of the accountability relation between entrepreneurs
and customers, user satisfaction is regarded as one of the means to secure market
accountability (Cooper, 1995). Under PPP arrangements, public services are usually

61
provided by the private sector, as partners with the government, and operated on the basis
of market principle. It would seem that market accountability could be particularly
important in studying accountability at the operations and services stages. This view is
shared by Hodge (2005), Papadopoulos (2005), National Audit Office, the United
Kingdom (2001), Harvard Law Review (2002) and Savas (2000). As a consequence,
market accountability should be regarded as one of the dominant forms of accountability
at the operations and services stages of a PPP project.

4.4 Public Accountability

According to Mulgan (2002), public accountability of government is 'understood as
the capacity of citizens to call their governments to account, to demand explanations and
remedies, and to impose sanctions and new directions'. The public can hold the
government accountable in two ways - seeking for explanation or redress regarding a
particular action or case and entails various ways of questioning the general direction of
policy. Parliament, the Audit Commission, the Ombudsman and formal complaint
mechanisms are the main watchdogs to secure public accountability in the sense that,
depending on the sanctions available to them, they can establish a powerful platform to
hold government to account for its actions. Moreover, the media also plays an important
role as it can exert pressure on the government officials or the ministers.
Due to the fundamental differences that lie between the public and the private sector,
the private sector can be said to be owned by its shareholders rather than by the general
pUblic. Although both sectors try to keep as much information confidential as possible, the
private sector usually is more reluctant to provide information under the name of
'commercial confidentiality'. In this case, the public accountability of the private sector is
focused on the rights of shareholders. Shareholders have rights to access information
obtained from the annual general meetings, directors' report, directors' certification of
accounts and auditors' report (Ffrench, 1994: 202-5). They can also ask questions at
meetings. They even possess legal rights for access company information through the
Courts.

Although parliamentary accountability shares many aspects in common with public

accountability, the coverage of public accountability is greater than that of parliamentary
accountability in that parliamentary accountability only refers to the specific channels of
questioning the general direction of policy via parliamentary institutions whilst the latter

62
includes other informal actors like the media.
Furthermore, with regards to the West Kowloon Cultural District case study, there is
no parliament in Hong Kong. Although the Legislative Council carries some similar
functions as parliaments in democratic countries, such as enacting laws; examining and
approving budgets, taxation and public expenditure; and monitoring the work of the
Government (Legislative Council, 2005c), they are different fundamentally and this is
especially so with regards to accountability roles and the sanctions that the Legislative
Council can exercise over on the government as it seeks to hold the latter accountable. In
the Westminster countries like the United Kingdom, the government is accountable to the
House of Commons (a chamber in the legislature) in that the Prime Minister is the person
who receives majority support from the House of Commons. The Prime Minister is
obliged to resign or seek the dissolution of Parliament once the government loses the
confidence of the House of Commons (The United Kingdom Parliament, 2005). While in
the United States, the Congress (the legislature in the United States) has a crucial role in
the process of impeachment and its powers of sanctions include the removal of the
president. Additionally, when no candidate can gain a majority votes in a presidential
election, the Congress is granted the power of choosing the president and vice-president.
Further, Congress is influential towards the executive in that presidential nominations of
cabinet members, ambassadors and federal judges are subjected to the approval of the
Senate (a house of the bicameral legislature) (Grolier Multimedia Encyclopedia, 2005).
Relatively speaking, most legislatures in other democratic countries are much more
powerful than that of Hong Kong. Since the colonial days, Hong Kong has practiced its
executive-led political system. The Basic Law, the mini-constitution of Hong Kong, has
preserved this and hence constitutionally, the role of the Legislative Council has been
limited. Although legislators can control the awarding of funds to government through the
Finance Committee, this body can only reject, approve or reduce the proposed government
expenditure, but cannot propose or increase it. Moreover, since proposals for discussion on
government finance in the Legislative Council is limited to the government expenditure,
proposals by legislators for raising revenue should not be placed on the agenda (Ma, 2002).
Equally, the policy influence of the Legislative Council is weak. Private bills have been
found as a most effective way for the legislators to propose alternative choice to the
government in the pre-1997 period (Choy and Lau, 1996). However, the power of this
weapon is greatly 'diminished' by Article 74 of the Basic Law that prohibits legislators
from introducing bills that 'relate to public expenditure or political structure or operation

63
of the government'. Further, 'written consent of the Chief Executive shall be required
before bills relating to government policies are introduced', Although under the Power and
Privileges Bill, the Legislative Council is given the power to summon government
officials and set up investigation committees to study serious scandals, the powers of the
Legislative Council in scrutinizing the government are very limited too. This is because
the motion debates, asking of questions and votes of no-confidence have no binding force
on the government. Hence, even though no-confidence motions have been moved against
three senior officials before, including the Secretary of Justice Elsie Leung on 10 March
2000, the Housing Authority Chair Rosanna Wong and the Director of Housing Tony
Miller on 26 June 2000 (Ma, 2002), all of them were not forced to step down7 , From this
perspective, parliamentary accountability may not work in the same way in Hong Kong as
it does in democratic countries.
Although the Legislative Council of Hong Kong is not as powerful as its counterparts
elsewhere, its role in PPP policy-making and its development should not be neglected. For
projects which involve public money, the approval of the Finance Committee of the
Legislative Council is required. Moreover, various panels of the Legislative Council act as
the monitor towards government's policies in designated areas through asking questions,
committee works and motion debates. Members can voice out the public or their own
opinions on a particular issue or can ask questions in areas with which they are concerned
and can urge the government for reply. First, questions can be raised in the Council
meetings. Additionally, for issues of public concerns, the Legislative Council House
Committee can even hold special meetings for discussion. Select Committees or
Subcommittees can also be established to examine such issues in depth (Hong Kong
Special Administrative Region Government, 2003b).
Although the West Kowloon Cultural District PPP is financially free-standing and
thus government has tried to implement it while bypassing the Legislative Council, the
Council has been nonetheless participating actively in its development. For instance, the
government has briefed the Legislative Council members on the project on different
occasions (including Panel meetings, Subcommittee meetings and written replies) and at
different time (both before and after the launch of the Invitation for Purpose)
(Subcommittee on West Kowloon Cultural District Development, Legislative Council,

7 Among the three above named officials, only Rosanna Wong had resigned after the passage of the
no-confidence vote. Her resignation is led by the public pressures that created, but not the constitutional
power of the Legislative Council to remove officials.

64
2005a). Moreover, a subcommittee on West Kowloon Cultural District Development was
established. Hence, in order to stress the role played both by the Legislative Council and
all other relevant informal parties in scrutinizing the development of the proj ect, in this
dissertation, parliamentary accountability is replaced by the broader notion of public
accountability as a criterion in studying accountability in PPPs.

4.5 Conceptual Framework for Studying Accountability in the West Kowloon

Cultural District PPPs

In this research, five types of accountability are examined. These include communal,
contractual, managerial, market and public accountability. The laden values and behavioral
expectations of each type of accountability are listed in Table 4.2.

Table 4.2 Laden Values and Behavioral Expectations of Accountability

Accountability Laden Values Behavioral Expectations
Communal Responsive to key » Responding to the expectations and needs of
stakeholders In the stakeholders in the stage of PPP initiation
stage of PPP initiation » Reaching consensus among stakeholders
Contractual Rule of Law » Fulfilling the PPP objectives by incorporating them
in contracts
» Translating general standards into more specific and
binding legal standards
» Establishing a bond of trust between partners
»PPP participants are accountable for their
performance according to liabilities and obligations
which are listed in the contract
Managerial Efficiency » Implementing and evaluating achievement of
Effectiveness outcome against standards
» Ensuring efficiency and effectiveness can be
achieved in service delivery
» Conforming with requirements or directives of
appropriate organizational hierarchy.
Market Responsiveness to » Responsive to consumers of service providers to
consumers/ consumers.
suppliers/ » The market can reward and punish market
co-producers actors
Public Responsiveness to » Citizens can call their governments to account,
citizens to demand explanations and remedies, and to
Individual Redress impose sanctions and new directions
Probity » Through auditing, probity of the related parties can
be examined
Based: Demirag et aI., 2004a, Mulgan, 2000, Raghavan, 2002, Hodge, 2005

65
 Furthermore, owing to the specific nature of different stages of PPPs, different types
of accountability are adopted in accordance with the extent of relevance and dominance at
different stages of a PPP project (please refer to section 3.5 for the description of different
stages ofPPP and see Table 4.3 for details, which is amended based on Table 4.1).

At the initiation stage, PPP objectives have to be established through conducting

needs analysis, market testing and feasibility test. After the objectives are established, a
business case should be developed in consultation with the stakeholders (Efficiency Unit,
2003). Therefore, communal accountability, which emphasis on holding the government
accountable to the stakeholders through responding to their needs or expectations, plays a
dominant role.
Pre-qualification, shortlisting, tender evaluation, negotiations and tender awarding
are included at the set up stage. Clearly, the contract itself is the most important element in
this stage. The government is accountable to the public contractually for incorporating the
PPP objectives and performance standards into a legal binding agreement.
As argued by Demirag et al. (2004b), managerial accountability is the dominant
form of accountability in the implementation (design and construction; operations and
services) of the project. In order to secure managerial accountability, it is expected that the
delegated authority would be accountable to his superior for his decision in terms of
outputs produced and the use of resources (Sinclair, 1995). To be specific, managers have
to ensure that the services are provided effectively and efficiently with reference to the
terms as listed in the contract. Clearly, other than managerial accountability, market
accountability could be particularly important in studying accountability at this stage.
Under PPP arrangement, public services are usually provided by the private sector partner
and operated on the basis of market principle. As the market itself can reward or punish
market actors through its invisible hand, service providers have to be responsive to users'
needs and the demands in the market too. Put simply, accountability relationship of market
accountability refers to that between the private sector partners (service providers) and
users.
The final stage of the project - transfer and post-transfer management includes the
smooth transfer of properties and personnel and the selection of a new operator, if
applicable. As a new operator would be selected and a new tender would be formulated,
contractual accountability deemed to be important at this stage.

66
 Moreover, it is worth noting that both internal and external monitoring have dominant
roles in all stages especially since PPPs usually involve public service delivery. Hence,
managerial and public accountability are regarded as dominant forms for studying
accountability in all stages of PPPs. For the internal monitoring process, accountability
relationship is mostly managerial in which the subordinate is held accountable to the
superior for his decision through the internal reporting mechanism. Public accountability
is regarded as the dominant form of accountability in the external monitoring process. It is
well secured if the public can call the government to account, to demand explanations and
remedies, and to impose sanctions and new directions through both the formal and
informal channels. As the government should retain the steering role in the PPP project
through becoming the purchaser and regulator of the service (Osborne and Gaebler, 1992),
government should still be held accountable to the public so as to secure public
accountability.

Table 4.3 Dominant forms of Accountability in different PPP stages

PPP stage Forms of Accountability
1. Initiation Communal
2. Setup Contractual
3. Design and Construction Managerial
4. Operations and Services Managerial
Market
5. Transfer and Post-Transfer Management Contractual
Internal Monitoring Managerial
External Monitoring Public

In the West Kowloon Cultural District PPP project, as the tender has not yet been
awarded, communal, contractual, managerial and public accountability are adopted as the
dominant forms in examining the accountability ofthe project.

4.6 Maintaining Effective Accountability Relationships

Studying the effectiveness of accountability relationships is as important as studying
the mechanism itself. Although there are several types of accountability relationships in
PPPs, each of which is different in nature, ways to secure effective accountability are
similar. The Canadian Policy Research Networks (2004) states four issues which are
usually listed as the requirements for effective accountability in the literature, including
the clarity of purpose; clarity of responsibilities; appropriate resources; and evaluation and

67
feedback (see Table 4.4).

Table 4.4 Requirements for Effective Accountability

Clarity ofpurpose: agreement on a desired outcome - the purpose of the exercise -
increase the likelihood of effective accountability. Without a common view of the
overall purpose compliance will be less likely.
Clarity of responsibilities: it is crucial that responsibilities are explicit and mutually
agreed upon. Experts suggest wherever possible, specific objectives or performance
targets be delineated to give further clarity to the allocation of responsibilities.
Appropriate resources: organizations can only be accountable for meeting their
responsibilities if they are equipped with the necessary resources to do so. Resource
capacity is broadly defined here to include funding, the autonomy to make
decisions, an information base, skills and experience.
Evaluation and Feedback: some assessment must be made as to whether goals are
being achieved and feedback provided to the appropriate parties.
Source: Canadian Policy Research Networks, 2004

On the other hand, Hayllar (2000a) has listed the aspects and attributes of effective
accountability relationships (see Figure 4.2). In this research, these are used as the
essential ideas in studying each type of accountability.

68
Figure 4.2 Aspects and Attributes of Effective Accountability Relationships

The Actors
LJ Accountees and accountors are identified clearly;
LJ Accountees are truly representative of the stakeholders concerned;
LJ Actors are not over-burdened with too many accountability relationships;
LJ The distribution and balance of power between multiple accountees is appropriate.

Values
LJ Accountors and accountees share the same vision and common values;
LJ Each party is committed to and believes in the value of being accountable.

Rights and Responsibilities

LJ Each actor's rights and responsibilities are defined clearly and understood;
LJ The accountor's responsibilities, autonomy, and capacities are balanced;
LJ The accountee sets specific goals and targets for the accountor to achieve as needed;
LJ Expectations of performance are linked to agreed standards and criteria for evaluation;
LJ The accountee controls the scalability of the accountability processes and attributes;
LJ Accountees have the ultimate right to control and set the agenda for the relationship.

Rendering and Appraising the Account

LJ Resource use, achievements and failures are reported timely, intelligibly, honestly and
credibly;
LJ Accountors are appropriately responsive to each of their accountees' needs for an account;
LJ Accountees have the capacity and commitment to actively appraise the accounts they
receive;
LJ Accountees provide accountors with relevant feedback;
LJ Costs of rendering accounts do not outweigh the benefits derived.

Making and Enforcing a Judgement

LJ The monitoring system enables accountees to judge results fairly;
LJ Accountees have the capacity, power and authority to ensure the accountor's compliance
with their prescriptions;
LJ Accountees possess incentives, including rewards and sanctions, for motivating or holding
accountors accountable for a particular performance standard;
LJ Mechanisms exist whereby accountees can secure redress or reparation if appropriate;
LJ Accountors can appeal if judged or sanctioned unfairly.

The Accountability Relationship

LJ The functions and rationale for each accountability relationship are clearly understood and
justifiable;
LJ Accountability relationships are built on mutual trust and a sense of fairness;
LJ Good communication exists between accountors and accountees;
LJ Accountees mentor, and not just monitor, accountors;
LJ There is a two-way transparency of decision-making and relationships;
LJ Prioritising by accountors between multiple accountees is considered fair by all concerned.

Source: Hayllar, 2000a

69
 In order to gain a better understanding of the role that accountees play in holding the
accountors accountable and the effectiveness of the accountability relationship, a classical
model in understanding citizen participation - Arnstein's Ladder of Citizen Participation is
also adopted.
According to Arnstein's Ladder of Citizen Participation, a typology of eight rungs of
citizen involvement is developed. Rungs are arranged in the descending order in
accordance with the extent of citizen power in detennining decisions (Arnstein, 1969) (see
Figure 4.3). Hence, it is expected that a larger degree of citizen participation and in turn,
accountability, would be achieved when moving up the ladder.
Figure 4.3 Arnstein's Model of 'Ladder of Citizen Participation'

- -
8 Citizen Control

7 Delegated Power Citizen Power

6 Partnership

5 Placation

4 Consultation Tokenism

3 Informing

2 Therapy

} Nonparticipalion
1 Manipulation

- -
Rung at the two lowest levels - Manipulation and Therapy are classified as
non-participation. Instead of allowing 'real' participation in the decision-making process,
citizens are educated and cured by the powerholders. To be specific, 'Manipulation' refers
to the kind of citizen participation that occurs through placing people in some rubberstamp
advisory bodies. This type of citizen involvement 'signifies the distortion of participation
into a public relations vehicle by powerholders' (Arnstein, 1969). Citizen engagement

70
undertaken with the objective to 'cur[e] them of their "pathology" rather than changing the
racism and victimization that create their "pathologies'" (Arnstein, 1969), it is regarded as
the rung of 'Therapy' in the Arnstein's ladder. 'Non-participation' in the accountability
relationships refers to the phenomenon that information delivered to the accountees is at
the discretion of the accountors and the accountees lack any real rights or control over the
accountors.
'Informing', 'Consultation' and 'Placation' are rungs under 'Tokenism'. Under
'Tokenism', citizens are allowed to hear and to be heard although the powerholders retain
the ultimate right to decide on what views would be taken into account. One-way
communication between the authority and the people is placed on the rung of 'Informing'.
Usually, there is no room for negotiation or a feedback channel. It should also be noted
that 'when information is provided at a late stage in planning, people have little
opportunity to influence the program designed "for their benefit'" (Arnstein, 1969) and
when the authority provides 'superficial information, discouraging questions, or giving
irrelevant answers' (Arnstein, 1969) in meetings, the level of citizen participation achieved
is also regarded as 'Informing'. At the stage of 'Consultation', although citizens' views are
invited during the decision-making process, there is no mechanism to ensure that their
views will be taken into account. In 'Consultation', people 'participated in participation' in
that they are regarded as 'statistical abstractions and participation is measured by how
many come to meetings, take brochures home, or answer a questionnaire' (Arnstein, 1969).
'Placation' is placed at the highest level through Tokenism. Apparently, citizens have some
degree of influence as a few citizens are placed on public bodies or committees 8 (Arnstein,
1969). Hence, people have a formal channel to express their views. However, the authority
preserves the right to decide what pieces of advice would be taken into account in the
policy-making process and it may also exercise the right to select and appoint the
'representatives' itself. Therefore, citizens would find it difficult to hold the accountors
accountable under 'Tokenism' as opinions raised by the accountees may not be taken into
account.
The top three rungs - 'Partnership', 'Delegated Power' and 'Citizen Control' - are
grouped as 'Citizen Power' because citizen power can be exercised in full. At the rung of
'Partnership', planning and decision-making powers are usually shared by citizens and the
authority. Negotiation is not rare at this rung of citizen participation. Whilst for 'Delegated

8 These people are minority in the public bodies or committees.

71
Power', citizens usually play a dominant decision-making role. Hence, they are
empowered to make some key decisions. With Citizen Control, people are in full control
of governing and managing a program or an institution (Arnstein, 1969). More importantly,
officials are held accountable fully by the citizens.
Together with the amended model of PPP policy making (see section 3.5), the
development and accountability of the West Kowloon Cultural District PPP is examined
also with reference to the ladder of participation.

4.7 Summary
This chapter has introduced key concepts and frameworks that are relevant to the
analysis of accountability in PPPs. Although the existing literature cannot reach the
conclusion on the impacts of PPPs on accountability, studying accountability in PPPs is
vital in that this is a means to protect the public interest. Before studying the WKCD PPP
project with the use of these models and concepts, the next chapter provides a more
detailed understanding of the development of Private Sector Involvement in Hong Kong.

72
 Chapter 5
Development of Private Sector Involvement in Hong Kong

5.1 Introduction
Since the launch of Public Sector Reform in 1989, enhancing private sector
involvement in public services delivery is placed high on the government agenda. This
chapter explores first the traditional role of government in public service delivery and then
investigates the history of private sector involvement (PSI) in Hong Kong. As the use of
PPPs is a key strategy in expanding private sector participation, the development of the
Bui1d-Operate-Transfer type PPPs project in Hong Kong is studied. The final section of
this chapter discusses accountability aspects relating to the start up of PPP projects in
Hong Kong.

5.2 Role of Government in Public Service Delivery in Hong Kong

To understand the role played by the HKSAR government in public services delivery,
it is crucial to examine its underlying ideology. Since the early colonial days, the
government of Hong Kong, driven by the ideology of laissez-faire capitalism that later
transformed into positive non-interventionism, practiced the minimal state approach. This
approach, which emphasis on minimum government intervention, is also upheld by the
HKSARG.
The laissez-faire ideology is imprinted from the earliest days of colonial history when
Hong Kong-based British merchants were influential in policy making. This is because the
decision to colonize Hong Kong was, to a great extent, a response to the urging of
merchants for providing a safe place that allowed the conduct of free trade in the South
China coast (Scott, 1989). As influential actors in policy making, the merchants exerted
pressure on the colonial government to keep its intervention minimal, especially in the
regards to policies that could not contribute to economic development and those that
involved 'non-essential' expenditure. Sometimes, they would also raise their concerns to
the colonial mandarin directly. Since the Colony received no financial support from the
British government since 1855 (Lee, 1999), maintaining a balanced budget was the first
priority of the government. Hence, the government was constrained in implementing any
social policy in the early colonial days. Further, Chinese cultural values on poverty,
natural disasters and education also contributed to the adoption of laissez-faire capitalism
as local people (most of them traditional Chinese) considered the above mentioned issues

73
as personal matters that should be taken care of by individuals or his family (Scott, 1989)
rather than by the state. These factors, together, gave rise to the laissez-faire ideology -
minimum government intervention in all spheres and, in particular, in the society and
market. The ideological stand of the colonial mandate - non-interventionism; the features
of 'utilitarianistic familism' and a 'minimally integrated socio-political system' identified
by Lau (1982); unsteady government revenue in the post-war era (Cheung, 2000); the
sentiment of 'borrowed place, borrowed time' by the transient population (Wilding, 1996),
further consolidated the laissez-faire approach in the post-war years. As a result, the
government played a limited role in social services provision (Jones, 1990; Lee, 2005).
The 1967 riots 9 , however, became a milestone in the development of social welfare
provision in Hong Kong. In response to the riots, there was a big expansion in social
policy (Chow, 1989; Castells et aI., 1990)10. The state then started to assume a greater role
in social services provision, for instance, in the areas of social welfare, public housing and
education. However, the government had also taken up the role as the producer on one
hand, and financer on the other by relying on subventing partners in the non-government
sector for some basic social service deliveries (Central Policy Unit, 2004; Pearson, 1997).
The expansion in social services provision has accompanied by a shift in the underlying
ideology of the government from laissez-faire capitalism to 'positive
non-interventionism' which emphasizes that the government would intervene under the
circumstance that 'industries with social obligations ran into trouble and when an
institution needed regulation to prevent inequitable practice' (Haddon-Cave, 1984). Owing
to these ideologies, a small public sector was maintained. Public expenditure to GDP ratio
of Hong Kong was kept to less than 20% before 1998. As the figure further rose to around
22% in 2002 11 , the government committed itself to bringing it down to less than 20%
again so as to uphold the principle of 'big market, small government' (Hong Kong Special
Administrative Region Government, 2003a) (see Figure 5.1). It is expected that the ratio
will drop to 18% in fiscal year 2006-2007.

9 The 1967 riots were staged by pro-communist leftists in Hong Kong, and lasted from May to the end of
1967. As the police arrested the leaders of the massive demonstrations and strikes, riots turned into more
violent as some leftists planted fake and bombs in the city. At the height of this struggle, 500,000 industrial
workers were on strike. The riots also led to 51 deaths and hundreds of injuries (Lam, 2005).
IO The government regards social services provision as a means to soak up some dissatisfaction of the local
people that is highlighted by the riots (Scott, 1989).
11 The increase of the public expenditure to GDP ratio is closely related to the impacts of the Asian
Financial Crisis. Hong Kong, as the small and open economy of the region, was hit by the crisis. The GDP
growth rate turned into negative in the fIrst two quarters of 1998 and with the rising unemployment rate
(Law and Yeung, 1998), the income of the government had been greatly reduced. Hence, there was a
substantial growth in the public expenditure to GDP ratio.

74
Figure 5.1 Public Expenditure as a Percentage of GDP
%

24 ~--------------------------------

22

20 ~----------~~--------------~--

18

16

14 ~--------------------------------

12 ~--------------------------------

o
94-95 96-97 98-99 00-01 02-03 04-05 06-07 08-09 10-11

Sources: Hong Kong Special Administrative Region Government, 2006

Compared with other developed countries, the public expenditure to GDP ratio is
very low in the sense that the average ratio of the OECD countries is usually double that
of Hong Kong (see Table 5.1).
Owing to the principle of 'big market, small government', Hong Kong government
owns few enterprises that provide public utilities and transport. Public enterprises are only
found in the field of water provision, postal services and railways. Whilst for other public
utilities and transport, various levels of private sector involvement are observed. For
instance, the private sector has long been invited to work as partner in tunnel building (see
5.4 for details). The for-profit sector is also involved in the provision of the electricity, bus
and ferry services through franchising (Miners, 1991). Instead of being the direct producer
of these public services, the government is responsible for regulating and monitoring the
performance of the for-profit sector and for ensuring that public interest would not be
harmed owing to the monopolistic nature of these companies. In some areas like natural
gas provision and port-related facilities, the enterprises are totally owned by the for-profit
sector with no direct government intervention other than in the form of regulatory control.
Hence, traditionally, the private sector has played a crucial role in public services
provision.

75
Table 5.1 Total outlays (excluding consumption of fixed capital) of government as a
percentage of GDP
1970 1974 1989 1990 1993 1996 1999
United States 30.3 30.7 34.3 35.3 35.9 34.3 --
Germany 38.1 44.0 44.8 45.0 46.2 47.3 46.2
France 37.6 38.1 47.0 47.5 51.8 51.6 49.6
Italy 33.9 37.6 51.4 53.0 55.5 51.4 46.8
United Kingdom 38.0 43.4 38.1 40.1 43.9 41.3 37.5
Canada 34.4 36.1 44.0 46.8 50.1 44.4 --
Australia 24.5 30.2 32.7 33.9 36.1 34.4 32.5
Austria 38.5 41.2 49.3 48.8 53.3 52.0 49.5
Belgium 40.3 43.0 51.6 51.5 54.1 51.2 48.5
Denmark 39.6 42.5 54.3 53.6 58.1 56.3 52.5
Finland 29.8 31.2 40.9 44.4 59.2 54.1 47.2
Greece 22.4 25.0 44.2 48.8 49.6 52.4 52.1
Iceland 29.8 35.6 42.0 39.0 40.4 38.6 38.9
Ireland 38.9 42.2 40.5 39.9 41.3 36.4 31.9
Netherlands 43.2 47.2 56.8 56.7 57.6 45.6 43.3
Norway 40.3 43.8 49.2 49.7 51.0 45.4 45.7
Portugal 21.6 24.6 37.6 40.6 45.3 41.3 40.5
Spain 21.8 22.7 40.9 42.0 47.6 41.2 38.2
Sweden 42.2 46.9 58.1 58.8 67.5 59.9 54.8
Switzerland 21.3 25.5 30.2 30.6 35.2 35.3 34.1

Total DEeD 31.3 33.6 38.6 39.5 40.7 39.0 40.1

Hong Kong 10.9 14.3 15.6 16.3 17.3 18.2 21.7
Souces: OrgamzatIOn for EconomIC Co-operatIOn and Development (2001); Lee (2005)

Owing to the underlying ideology of laissez-faire capitalism and positive

non-interventionism, the government has made good use of the non-government sector,
including the third and the for-profit sector, to produce or even deliver some public
services, thus enabling it to maintain a small government. It has substantial experience in
being the financer, producer and regulator in public services delivery. Hence,
non-government sector involvement in public services delivery cannot be regarded as rare.
Nevertheless, with the introduction of the public sector reform, private sector involvement
has further been encouraged since the late 1980s.

5.3 Private Sector Involvement in Hong Kong

Since the 1980s, there has been an international trend in public administration - New
Public Management (NPM) that brings private sector ideas into the management of public
agencies and into public services delivery (Lane, 2000). Several characteristics are

76
identified by Hood (1991) include
* Leaving managers 'free to manage';
* Using performance standards and measurement;
* Implementing output controls;
* Discipline and parsimony in resource use
* Breaking up public sector entities into 'corporatized' units;
* Adoption of private sector management style; and
* Encouraging competition through term contracts and public tendering (Hood, 1991).

Therefore, reflecting NPM developments elsewhere, extending private sector participation

through outsourcing is one of the key strategies in the Hong Kong's public sector reform
(Efficiency Unit, 1989). There has been also a rapid expansion of outsourcing in the 1990s
(Hayllar, 2005). According to the studies conducted by the Efficiency Unit in 2000,
outsourcing has been adopted as a means to deliver services by approximately two-thirds
of the eighty-six government bureaux and departments (Hayllar, 2005). There were 'nearly
four and a half thousand outsourcing contracts with the private sector, totaling more than
HK$31 Bn [billion] annual expenditure' (Efficiency Unit, 2001). As shown in Table 5.2,
however, outsourcing was not being adopted extensively. Total expenditure on capital
works and construction represents nearly 70% of the total expenditure spent in all
outsourcing projects at that time. Moreover, '84% of all contracts were for annual
expenditure averaging only $1.5 million' (Efficiency Unit, 2001).

Table 5.2 Annual Expenditure on current contracts in 86 bureaux/ departments

Category No. of contracts % Total Total annual Average annual
contracts expenditure expenditure HK
HK$Bn $Mn
Waste 19 <1 1.5 75.9
Management
Capital Works 529 12 21.9 41.4
& Construction
Infrastructure 81 2 1.9 23.9
Maintenance
Transport 65 2 0.8 12.8
Services
All Other 3,676 84 5.5 1.5
Categories
Total 4,370 100 31.6 7.2
Source: EffiCIency Umt, 2001: 2

In 2001, the Efficiency Unit established a team to oversee outsourcing and to assist
the government to enhance the private sector involvement through providing services on

77
• Feasibility and business case studies;
• Re-engineeringl performance improvement studies;
• Project planning, scoping studies, and implementation planning;
• Development of procurement documents including contracts, service specifications
and tender evaluation criteria;
• Due diligence checks;
• Establishment of contract administration and relationship management regimes;
• A range of guides;
• Training courses, seminars and experience sharing sessions; and
• Help desk services (Civil Service Bureau, 2005).

Further, the government published a document titled 'Serving the Community By Using
the Private Sector' which outlined a more developed policy initiative that has been
strengthened further by 'Serving the Community By Using the Private Sector - A General
Guide to Outsourcing' .

From the findings of the Outsourcing Surveys that conducted by the Efficiency Unit
in 2000, 2002, 2004 (see Table 5.3 and Figure 5.2), generally, the scope and the scale of
outsourcing have been enhanced and the potential economies of scale that outsourcing
offers are being better tapped. According to the Efficiency Unit, the drop in the total
number of contracts, total contract value and annual outsourcing expenditure between
2002 and 2004 was 'largely attributed to the volume of public works projects changing
over the two year period between surveys' (Efficiency Unit, 2005)

Table 5.3 Findings of the Outsourcing Surveys conducted by the Efficiency Unit
Year of Survey 2000 2002 2004
Total number of contracts 4389 4853 4512
Total contract value -- $238 billion $214 billion
Annual outsourcing expenditure $32 billion Note $66 billion $46 billion
Average annual expenditure per $2.1 million $3.6 million $3.9 million
non-works contract
Average savings compared with the -- 23% 25%
in-house modes of delivery
Percentage of outsourcing objectives 38% 58% 59%
being fully met
Note
Some of the works departments that outsource work dId not respond to the survey.
Source: Efficiency Unit, 2005

Comparing the findings of2000 and 2004 in Figure 5.2, it is evident that a relatively wider
spectrum of services is now being outsourced.

78
Figure 5.2 Annual Outsourcing Expenditure by Service Category

.Vear 2000
IllVear 2002
.Vear2004

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Other than outsourcing, PPP is another strategy identified by the government in

expanding private sector involvement. In August 2003, the Efficiency Unit published An
Introductory Guide to Public Private Partnerships so as to provide guidance and enhance
the understanding of government bureaux and departments on the approach. Political
commitment was also observed.
"'PPP" - "Public-Private Partnership" in various forms: PFIs, BOTs, PSPs,
all kinds of acronyms, are really ways for the private sector to participate in
various kinds of infrastructure and other public projects. I am a great
believer in these initiatives ... We are all trying to find ways to promote PPP,
to increase PFIs and so on and so forth', said Antony Leung, the former
Financial Secretary (Information Services Department, Jan 23,2003).

'To implement the "Market Leads, Government Facilitates" principle, we

will consider delivering more public services through
Public-Private-Partnerships,' said Donald Tsang (Information Services
Department, Oct 12, 2005).

'We will continue to explore opportunities for public private partnerships,

and in the process, we will take care to select our partners in a transparent
way in open competition,' said Donald Tsang (Information Services
Department, Dec 21, 2005).

On different occasions, therefore both the Chief Executive and Financial Secretary have
reiterated the commitment of the HKSARG to adopt PPPs wherever feasible.

79
5.4 Development of Build-Operate-Transfer type Public Private Partnerships Project
in Hong Kong

Hong Kong is at a relatively early stage of adopting PPPs as a means to deliver

public services. It has, however, considerable experience in developing transport
infrastructure by using the Build-Operate-Transfer (BOT) approach (Efficiency Unit,
2004). Since the late 1960s, Hong Kong has experienced an expansion in its large-scale
public works construction. In order to construct large-scale transport infrastructural
projects while under budgetary pressures, the government has, at different times, invited
the private sector to participate in the projects.
In highway development, the BOT model IS usually adopted. In 1969, the
government decided to construct the Cross Harbour Tunnel by using the BOT approach.
The success of the Cross Harbour Tunnel enhanced government's determination to adopt
the BOT approach in other highway developments wherever feasible. Table 5.4 lists five
BOT tunnel and highway projects in Hong Kong.

Table 5.4 Information on BOT-type infrastructural projects in Hong Kong

Construction Commence Operation
Commencement Date
Cross Harbour Tunnel Sept 1969 Aug 1972
Eastern Harbour Crossing Aug 1986 Sept 1989
Tate's Chairn Tunnel Jul1988 Jun 1991
Western Harbour Crossing Aug 1993 Apr 1997
Route 3 Country Park Section May 1995 May 1998
Source: Mak and Mo, 2005

In the past few years, senior officials, including the Chief Executive and Financial
Secretaries, have reiterated the government's determination to return to 'small
government' (Tung, 1997; Leung, 2003). One of the strategies is to enhance the role of
private sector in public service delivery. Hence, the government has committed to adopt
PPPs wherever feasible (Efficiency Unit, 2003). Recently, the BOT-type PPP is
increasingly implemented in other infrastructural and service delivery projects. Examples
include the Asia-World Expo, Cyberport, Disneyland (see Appendix 1 for details) and the
West Kowloon Cultural District (see Section 1.4 for background information of the West
Kowloon Cultural District PPP).

80
5.5 Accountability Aspects relating to the Start Up of Public Private Partnerships in
Hong Kong

Although accountability is an important issue in PPPs (see 1.3), there are variations
in terms of the degree of accountability present among the projects - Asia-World Expo,
Cyberport and Disneyland.
Since the projects were initiated, Cyberport and Disneyland have been widely
criticized for the lack of equity, transparency and accountability (South China Morning
Post, Mar 27, 1999; South China Morning Post, Nov 3, 1999; South China Morning Post,
Dec 21, 2002). These projects are alike in certain aspects and were being criticized on
similar grounds. First, the proponent was awarded the tender for constructing and
operating the facilities without any competitive bidding. For instance, the Cyberport
project was initiated and mobilized by the Pacific Century Group (PCG). In order to
persuade the government, PCG commissioned a consultancy study on the issue and
proposed several options for the Cyberport. The government and the PCG finally signed a
Letter of Intent after several rounds of negotiation. This, however, occurred before the
project was first made public by the Financial Secretary in his 1999-2000 Budget Speech
(Tsang, 1999). Hence, neither an Expression of Interest Exercise nor a Request for
Proposal was held. More importantly, no prior consultation with the public or its
representatives - the Legislative Council - was found. The public and the Legislative
Council lacked knowledge on the government's intention to construct a Cyberport in Hong
Kong. Indeed the Letter of Intent had already been signed before the project was first
announced. Further, it took only two months from announcing the project to receiving
financial approval from the Legislative Council. The degree of 'consultation' conducted is
hence doubtful. Whilst for Disneyland, the government first announced its commitment
'to develop a multi-media theme park such as Disneyland' in the 1998 Policy Address
(Information Services Department, 1998). This, however, was only after the Walt Disney
Company (WDC) had identified Hong Kong and Zhuhai as the potential sites for its
second Asian Disney theme park (South China Morning Post, Oct 12, 1998). In the
following year, Hong Kong and Zhuhai were negotiating with WDC respectively. In late
1999, the Hong Kong government and WDC reached an agreement on constructing Hong
Kong Disneyland. Owing to the specific nature of Disneyland, no Expression of Interest or
Request for Proposal was held. Also, similar to Cyberport, the government and the
respective private sector reached an agreement before the projects were announced.
However, it is worth noting that compared with the Cyberport, the involvement of the

81
Legislative Council was relatively higher in that legislators had seized a chance to discuss
the issue through a motion debate in November 1998 and before the final deal was made a
year later.
Second, most of the public perceive that there is a lack of transparency in the
formulation of the projects or on the deals entailed (SynergyNet, 2005; Oriental Daily,
May 19, 2004; Wen Wei Po Jan 28, 2005; Hong Kong Economic Journal, Feb 7, 2005).
Owing to the lack of transparency, the government was suspected of colluding with the
businesses involved and of transferring benefits in the Cyberport development to a
favoured company. Typical comments on this by legislators included:
'[B]efore that [the announcement of the Cyberport], there was no public
consultation ... the whole saga lasted for only two-odd months from the
beginning to the end ... Within two-odd months ... the procedure of the
Government's so-called consultation and the Legislative Council's approval
of the funding for the infrastructural project was also completed ... The
Government only hand picked a consortium... Not only was this opposed by
the Legislative Council, political parties and a lot of members of the public,
but at least 10 developers personally reflected their views of discontent to a
number of democratic parties. This non-tendering approach has at least
given us an impression that the Government has very strong policy
inclination towards certain developers and real estate developers,' said Lee
Wing-tat, legislator (Legislative Council, 2005a).

'The crux [of the problem] did lie in the fact that TUNG Chee-hwa had
awarded the right of development to LI family's PCCW without having
conducted any open tender. As a result, LI family's PCCW can enjoy
exclusively the enormous land development right there, where they actually
concentrate on reaping profits from the property development under the
pretence of cyber development. It is a naked transfer of benefits,' said
Cheung Man-kwong, legislator (Legislative Council, 2005a).

'The approach adopted by the Government in handling the Cyberport was

actually injecting a so-called property project into a so-called technology
project. However, the supposed beneficiary, such as those working in the
technology sector, do[es] not have any feeling about the Government's
injection of $2 billion or several billion dollars. They could not feel that the
Government had spent so much money on helping them,' said Sin
Chung-kai, legislator (Legislative Council, 2005b)

In the mean time, Executive Councillor Henry Tang admitted that the degree of
transparency in the deal of Cyberport 'was not high enough' (South China Morning Post,
Mar 27, 1999). Whilst for the Disneyland, although the public, in general, welcomed the
decision for constructing Disneyland in Hong Kong, the agreement reached between the
Hong Kong government and the WCD was strongly criticized by some legislators and

82
citizens. For example, the Democratic Party questioned the basis for not charging the land
premium for the site in Lantau Island (South China Morning Post, Nov 3, 1999).
Moreover, according to a survey conducted by the Hong Kong Polytechnic University,
Hong Kong people feel that there is a lack of transparency on the deal between the
government and WDC:
• 75% of respondents stated there was a lack of transparency on the deal.
• About 65 per cent of respondents indicated that Disney and the government should
share losses equally with the Hong Kong government, which is paying 90% of the
cost of the Penny's Bay development.
• About 43% of respondents said the $13.6 billion deal which provided land
formation and infrastructure works to attract Disney was unfair (South China
Morning Post, Dec 21, 2002).

Further, the public and key stakeholders were not properly consulted in both projects
(Loh, 2005). Without proper consultation with the public and key stakeholders in the
Cyberport development, the government faced opposition from both the Legislative
Council and the property developers. According to Sin Chung-kai, the legislator who
represents the information technology sector, the concern of the opposition property
developers was 'not the profit but a change in game rules ... They [the property developers]
don't know whether they have to build up personal relations with Tung Chee-hwa [the
then Chief Executive], Anson Chan [the then Chief Secretary for Administration] or
Donald Tsang [the Financial Secretary of the date] if they want to develop new projects'
(South China Morning Post, May 13, 1999). In response, government officials and
pro-government legislators admitted that the government should have a proper
consultation with key stakeholders, in particular, the property developers (South China
Morning Post, May 13, 1999). Moreover, although the Arthur Andersen Business
Consulting, which is commissioned by the Hong Kong government to conduct a strategic
assessment on the concept of a Cyberport in Hong Kong, have consulted companies in the
Information Technology (IT) industry (Legislative Council, 1999), the IT community
complains that, in general, there is a lack of two-way communication between the
government and the community (South China Morning Post, Apr 6, 1999). Furthermore,
when the project was first tabled in the Legislative Council on 8 March 1999 (the project
was first announced by the Financial Secretary in his Budget Speech on 3 March 1999), it
was clearly framed to indicate that the government had decided to award the tender to the
PCG without any open and competitive tending. Also, the government and the PCG had
already agreed on the contributions of each partner. Hence, it can be argued that the

83
government was infonning, instead of consulting, the Legislative Council on the project
(Panel on Infonnation Technology and Broadcasting, Legislative Council, 1999). Similarly,
the government has been criticized for bypassing public consultation in the Disneyland
development. Residents of the Discovery Bay, which is located two kilometers from the
site of the theme park, have expressed their disappointments towards the lack of
consultation on the physical site of Disneyland through the Islands District Council
(Islands District Council, 2005).
Relatively speaking, the degree of accountability present in the start up stage of the
Asia-World Expo is greater than that in both the Cyberport and Disneyland. This was
because, in order to meet the growing demand for additional exhibition spaces and to
further promote Hong Kong as the regional 'trade fair capital', the government had started
to examine the need for building additional convention centre since 1997. In early 1998,
the consultant commissioned by the Economic Services Bureau concluded that provision
of additional exhibition facilities is necessary (Legislative Council, 2001a). The
consultancy report, which suggests that Chek Lap Kok (near the Hong Kong International
Airport) is a potential site for the new exhibition centre, was later referred to the Airport
Authority for follow-up actions. Before the Airport Authority submitted a paper on the
proposed international exhibition centre at Hong Kong International Airport, the
government had tabled the importance of constructing additional convention and
exhibition facilities in Hong Kong on the agenda of the Legislative Council. Since then,
the government has regularly consulted and sought policy approval from the Legislative
Council on the issue. For instance, the decision to launch the Expression of Interest
Exercise in July 2002 was agreed by the Legislative Council.
Moreover, the government had consulted the key stakeholders of the proposed
exhibition centre on different occasions. Before the launch of the Expression of Interest
Exercise, in order to understand their needs and to collect opinions from the exhibition
community, the government conducted an international road show to enable stakeholders
to meet international key exhibition centre operators in 2002, these included those from
Gennany, the United Kingdom, France, Italy, Switzerland, the Netherlands, Belgium,
Canada and the United States (Commerce, Industry & Technology Bureau! Invest Hong
Kong, 2002). Additionally, when drafting the tender which was awarded in accordance to
an open procurement and selection process, the government and the Airport Authority did
consider the views of the consultants, legislators and those received from the market in the
Expression of Interest Exercise. Furthennore, one of the key stakeholders - the Hong

84
Kong Exhibition and Convention Organisers' and Suppliers' Association - had actively
participated in the start up stage of the Asia-World Expo. The Association had submitted
its position paper and proposals for improvement and modifications to the initial design of
the new exhibition centre directly to the Airport Authority (Hong Kong Exhibition and
Convention Organisers' and Suppliers' Association, 2001; Rowse, 2002).
More importantly, in the development of the Asia-World Expo, when the government
has launched the Expression of Interest Exercise in mid 2002, it received 10 submissions
from the private sector (Legislative Council Secretariat, 2004), and has able to invite
tenders for the project in early 2003. The Evaluation Board has comprised of
representatives from the government and the Airport Authority. An exhibition consultant,
as a third party, was also included in the Board to provide independent opinion and expert
advice on the assessment of the submissions (Commerce, Industry & Technology Bureau!
Invest Hong Kong, 2002). After the careful evaluation on the submissions, the Board
short-listed four consortia for the tender stage and 'recommended the broad parameters'
for the projects. Further, the evaluation criteria for the tender were stated. Later, the tender
was awarded on the recommendation of the Tender Evaluation Committee (Commerce,
Industry & Technology Bureau! Invest Hong Kong, 2003).
From these cases, it is observed that the government did not have a set of consistent
procedures in developing BOT-type PPPs in Hong Kong. However, it seems that the
government has learnt a lesson and has been becoming more accountable to the public in
handling BOT-type PPPs as time passes. In the development of the Cyberport and
Disneyland, the government had no intention of launching an Expression of Interest
exercise or a Request for Proposals. Further, tenders were awarded without any open
competitive bidding. Additionally, the public and key stakeholders were not properly
consulted at the start up stage of the projects. Learning from its previous experience (in
developing Cyberport and Disneyland), the government adopted a more accountable and
transparent approach in developing Asia-World Expo. Hence, the Legislative Council has
consulted regularly and its policy approval has sought at the initial stage of the
policy-making process. Furthermore, relatively, the government has keen to consult the
stakeholders, in particular, the exhibition centre operators. Opinions obtained were then
considered by the government and Airport Authority. Additionally, the tender of the
Asia-World Expo is awarded on a competitive basis.
Owing to the previous experience, it would seem reasonable to assume that
accountability presented in the WKCD development would be greater than that of the

85
previous three. However, since the announcement of the WKCD project, many residents,
professionals and politicians have expressed concerns about how accountability will be
achieved. In the remainder of this dissertation, the WKCD is adopted as the case study and
is used for testing the evaluation model for studying accountability for BOT-type PPP
projects.

5.6 Summary
This chapter has introduced the development of private sector involvement, in
particular, the Build-Operate-Transfer type PPPs in Hong Kong. Moreover, accountability
aspects relating to the start up ofPPP projects in Hong Kong is discussed. After capturing
some background information on PPPs and accountability relating to the start up of other
PPP projects in Hong Kong, the next chapter will examines the accountability issue in the
initiation ofthe WKCD, before the IFP was issued.

86
 Chapter 6
Accountability Secured Before the Invitation for Proposals

6.1 Introduction
The development of the West Kowloon Cultural District dates back to 1998. From
1998 to February 2006, the project experienced several major changes. With the adoption
of a Public Private Partnership as a means to develop the project, many residents and
politicians have expressed concerns about how accountability will be secured. To provide
a holistic and clear picture, this chapter studies how accountability has been secured as the
project has developed. The chapter begins by discussing the policy-making process and
the establishment of the WKCD public private partnership and then examines how
accountability has been secured in the pre-Invitation for Proposals period (i.e. initiation of
the project).

6.2 Policy-Making Process

In this section, the chronology of decision-making for the WKCD is discussed first.
This is then followed by a discussion of the roles of the Executive Council and Legislative
Council respectively.
As one of the Airport Core Programme projects, 334 hectares of new land between
Yau Ma Tei and Lai Chi Kok (i.e. West Kowloon Reclamation, WKR) was reclaimed to
accommodate the transport infrastructure for the new airport at Chek Lap Kok and to
provide land for various purposes. Originally, the southern tip of the WKR where the
proposed WKCD locates was planned for housing, government, commercial facilities and
recreation areas. Among all of these, the recreation area - a regional park and open
spaces - represented more than 75% of the total area of the site.
Relevant development projects of the southern portion of the WKR started from 1998.
On 16 October 1998, $914 million was allocated through the Finance Committee of the
Legislative Council (Legislative Council, 2006) for constructing the road network and
drainage sewerage works. After the 3-year construction period, the works were completed
in December 2001.
In October 1998, the then Chief Executive, Tung Chee-hwa, announced that the
government was planning to build a new, state-of-the-art performance venue on the West
Kowloon Reclamation (WKR) which locates along the seaside (Information Services
Department, 1998). However, at that time, this did not have any impact on the above

87
mentioned works. In the 1999 Policy Address, the Chief Executive stated his plans to
provide arts, recreational and entertainment facilities, including open plazas, shops and
cafes, along the waterfront of the Victoria Harbour. It is worth noting that in the 1999
Policy Address, the government still planned to 'develop a major performance venue in
the West Kowloon Reclamation' (Information Services Department, 1999: 45). In
November 1999, reflecting the recommendation of the consultancy study commissioned
by the Hong Kong Tourist Association, titled 'Study on the Feasibility of a New
Performance Venue for Hong Kong', it was stated that an integrated arts, cultural and
entertainment district should be built so as to achieve a clustering effect. In the study, 5.5
hectares on WKR were identified as the site for an integrated arts and cultural district with
a new international performance venue which would be comprised of a 1,500 to 2,200
seat-theatre and a semi-open amphitheatre with up to 8,000 seats (Hong Kong Tourist
Association, 1999). In the mean time, the Planning Department published its report
which aimed to 'assess the requirements for cultural facilities up to year 2011 to enable
better planning to meet the needs of the community' (Planning Department, 1999: 2). This
concluded that a new, world-class performance venue should be built. Also, deficiencies in
medium scale performing venues, privately-operated performance studio venue, 'art
space' and community level facilities were identified (Planning Department, 1999).
Furthermore, in the Policy Addresses of 1998 and 1999, based on the advice of the
Executive Council, the Chief Executive ordered the replanning of the WKR. The decision
was later reported to the Legislative Council and the Panel on Home Affairs was consulted
about building a new performance venue on the 40-hectares WKR site with reference to
the study conducted by the Hong Kong Tourism Association (Panel on Home Affairs,
Legislative Council, 1999a: 8). Owing to the replanning of the area, $24 million works,
which had been completed already, had to be aborted.
Later in 2000, the government endorsed a new proposal regarding the development of
the WKCD when it announced that a Concept Plan Competition (CPC) would be held for
the project. In its competition brief, several core and optional facilities were included:
Core Facilities:
* A world-class performance venue with seating capacity of 1,800 to 2,200 as
focus of the whole area
* A large versatile multi-purpose open plaza with service facilities to accommodate
about 6,000 to 8,000 people
* A number of theatres and studios of various seating capacity
* A museum complex comprising facilities such as a museum of moving image, a
museum of contemporary art and a children's museum

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 * An arts village containing workshops, studio spaces and exhibition! sales area,
training and practicing ground for artists and designers

Optional Facilities (following are examples only)

* A multi-purpose venue with seating capacity of about 35,000 to 60,000 for
holding large-scale mass activities
* An arts market
* Themed entertainment development, such as retail and dining facilities, skating
rink, games centres, a cinema complex and! or an IMAX cinema
* Hotels/ service apartments/ residential development
* Grade A offices
* A cruise pier for waterfront leisure activities
* Ahelipad
* Other uses that are complementary to arts, cultural and entertainment
Source: Planning, Lands and Works Panel, Legislative Council, 2000: 5

In the CPC, the government made it clear that '[p ]ackages within the Scheme Area
suitable for private sector development will be decided by public tender, which will be
open to all' (Housing, Planning and Lands Bureau, 2001). Hence, in accordance with the
CPC, multi-packages would be adopted in developing the project.
The Competition received 161 worldwide submissions. In selecting the winner based
on the criteria listed in the CPC, a Jury that comprised by ten local and international
professionals was established. The Jury was advised by a Technical Panel that was chaired
by a senior civil servant, the Director of Planning, with the Director of Architectural
Services and Director of Leisure and Cultural Services or their representatives, plus seven
non-official experts on technical concerns and feasibility of the designs acting as members
(Housing, Planning and Lands Bureau, 2005b). The submission by Foster and Partners,
whose design featured a large-scale canopy, was chosen as the winner of the Competition
in February 2002.
Although multi-packages approach was adopted in the CPC, the approach for the
development of the WKCD experienced a fundamental change in 2003, when the
government announced the launch of its invitation for proposal (IFP). The IFP specifies
that the tender would be awarded to one proponent 12 only and the canopy is a mandatory
requirement for the project. Core arts and cultural facilities are other mandatory
requirements. These include:
* Three theatres with at least 2,000,800 and 400 seats respectively;
* A performance venue with at least 10,000 seats;
* A cluster of four museums at least 75,000 square metres in size;

12 Consortium is treated as a single proponent.

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 * An art exhibition centre at least 10,000 square metres in size;
* A water amphitheatre;
* At least four piazzas; and
* A canopy covering at least 55% of the development area (Housing, Planning
and Lands Bureau, 2003a).

From the above description, it is found that the project has undergone several
major changes from the pre-IFP period. First, the 40-hectares site was originally planned
for housing, government, commercial facilities and recreation areas (regional park and
open spaces). In 1998, the Chief Executive altered the planning of the site and stated that
'a new, state-of-the art performance venue' would be built. Whilst in 1999, the Hong Kong
Tourism Association identified 5.5 hectares of the WKR as the site for the new
international performance venue with a theatre and a semi-open amphitheatre. The scope
was further enlarged to the whole site (40 hectares) with a cultural district, instead of a
single performance venue, to be built. Another major change is the mode of development.
In the Concept Plan Competition, the government states that a multi-developers approach
would be adopted. However, the decision was changed and the single package approach
was later adopted as outlined in the IFP document. The inclusion of the canopy as the
mandatory requirement is another decision that was criticized by a skeptical pUblic. The
role of the Executive and Legislative Councils in the decision-making processes will be
examined in tum. Particular attention will be paid to their respective roles in making or in
holding government accountable for these major changes.

6.2.1 Role of the Executive Council

According to the Basic Law, the Executive Council is the organ which assists the
Chief Executive in policy-making. The Council should be consulted on important
decisions by the administration in advance. The involvement of the Executive Council in
the policy making of the WKCD is summarized in Table 6.1.

Table 6.1 Involvement of the Executive Council in the Policy Making process
Date Involvement of the Executive Council
November 1999 The Executive Council endorsed the decision to replan the West
Kowloon Reclamation into a world-class integrated arts, cultural and
entertainment district
May 2003 The administration briefed the Executive Council on the plan to issue
the Invitation for Proposal
Source: Housing, Planning and Lands Bureau, 2005a.

Generally speaking, the government has given high priority to the development of the
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WKCD since the initiation of the project. In the 1998 Policy Address, the objective of
constructing a new perfonnance venue on WKR is to 'cultivate Hong Kong's image as the
Asian centre of arts and culture, and of entertainment. .. events' (Infonnation Services
Department, 1998). Whilst in 2001, a similar objective is listed in the CPC document that
states that the government aims to 'enhance Hong Kong's position as Asia's premiere
centre of arts, culture and entertainment and create a new look for Victoria Harbour'
(Housing, Planning and Lands Bureau, 2001) The decision to develop the 40-hectares
seaside land into a cultural district with the involvement of a private partner should not,
however, be regarded as day-to-day decision. This is because of the size of the project
developing such a large scale cultural district through BOT-typed PPP with land grant is
not a common practice, whether in Hong Kong or elsewhere in the world. Hence, it is
expected that there should be substantial involvement of the Executive Council in the
policy-making process ofthe WKCD.
However, as shown in Table 6.1, the participation of the Executive Council was low
in the pre-IFP period. Other than endorsing the proposal for replanning the WKR into an
integrated arts, culture and entertainment district, the Executive Council was not updated
on the progress of the project until May 2003, only four months before the official launch
of the IFP. As the IFP was about to begin, it is expected that all decisions, including the
inclusion of the canopy as the mandatory requirement, 50-year land grant and
single-developer approach, would have been made by the Steering Committee chaired by
the Chief Secretary for Administration in advance. Further, the government 'at first told
the Subcommittee [of the Legislative Council] that it had 'briefed' the Executive Council
on its plan to issue IFP, but subsequently said it had 'consulted' the Executive Council on
IFP before it was published' (Subcommittee on West Kowloon Cultural District
Development, Legislative Council, 2005a: 18). Even though the government has
'consulted', instead of 'briefed' the Executive Council in May 2003, consultation with the
Executive Council on the single-developer approach with land grant should have taken
place at the earlier stage, i.e. before the decision was made, so that the scope within which
the views of the Executive Council could be heeded in the decision-making process could
have been enhanced.
Limited involvement of the Executive Council placed a question on the degree of
managerial accountability achieved. This is because the Executive Council is an advisory
body constitutionally. Hence, the government should consult the Executive Council
important decisions are made. More importantly, although the Executive Council is an

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advisory body, as the highest level policy body, it acts as the cabinet of the HKSARG in
reality. Therefore, the limited participation of the Executive Council, to a certain extent,
suggests that managerial accountability may not have been well-secured at the initiation of
the project.

6.2.2 Role of the Legislative Council

Constitutionally, the Legislative Council is empowered to legislate and to scrutinize
the operations of the government. Public expenditure is scrutinized by the Legislative
Council in that HKSARG has to obtain in advance the Legislative Council's financial
approval for projects that require public money. The Legislative Council also acts as the
monitor in the policy-making process. Theoretically, as the representatives of the citizens,
the Council should be briefed, involved and consulted on the project from the initial
stages.
Consultation with the Legislative Council on the WKCD-related issues did occur in
the pre-IFP era. The Legislative Council was briefed, consulted and involved in the
development of the WKCD regularly (see Table 6.2 for details). However, it is worth
noting that although the then Chief Executive, Mr. Tung, had announced his intention to
construct a new, state-of-the-art performance venue on the WKR in his 1998 Policy
Address, the idea of building additional cultural facilities on the WKR was not placed on
the agenda of the Legislative Council until late 1999. When the Legislative Council was
first briefed on the intention, the government had already made the decision to develop a
world-class integrated arts, cultural and entertainment district on the WKR. The
government was thus only seeking approval from the Legislative Council for the decision
of replanning the site as this would incur a financial loss of $24 million from the
construction of road network and drainage sewerage that was in progress and would now
have to be abandoned. The skeleton of the WKCD was further outlined by the
government at the meeting of the Panel on Home Affairs of the Legislative Council on 13
December 1999. In the meeting, the Principal Assistant Secretary for Planning,
Environment and Lands stated that the WKR would be developed in an integrated
approach in which 'the development should not comprise only residential buildings, hotels
or commercial activities ... the commercial development in the area was only to support
the arts and cultural activities' (Panel on Home Affairs, Legislative Council,1999b). Also,
an open competition for designing the site would be held. In the meeting, several
legislators raised their concerns towards the relationship between the long-term arts and

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cultural needs of Hong Kong and the WKR development. Further, wide consultations with
key stakeholders and clear policy objectives and guidelines were urged. In March 2000,
members were updated on the progress of the project, in particular, the open competition
on the development of the WKCD. At that time, core arts and cultural facilities were first
made public for discussion. However, discussion was mainly focused on the arrangements
of the open competition, such as the linkage between the winning design and development
rights. The outcome of the open competition and the government's intention for launching
the IFP were reported to the Council in 2002 and 2003 respectively.

Table 6.2 Consultation with Legislative Council in the Pre-Invitation for Proposal Era
Date Consultation with Legislative Council
5 September 1998 HKTA submitted to Home Affairs (HA) Panel that additional
performance venues were urgently required
16 October 1998 The Finance Committee (FC) approved the recommendation of the
Public Works Subcommittee (PWSC) to upgrade WKR works
18 November 1999 Panel on Planning, Lands & Works (PLW) was briefed on the need
to review the land use ofWKR
December 1999 The Administration informed the Finance Committee of its decision
to review the land uses of the southern portion of WKR and to
delete part of the WKR works. $24 million of works which had
been completed were abandoned as a result of the replannning

HA Panel was briefed on the planning of a performance venue on

WKR and Government's stance on a clustering effect in planning
new facilities
9 March 2000 PLW Panel was briefed on the open competition for concept plans
for a range of core cultural facilities, including themed museums for
contemporary art and moving image, as well as commercial
developments
May 2002 The Administration informed the PLW Panel of the outcome of the
Concept Plan Competition
4 July 2003 PLW Panel was briefed on Government's intention to issue an IFP
forWKCD
Source: SubcommIttee on West Kowloon Cultural Development, LegIslatIve CouncIl,
2005: 89-92

As shown above, the government has regularly informed the Legislative Council on
the development of the project in the pre-IFP period. However, it is worth noting that no
information regarding the development approach (BOT-typed PPP and single-developer
approach) and the mode of financing (free-standing nature of the project) or its possibility
has been provided by the administration until July 2003, two months before the official
launch of the IFP. Hence, the writer shares the view of the Legislative Council that 'the
way the Administration chose the timing and the mode of the consultation, and the extent

93
of infonnation released to Members meant the Legislative Council was never put in the
position of being able to properly appreciate or scrutinize the financing of the project until
at a very late stage' (Subcommittee on West Kowloon Cultural Development, Legislative
Council, 2005: 60-61). Hence, the Legislative Council, to a great extent, could not
function effectively as an accountability, check and balance mechanism towards the
executive branch. From this perspective, the Legislative Council plays a limited role and
its view, to a certain extent, cannot be fully taken into account because those decisions
have been made in advance.

6.3 Public Private Partnerships Establishment

Through the adoption of a PPP strategy, the public sector delegates the responsibility
of direct service delivery to its private partner. The government, however, still plays a
crucial role, from the early deVelopment to the end of the project. In general, state
intervention can be classified into three main categories: provider, purchaser and regulator
(Corry et aI., 1997). With the international trend of increased involvement of the
non-profit and business sectors in public service delivery, governments have undergone
transfonnation from being direct service providers, to becoming purchasers and regulators.
In other words, governments now steer instead ofrow (Osborne and Gaebler, 1992).
Unlike privatization, under the PPP framework, government and business work as
partners, instead of principals and agents. Hence, steering a PPP project effectively can be
regarded as a way to transfonn both the public and private sectors to become better and
more effective partners. According to the HM Treasury (2000), the government should
look for securing long tenn value of the project for the taxpayer. Hence, identifying value
for money and using a public sector comparator are, to a certain extent, compulsory
exercises so as to ensure that taxpayers will benefit from the PPP arrangement in the long
tenn. Further, so as to achieve communal accountability, stakeholders' interests should be
taken into account in designing a PPP project as 'the prospects for a successful PPP are
best if all the main stakeholders are committed to the partnership's objectives' (HM
Treasury, 2000: 30). In particular, the government is accountable for several aspects or
roles, including:
• defining the business and the servIces required, and the public sector resources
available to pay for them;
• specifying the priorities, targets and outputs;
• executing a carefully planned procurement process;

94
* determining the performance regime by setting and monitoring safety, quality and
performance standards for those services;
* governing the contract by enforcing those standards, taking action if they are not
delivered;
* managing community expectations;
* providing the enabling environment; and
* reacting, in cooperation with the private sector, to changes in the project environment
while remaining focused on pre-defined objectives (Grimsey and Lewis, 2004).

6.3.1 Assessing Cultural Needs in Hong Kong

During the pre-IFP period, the government assumed several of the above roles
including defining the business and range or scope of services required. As previously
mentioned, the government decided to construct an arts and cultural district in the WKR
on the basis of the recommendations of various studies, including those either
commissioned or conducted by the Hong Kong Tourism Association (HKTA study) and
Planning Department (PD study) 13. In general, both studies concluded that Hong Kong
needs new cultural facilities 14 and they should be developed in an integrated approach, i.e.
in the form of cultural district, so as to achieve a clustering effect. For the location of the
proposed cultural district, WKR is preferred in the HKTA study. However, it is worth
noting that other than the WKR, the PD study also recommends Wanchai to Central
Waterfront, Lan Kwai Fong and Yau Ma Tei as potential locations for the cultural district.
The suggested core facilities listed in the IFP of the WKCD development are, generally

\3 Although the government has conducted several relevant studies, only those conducted or commissioned
by the Hong Kong Tourism Association and Planning Department are regarded as government studies which
examined the needs for new cultural facilities. This is because all other studies were conducted after the
government has decided to develop the WKR into a cultural district in late 1999 and had briefed the
Legislative Council on the open competition for concept plans for a range of core cultural facilities in WKR
in March 2000.
14 New cultural facilities that are identified by the HKTA study include (1) a formal 1,500 to 2,200 seat
theatre; (2) a large semi-outdoor weather protected flexible open venue space for the staging of a wide
variety of performing events, arts and cultural activities including visual! environmental art display and
exhibitions. When used as an outdoor performing event venue, it should accommodate up to approximately
8,000 seats; (3) adjacent waterfront park directly linked to the semi-outdoor open venue space; (4) a wider
range of supplementary performance rehearsal facilities and informal activity spaces within the venue; (5) a
harbour viewing tower with observation deck; (6) a commercial area for retail, gift and souvenir, gallery,
studio, office, cafe, bars with live music, and dinning activities focused on themes related to performing arts,
entertainment, media, art and culture; (7) supporting facilities such as parking, loading and unloading; and (8)
a direct all weather automated pedestrian walkway connection linking the venue to the MTR Station (Hong
Kong Tourism Association, 1999). Whilst in the PD study, after considering the demands and current and
planned supply of facilities, the study concluded that (1) although there is a lack of suitable venues for world
class performances in Hong Kong, the proposed development of a new performance venue which has been
advocated strongly by the HKTA has filled the gap; (2) the need for more informal or 'alternative' space, and
flexible 'art space' for installation arts and contemporary arts; (3) there is generally an insufficient provision
of supporting facilities proposed. The principal gaps are restaurants, car parking and loading! unloading
facilities, bookshops, souvenir shops, box offices, information kiosks, etc. which are important for the
creation of a better cultural experience; and (4) lastly, existing and proposed provision of community level
facilities such as venues for classes, rehearsals and practices, workshops, small scale performances and
exhibitions falls short of the arts community expectations (Planning Department, 1999).

95
speaking, in line with the recommendations of the two studies. Although the government
has taken the view of the PD study that the development of new cultural facilities should
be based on a supply-led approach, which is consistent with the WKCD development,
there is no evidence that the government has conducted any individual project feasibility
and viability studies 'which should be prepared for all major public investments' (Planning
Department, 1999) as stated in the PD study. Instead, under the IFP, the responsibility has
been 'delegated' to the proponents, who are responsible for formulating plans towards the
design, build and operation of the facilities. Hence, the decision to develop the WKR into
a cultural district does not appear to be formulated in a transparent and accountable way.
After the decision to construct an arts and cultural district in WKR was made, three
more relevant reports were published from late 2002 to 2003. These include (1)
consultancy study on the provision of regional! district cultural and performance facilities
in Hong Kong by Horne Affairs Bureau and Leisure and Cultural Services Department
(HAB Report); (2) policy recommendation report of the Culture and Heritage Commission,
which was established in April 2000 (CHC Report); (3) consultancy study on the mode of
governance of Hong Kong's public museums and the Hong Kong Film Archive by the
Leisure and Cultural Services Department (LCSD Report).
In late 2001, a consultancy study on the provision of regional! district cultural and
performance facilities in Hong Kong was conducted. In light of assessing the cultural
needs and recommending ways to bridge the gap, the consultancy study concluded that
additional cultural facilities should be built so as to meet the needs of the community. It
recommended: that the planning, funding and management of the new facilities should be
rationalized by more stakeholder involvement; a changed government role (from sole
provider to include roles as partner and facilitator); achieving cost effectiveness and
pursuing the international best practices in planning, funding and operating cultural
facilities (Horne Affairs Bureau and Leisure and Cultural Services Department, 2002). In
particular, it stated clearly that in developing an arts district, it 'should be subject to the
feasibility study process ... before implementation' (Horne Affairs Bureau and Leisure and
Cultural Services Department, 2002: 25). The feasibility study should also be carried out
for any individual facility in that 'the development of cultural facilities takes place within
the framework of broader policies and strategic for cultural policy, the planning of an
individual facility is usually unique to the facility and is carried out through specific
project feasibility studies' (Horne Affairs Bureau and Leisure and Cultural Services
Department,2002: 11).

96
 The Culture and Heritage Commission (CHC) was established in April 2000 so as to
review cultural development in Hong Kong and to advise the government on its long-term
cultural policies and funding priorities. The CHC put forward a hundred recommendations
and suggests that the development of culture in Hong Kong should be people-oriented and
based on a community-driven approach. The WKR development is regarded as an issue in
the report. The CHC supports the concept of developing the WKR into an integrated arts,
cultural and environment district. Nevertheless, it points out that the government should
'thoroughly consider the "software" or cultural contents before planning the "hardware'"
(Culture and Heritage Commission, 2003: 48). It recommends that the government should
assume the role as a facilitator so as to facilitate partnerships between the for-profit and
the cultural sector. In particular, the cultural sector should be given the opportunities to
participate in both the planning and operation of the facilities in the cultural district.
In 2002, the Leisure and Cultural Services Department commissioned a study on the
mode of governance of Hong Kong's public museums and the Hong Kong Film Archive.
The report, published in 2003, made ten recommendations which aimed to transform the
public museums to become more community-centred with the ability to generate revenues.
Among these ten recommendations, two are relevant to the WKCD. First, the consultancy
suggests developing a ten-year master plan, which 'based upon sound planning principles,
including a full in-depth financial implications analysis and assessment, will provide a
framework by which new museum opportunities can be identified, and proposals can be
assessed' (Leisure and Cultural Services Department, 2003: 15). Also, an on-going
Museum Accountability and Evaluation Program should be included in the governance
system.
To a certain extent, the above studies can be regarded as those which serve to
'reinforce' the 'legitimacy' of developing an arts and cultural district in Hong Kong.
However, the government has paid no attention to several of the recommendations in the
reports which are relevant to the development of the WKCD. For example, although both
the HAB Report and the CHC Report have emphasized the importance of conducting
feasibility studies on individual facilities, the government has discounted this in the
WKCD development. Further, although the government was urged by the CHC to consider
the 'software' before planning the 'hardware' and the government has accepted this
recommendation in principle (Home Affairs Bureau, 2004: 28), the approach in the
development of the WKCD is the other way round which is, however, consistent with the
recommendation of the PD study. Nevertheless, the government failed to provide the

97
rationale for adopting the PD's recommendation instead of the CHC's, despite the fact that
the report of the latter is regarded by the government as the primary blueprint for cultural
development in Hong Kong.

6.3.1.1 Reflecting Cultural Needs? Views of the Arts and Cultural Groups
Although the government has established the needs for more cultural facilities
through conducting the above mentioned studies, some interviewees challenged the
quality of these studies. One interviewee, from the arts and cultural groups, claimed that
no qualified research on cultural policy or cultural development in Hong Kong has been
conducted. Another challenged the methodology of these 'researches', i.e. through
comparing the statistics between Hong Kong and other international metropolises, and
thus doubts the reliability of the cultural needs identified and the decision of developing
the WKR in an integrated approach. To a great extent, the claim of the interviewee is valid
in that the CHC has established the needs of additional museums in Hong Kong it did so
by doing international statistical comparison and concluding that Hong Kong needs more
museums as there are only twenty whilst other international metropolises have, on average,
more than a hundred museums (Culture and Heritage Commission, 2003). However, this is
not necessarily a good way of determining cultural needs as it ignores all other relevant
factors and has not examined the needs in the Hong Kong context.

'I worked in the Home Affairs Bureau as the senior research officer before. 1
have also worked with the Culture and Heritage Commission... 1 was a
senior researcher in conducting these studies. Some basic principles in these
researches are ridiculous. For instance, some researches have calculated the
ratio of population to the number of museum in different cities, including
London and New York, and come to the conclusion that how many museums
we should have in Hong Kong. This way of calculation is totally relied on
statistics ... The data are not proposed by a critical cultural analysis and
cannot highlight our cultural needs.' (Interviewee, Arts and Cultural Groups)

'I was one of the members in the Culture and Heritage Commission. That is
not research. [The number of research conduced by the government on
cultural development in Hong Kong] is zero.' (Interviewee, Arts and Cultural
Groups)

Though the cultural needs established by the government through conducting several
studies are doubtful, it is undeniable that some studies, in particular, those of the HKTA
and PD studies, have concluded that Hong Kong needs some additional cultural facilities.
However, both studies (the HKTA and PD studies) only conclude that there is a lack of an

98
international standard performance venue in Hong Kong without establishing the real
needs for constructing any new museums in Hong Kong 15 . In March 2000, according to
the paper provided by the Administration for the Panel on Planning, Lands and Works
meeting, the government clearly stated that there is a need for a museum cluster
'comprising facilities such as a museum of moving image, a museum of contemporary art
and a children's museum' (Planning, Lands and Works Panel, Legislative Council, 2000),
together with a world-class performance venue, a large versatile open plaza, an arts village
and theatres/ studios as the core arts and cultural facilities (Planning, Lands and Works
Panel, Legislative Council, 2000). Later in the Invitation for Proposal, other than stating
the uses and scales of cultural facilities, the administration has also recommended the
preferred themes for the four museums in the museum complex 16, namely Museum of
Moving Image, Museum of Modem Arts, Museum of Ink and Museum of Design.
Unfortunately, there is no relevant government document or study which aims at
identifying and establishing the needs of building four new museums in Hong Kong 17 .
Hence, the basis for the decision to include four museums in the museum complex, instead
of two, three, five or six, is doubtful. The lack of established evidence as to the need for
four such new museums in Hong Kong has, to a certain extent, led to some criticisms.

'The project is just about allocating hardware in West Kowloon. There were
no serious studies backing the assumption of, say, how many museums we
should have. It doesn't consider Hong Kong's characteristics and what Hong
Kong needs', said Mr. Albert Lai Kwong-tak, chairman of the Conservancy
Association's centre for heritage (South China Morning Post, Dec 31, 2005).

'Have you ever thought of the reason why we need four new museums, three
additional theaters in Hong Kong? Are they really corresponded to our needs?
Further, I don't think the government has conducted any research on this
issue. Who said Hong Kong needs four more museums, not five, six or seven,
or two or three?' (Interviewee, Arts and Cultural Group)

'Hong Kong has already got so many theatres, so many museums, but Hong
Kong still isn't a cultural city. So, how many more cultural facilities should

15 In the PD study, Museum of Contemporary Art is regarded as one of the committed and potential cultural
facilities developments in Hong Kong.
16 Although there are preferred themes of the museums, proponents are given the flexibility to propose
alternative themes if the themes are supported by justifications.
17 It is worth noting that the Culture and Heritage Commission has established a Working Group on
Museums. Compared with other international metropolises, the number of museums in Hong Kong is far
less than her counterparts. Hence, CHC recommends that new museums with various themes would be
needed. Also, flagship museum, like Museum of Modem Art, Museum of Ink Painting should be established
in the WKCD (Culture and Heritage Commission, 1999:25). Although the CHC has, to a certain extent,
established the need for constructing additional museums in Hong Kong, it does not state the exact number
and identify the themes of Moving Image and Design.

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 we build so as to be a cultural city?' (Interviewee, Arts and Cultural Group)

'Be frank, I have been very critical on why we should construct four more
museums, but not twenty small museums. That makes a lot of difference.
That means the government has packed the stuffs together without thinking
the reason behind.' (Interviewee, Arts and Cultural Group)

Without examining how many additional museums we need in Hong Kong, the
decision of choosing Moving Image, Modem Arts, Ink and Design as the preferred themes
of the museums in the WKCD is, again, questionable. According to the PD report, it was
prepared to build the Museum of Contemporary Art in Hong Kong before 2000. However,
as some applied arts, such as photography and design, have been praised highly
internationally, the Home Affairs Bureau has proposed the construction of Museum of
Modem Arts which includes both applied arts and contemporary arts. Together with the
Museum of Ink Painting (the term is interchangeable with the Ink Museum), the CHC has
recommended these as the flagship museums in the WKCD. However, for the themes of
Moving Image and Design, there is a lack of supporting studies that identify the needs for
such museums in the WKCD, even though some pressure groups and the connected
industry, including Hong Kong Federation of Designers and the Bruce Lee Union, have
urged the government to adopt these as the preferred themes for the museums in the
WKCD (Hong Kong Special Administrative Region Government, 2005). More
importantly, Design has never been regarded as a single theme of new museum in Hong
Kong l8 . It is understandable that the government might has been pressurized by the
above-named pressure groups or professional organizations. However, the government has
failed to explain clearly the rationale for choosing these two as the preferred museum
themes, other than claiming that the film industry and design in Hong Kong has been
highly regarded in the international arena. Further, other than design and film, Hong Kong
is also well-known for some other fields like food culture, pop music. Even though the
government has tried to justify the needs for constructing the Museum of Moving Images
in Hong Kong by claiming that it has been proposed since 2001, why Design, but not
other themes proposed by the Leisure and Cultural Services Department in 2001 19, is now
regarded as the preferred theme is still unexplained. Further, in accordance to the museum

18 According to a paper prepared by the Leisure and Cultural Services Department, the Museum of Moving
Images and Museum of Modem Art and Design have proposed as the new cultural facilities in Hong Kong.
19 The Leisure and Cultural Services Department has proposed several new museums in Hong Kong,
including Ink Museums, Museum of Hong Kong Modem Art and Design, Museum of Food Culture, Hong
Kong Film Museum, Canto-pop Music Museum, Transport Museum, Museum of Natural History and Sports
Museum (Home Affairs Bureau, 2005a).

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development plan prepared by the Leisure and Cultural Services Department, the Film
Museum, i.e. the Museum of Moving Images (to a certain extent, they are interrelated),
should be located next to the Canto-pop Music Museum so as to 'add tremendously to the
appeal of the [Film Museum]' (Home Affairs Bureau, 2005a). However, as only the
Museum of Moving Images is going to be built in the WKCD, does it imply that the
government has dropped the proposal on Canto-pop music? For the location of the Ink
Museum, the Leisure and Cultural Services Department states that the best location is in
Sai Kung as 'it is destined to become a world-class museum if housed in fine architecture
blended with nature, exclusively on a small island, say in Sai Kung - a Shangri-la setting
similar to the Miho Museum in Japan' and the WKR is identified as a 'far less attractive
site' (Home Affairs Bureau, 2005a). With no open records of the CHC meetings, it is
impossible to trace CHC's consideration of the priority and preferred locations of the
proposed new museums, even though the Commission has concluded that the 'flagship'
Ink Museum and Museum of Modem Art should be established and built in WKCD. From
this perspective, it is doubtful that the government has performed well in establishing
community needs on museums, a prerequisite for achieving communal accountability.

6.3.2 Market Testing and PPP Feasibility Study

According to Table 3.7, other than conducting needs analysis, the Efficiency Unit
recommends that market testing and PPP feasibility studies are carried out in the early
stages of PPP development (Efficiency Unit, 2003). The government, in response to the
urge of the legislators' questions, prepared a document which compares the Introductory
Guide to Public Private Partnerships and the procedures adopted for developing the
WKCD. The government states that the above named studies, including the HKTA study,
the PD study, the HAB report, the CHC report and LCSD report are 'survey/ studies [that]
have been taken into account by the Government in the development of the WKCD'.
Further, in justifying the adoption of BOT model in the development of the WKCD, the
government reiterates that 'as referred to in the Foreword of the PPP guide, enhancing
radically the use of the private sector in delivering government services will help address
demands for more and better public services. One of the stated arts and cultural objectives
of the WKCD development is to encourage private sector participation in the rendering of
cultural services in Hong Kong. The arts and cultural facilities in WKCD can and should
be run with greater commercial expertise than the Government is able to provide'.
(Subcommittee on West Kowloon Cultural District Development, Legislative Council,

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2005a).
The studies named by the government, however, can only been regarded as studies
which analyze the cultural needs in Hong Kong as they are not examining whether a PPP
model should be used in developing the cultural district in Hong Kong. The only study
which confirms the adoption of partnership as a means is the CHC report that regards
partnership among the government, the for-profit sector and cultural sector as one of the
principles in planning and developing the WKCD. In particular, the government should act
as the facilitator to foster the partnerships between the cultural sector and the private
partner in the planning and operation of the cultural facilities (Culture and Heritage
Commission, 2003). As highlighted by the government, these recommendations of the
CHC were considered in deciding the means of developing the WKR, i.e. adopting PPP.
However, this should not be regarded as a formal market testing and PPP feasibility study
as the CHC is only an advisory body which recommends the government to adopt a PPP in
principle. Although the government has generally accepted the recommendations of the
CHC, this does not mean that it can take such a suggestion for granted without
undertaking any feasibility study of the project itself. To be specific, and as PPP is an
ambiguous concept (see Chapter 3 for details), the recommendation of the CHC cannot be
regarded as a sufficient base for the government's decision to adopt a BOT-typed PPP for
the project. Hence, this appearance is definitely inconsistent with the best practices of
market testing and feasibility study elsewhere and may lead to failure of the project. More
importantly, when the government is being held accountable for the decision to adopt PPP
as a means to develop the WKCD, it is difficult for it to justify its position as no 'formal'
market testing and feasibility study have been carried out.

6.3.3 Assessing Value for Money

According to the best practices elsewhere and the Introductory Guide to Public
Private Partnerships prepared by the Efficiency Unit, one of the major benefits of using
PPPs is as a means to achieve value for money (VFM). Hence, whether VFM can be
achieved through adopting PPPs should be one of the determining factors. In order to
achieve VFM, an assessment should be based on three main criteria. First, the projects
should be awarded in a competitive environment. Second, sufficient risk transfer and
reallocation should occur so as to maximize the expected value for money. Moreover, a
fair, realistic and comprehensive comparison between the net benefits brought by adopting
PPPs as a means and traditional conventional procurement should be done. In order to

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meet the last requirement, it is advised to establish the public sector comparator (PSC)20
as the benchmarking reference. In accordance with best practices elsewhere and the advice
of the Efficiency Unit, an initial PSC should be constructed as early as possible. However,
in the development of the WKCD, the government did not construct any PSC. In
explaining this decision, the government states that as the WKCD is a financially
free-standing project, it is not necessary to construct a PSC in advance. This is, in general,
in line with the Introductory Guide to Public Private Partnerships that states that 'where no
public money is involved because the project is financially free-standing (i.e. the private
partner recovers all costs through charges to the ultimate consumers), or where a firm
decision has been made that the PPP approach is to be followed for policy or qualitative
reasons, a PSC need not be constructed' (Efficiency Unit, 2003: 32). Further, in order to
maximize the flexibility in the IFP process, the government argued that the PSC is
irrelevant and is impossible to construct at the beginning of the IFP. Instead, the
government has conducted several feasibility studies based on data gathered from different
government departments 'before preparing IFP and for assessing the cost and revenue
assumptions adopted by the proposals' (Housing, Planning and Lands Bureau and Home
Affairs Bureau, 2005:4-5). Data adopted in the feasibility studies 'will be revised and
refined in the next stage of IFP' (Housing, Planning and Lands Bureau and Home Affairs
Bureau, 2005: 5). The Subcommittee on the West Kowloon Cultural District Development
of the Legislative Council has strongly opposed this approach by claiming that the 40
hectares of land which will be granted to the private partner in reference to the IFP should
be regarded as a public resource of significant value and thus the project is not financially
free-standing in reality (Subcommittee on the West Kowloon Cultural District, Legislative
Council: 2005b). It should be noted also that the Introductory Guideline to Public Private
Partnerships has stated clearly that 'client departments will still wish to establish value for
money, especially if public land has been provided at less than full market value'
(Efficiency Unit, 2003:32). Hence, it is not convincing that the PSC is totally irrelevant in
the context ofthe WKCD development.
'I have criticized the government for not constructing a PSc. You are going
to grant the private sector 40 hectares of the most valuable harbour side land
in Hong Kong. We don't have much left ... Well, just assume that the land
worth one-third of the price that Mr. Stanley Ho estimated, the amount is 10
billion. That is the public money. Whether it is allocated correctly, will you
be interested? If I want to know whether this 10 billion, I am sure the amount

20 It should be noted that the PSC is regarded as the mechanism linking communal accountability and
performance in Figure 4.1.

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 is less than what it should be, have been allocated correctly or not, do I have
any basis ... It [the government] does not have any figure. There is no PSC
constructed. So, how can I know whether the proj ect should be developed by
PPPs or traditional conventional procurement?' (Interviewee, Legislator)

Given that the government did not construct any PSC at the initial stage of the
WKCD project, plus the single-developer and development mode of the project, as well as
the fact that there were some previous suspicious precedents, including the Cyberport and
also the Hunghom Peninsula project21 , the public, and in particular some legislators, have
challenged the basis for adopting PPPs as a means to develop the WKCD. They have even
suspected that PPPs are a means to secure a 'transfer of benefits' and
'government-business collusion'.

'The first TUNG Chee-hwa had awarded the Cyberport project without
inviting any tenders; changed the contract in order to sell the Hunghom
Peninsula development at pitiable prices; proposed to award the West
Kowloon Cultural District (WKCD) project by way of a single development
approach so as to convert precious land resources of Hong Kong into the
benefits of a certain consortium,' said Cheung Man-kwong, legislator
(Legislative Council, 2005a).

'However, should the Government have carried out this assessment exercise
[the PSC] at the early stage of the project, the Government should be able to
justify that the PPP approach would offer value for money and that there
should be no "transfer of interest" as alleged by the public. More
fundamentally, the best value assessment cannot be run in parallel or at the
end of the procurement stage; otherwise, there is no agenda for questioning
the basis of the PPP project' (Views forwarded to the Subcommittee of the
WKCD Development by the Hong Kong Institute of Surveyors) (The Hong
Kong Institute of Surveyors, 2005a: 9) ..

'Don't you find that the public has already put an equal sign between the
private sector involvement project and "government-business collusion"? ...
There are some previous suspicious precedents like the Cyberport and
Hunghom Peninsula project. That's why the general public has such a
feeling. ' (Interviewee, Pressure Group)

Ensuring there is a competitive environment is another criterion for assessing the

VFM of a proposed PPP project. Competition has long been regarded as an essential

21 In 2002, in order to stabilize the property market, the government ceased the sale of subsidized flats. As a
new housing development under the Housing Authority's Home Ownership Scheme, the sale of Hunghom
Peninsula had been put 'on hold'. However, as the completed estate is constructed under the Private Sector
Participation Scheme, the Housing Authority is obligated to purchase the flats at the guaranteed purchase
price. A deal was fmally made between the government and the private partners and the Hunghom Peninsula
was sold below the market price.

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element in the tendering process of a PPP project in that competition can 'create an
environment that encourages bidders to be innovative in their design solution and efficient
in service delivery' (Grimsey and Lewis, 2004: 135). The degree of competition in the
development of the WKCD is closely related to the single-developer approach. In
explaining the rationale for adopting the single tender, the government states that it is
undesirable to develop an integrated arts, cultural, entertainment and commercial facilities
by using mUltiple packages. A multiple-tender development approach would require the
government to draw up a master layout plan in the first place. The government faces
difficulties in drawing up the plan as the plan has to be based on some 'uncertain
assumptions of what would be commercially viable (Information Services Department,
May 12, 2004). Further, the government would have to be responsible for drawing up
'multiple sets of complex interlocking land leases which may lead us into costly litigation
in future' (Information Services Department, May 12, 2004). It would also have to be
responsible for the design of some infrastructures, such as, the canopl2, which serve the
whole development. This may create another problem in ensuring that the design can
interface properly with other developments in the cultural district. Last, but not least, it
is expected that through adopting the multiple-package approach, arts and cultural
facilities will be tied with different requirements, 'thereby losing the opportunity for
integrated and complementary design of these facilities' (Information Services Department,
May 12, 2004). An urban designer shares the views of the government by stating that the
single-developer approach allows 'a single coherent design. The controversial canopy will
ensure there will be no obstructive high-rises that create a canyon effect on either side of
Victoria Harbour, which many people want to preserve. Also, the canopy and integrated
urban places could become an attractive international landmark... Furthermore, the
winning developer would be expected to provide the internal financing, cross subsidies
and deVelopment phasing to create the necessary critical mass and to bear the risks.'
(South China Morning Post, Jan 26, 2005).
Again, there was a public outcry against this single-developer approach which was
seen as potentially harming the competitive tension in the bidding process as small
developers might not be involved for two reasons. First, as required by the IFP's
mandatory requirements towards the qualification of the proponents, only those who
'possess experience in developing at least one mixed-use development with a total

22 The canopy was one of the mandatory requirements in the IFP.

105
construction cost of not less than $3 billion in managing, marketing and leasing of large
developments, within the last 15 years' (Housing, Planning and Lands Bureau and Home
Affairs Bureau, 2003) can bid. Second, small developers have their economic concerns in
forming a long-term joint venture. As cited in the South China Morning Post (Jun 18,
2004), a small developer stated that 'it is easy for us to just bid, build and sell, but forming
a joint venture for 15 to 20 years is very difficult, especially when the economic cycle
goes down'. This would, to a certain extent, restrict the number of potential proponents
and undesirable tender prices may result. The government has implied that the degree of
competitive tension would not be harmed as it received eleven written indications
expressing interest in taking part in the project23 (Housing, Planning and Lands Bureau
and Home Affairs Bureau, 2003), in reality, however, the government received five actual
proposals, including one which was prepared by an individual. For this latter proposal, the
screening team, headed by Project Mangerl Kowloon, of the Civil Engineering and
Development Department, and senior officials from different relevant bureaux and
departments, concluded that it 'does not meet any of the project-related mandatory
requirements and fails to demonstrate the proponent's capability for undertaking the
project' (Housing, Planning and Lands Bureau, 2004: 3). From this perspective, it is
reasonable to conclude that only four developers, of which two are consortia, have
submitted a proposal in reality.
One interviewed proponent has argued that the single-developer approach may not be
problematic and may not harm the competitive tension in the WKCD. Instead, helshe
argues that the competitive tension is harmed by the detailed input specifications which
are clearly listed in the IFP (for details, please go to 6.3.4).
'As far as I know, there are 11 indications which expressed their interest in
the WKCD. All of them are local property developers. Well, as oversea
groups are allowed to take part too, definitely, there should be more than 11
proponents. However, if you take a look of the IFP, the government provides
input specifications instead of output specifications. With these strict
requirements, only 4 large property developers have submitted their
proposal.' (Interviewee, Proponent)

It is difficult to assess the extent to which competitive tension existed in the bidding
process as no financial information has been provided and despite there being eleven

23 It should be noted that the government did not examine the background of the 11 potential proponents
(who have submitted an indication to express their interest in undertaking the project) as 'we must assume
that they [those who sent government an indication of their interest towards the WKCD] consider that they
meet the experience requirement and intend to submit a proposal in due course' (Housing, Planning and
Lands Bureau and Home Affairs Bureau, 2003: 4-5).

106
potential proponents, only three were left after the screening process 24 • Although some
legislators have commented that the government might have been in a less favorable
position than expected as, in the negotiation stage there were only three screened-in
proponents left (Panel on Planning, Lands and Works, Legislative Council, 2004), it is
worth noting that the optimal number of screened-in proponent is from three to five. This
is because 'bidders are most comfortable with odds of one in three or less. Commonly, up
to one in five can be made to work, but more than this will find bidders dropping out, and
may leave you in a much worse position with only one or two left in. And, in doing this
you have no control over who stays in the bidding process, and you may find the right
partner disappears in the process' (Foster, 2004). Hence, the existed competition may not
actually have been greatly reduced.
Risk allocation is another essential criterion in assessing the VFM of a PPP project.
Nine main risks are usually involved in infrastructure building:
* technical risk;
* construction risk;
* operational risk;
* revenue risk;
* financial risks arising from inadequate hedging of revenue streams and hazards;
* force majeure risk (e.g. war);
* regulatory/ political risks, resulting from planning changes, legal changes and
unsupportive government policies;
* environmental risks;
* project default, as a consequence of failure of the project from a combination of any of
the above (Chapman and Ward, 1997; Smith and Walter, 1990; Thobani, 1998;
Grimsey and Lewis, 2004).

In accordance with the requirements in the IFP, risks and accountability for them have
been allocated to the proponent in respect of financial risks, construction risks, operational
risks, revenue risk and technical risk. In the aspect of technical risk, it is evident that the
government has allocated this risk because that although the mandatory canopy was
regarded as problematic the Technical Panel which assisted the Jury for selecting the
winner of the West Kowloon Reclamation Conceptual Plan Competition 'observed that
some of the conceptual proposals could be difficult to implement in practice. For example
several submissions proposed large canopies covering all or substantial parts of the
Scheme Area, the construction of such structures and of buildings within them might be
feasible, but the ownership, management and maintenance of the canopy could well
present problems' (Hong Kong Special Administrative Region Government, 2002). In the

24 This is because Swire Properties fails to fulfill the mandatory requirements as listed in the IFP.

107
Foster's plan, winner of the competition, a large canopy is included and was subsequently
listed as a mandatory requirement. Instead of conducting a detailed feasibility study on the
canopy, the government has sought advice from departments and 'assurance from Foster
and Partners on the feasibility of the canopy and potential solutions to relevant technical
issues ... [and finally concluded that] the technical challenges presented by the Foster's
Scheme were not insurmountable and that most could be addressed in later design stage'
(Housing, Planning and Lands Bureau, 2005b: 5). The technical risk in terms of the design
and construction of the canopy was thus later passed to the proponent with the IFP listing
out some requirements on this issue, including 'the proponents are required to conduct
engineering studies, including wind engineering study to address the structural safety of
the canopy, especially under extreme weather conditions; the canopy must comply with all
applicable statutory requirements; the canopy should be designed with appropriate built-in
redundancy to prevent progressive collapse of the canopy in case of damage to part of the
structure due to exceptional hazards; and computerized modeling should be used to
demonstrate heat and smoke dissipation as well as the micro-climate environment under
the canopy' (Housing, Planning and Lands Bureau, 2005b: 7). Further, in the IFP
document, it requires the proponents to submit a preliminary masterplan that 'must be
supported by Conceptual Design and Broad Technical Assessment and Solutions to
ascertain its feasibility for implementation' (Housing, Planning and Lands Bureau, 2003a:
29). Proponents also have to make up their business plan which is to be supported by 'a
financial appraisal and technical studies (including a preliminary traffic study and a
preliminary environmental study) based on its preferred development schemes to
demonstrate its financial viability and technical feasibility' (Housing, Planning and Lands
Bureau, 2003a: 31). From this perspective, the government, in general, has distributed the
risks that the private sector is in a better position than the public sector to bear with.
However, it should be noted that as payment mechanisms are not intended to be
involved in the project, only two risk allocation strategies, namely 'specified service
obligations' and 'express contractual provisions adjusting the risk allocation implicit in the
basic structure', can be utilized (Grimsey and Lewis, 2004: 177). Because the project has
not yet come to the negotiation and tender awarding stage, it is not possible yet to
understand fully the actual risk allocation in the project.
After examining the VFM with reference to the three mam criteria, namely
competition tension, risk transfer and the construction of PSC, it is evident that the VFM
exercise might not be well appraised. Clearly, when the government is being held

108
accountable for its decision to adopt PPP as a means to develop the WKCD, it is difficult
for it to justify and accounting for its position.

6.3.4 Managing Community Expectations

Identifying and managing community expectations are another fundamental role of
the government in the PPP project. In managing community expectations, having a better
understanding of community needs and demands is a pre-requisite and thus consultation
with key stakeholders plays a vital role.
The government has conducted several studies assessing the cultural needs of Hong
Kong. Among the five studies mentioned previously, the CHC report, HAB report and
LCSD report25 assessed the cultural needs in Hong Kong from an arts and cultural
perspective. Rounds of consultation with the public, the arts and cultural groups, were
undertaken during the research period of the above named studies. For instance, in
preparing the CHC report, which is regarded as the blueprint for the development of arts
and cultural policy in Hong Kong, the CHC conducted two series of public consultations
in early 2001 and late 2002 and published two consultation papers, namely 'Gathering of
Talents for Continual Innovation' and 'Diversity with Identity, Evolution through
Innovation'. The CHC received more than six hundred written submissions. Public
consultation sessions, media forums and meeting with the Legislative Council, District
Councils and advisory or statutory bodies were carried out too (Culture and Heritage
Commission, 2003). For the HAB report, consultations with different stakeholders,
including arts companies, hirers and representative groups, managers and operators of the
performance venue, and the District Council members were conducted (Home Affairs
Bureau and Leisure and Cultural Services Department, 2002). Similarly, consultations
with key stakeholders were undertaken in the LCSD report. Such consultations, however,
even with the arts and cultural groups, had their own focus and were not conducted to
consult the public on the particular decision of developing the WKR into an integrated arts,
culture and entertainment district26 . To improve on its accountability to the community, the
government held six consultation forums with cultural sector in 2002. These forums were
particularly for the WKCD project (Information Services Department, Nov 24, 2004) and
a nearly a hundred arts and cultural groups or individuals were invited to opine on the

25 The remaining two studies assess the cultural needs in Hong Kong from the perspective of tourism (the
HKTA report) and planning (the PD report).
26 However, it should be noted that the WKCD is listed as one of the items for consultation in the second
consultation paper of the CHC.

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project.
Unfortunately, from the interviews and documentary review, it is evident that some
arts and cultural groups are not satisfied with these consultations. Some interviewees
criticize the consultations for being too superficial and without focusing on the cultural
policy in Hong Kong. Whilst others comment that they have not be consulted on the IFP,
the development approach and the mode of financing. Further, although a consultation
forum is usually adopted as a means for consultation, many arts and cultural groups are
not satisfied with this mode of consultation. Some even challenge whether real
'consultation' were conducted, and as one interviewee suggested 'consultation' is
conducted so that the government can justify or legitimatize its decision that without
taking his views into account. Hence, from their perspective, there was insufficient 'real'
consultation in the pre-IFP period (Hong Kong Economic Times, Nov 17,2003).
'Consultations can be dated back from 2001... Hong Kong Arts
Development Council is a statutory advisory body. Although the Council was
being consulted, I, as the Arts Advisor at that time, was not invited to opine
on the issue. The coverage and the depth of the consultations are not
adequate ... Consultations conducted in 2001 are superficial. They are not for
the development of the cultural policy in Hong Kong.' (Interviewee, Arts and
Cultural Group)

'[The government] consulted the public by either doing some SUSpICIOUS

studies or conducting some consultation forums that no body attends. After
all the meaningless consultations, the government can state that it has
consulted the public on the issue.' (Interviewee, Arts and Cultural Group)

'Whether a consultation is "successful" or not. .. depends on the content, the

timing and the way it [the consultation] carries out. I think the government
should consult before the decision is made.' (Interviewee, Arts and Cultural
Group)

Mr. Mathias WOO of Zuni said that the arts and cultural sector had not been
consulted on the canopy design or other details of the Foster scheme (Panel
on Planning, Lands and Works and Panel on Home Affairs, 2003b).

In September 2003, Mr. Danny Yung criticized that although he had

expressed his opinion on the WKCD through the Hong Kong Arts
Development Council, raised a professional agenda for follow-up action, and
suggested the Home Affairs Bureau to organize a group for undertaking some
follow-up actions. Unfortunately, he does not receive any positive reply from
the government (Hong Kong Economic Times, Nov 17,2003).

It is worth noting that it was not only the arts and cultural groups that were dissatisfied
with the consultation exercise owing to the lack of concrete information about the cultural

110
district. An interviewed proponent shares this view too.
'Although the government has conducted consultation with the arts and
cultural groups in 2000 and 2001, the exercise should be regarded as
unsuccessful, if that were regarded as consultation for the development of
WKCD. This is because at that time, the government has not yet made up her
mind on constructing a cultural district in such a large scale - on a 40-hectare
site. That's why the arts and cultural groups were of no knowledge of
building a large scale of cultural district and developing it through public
private partnerships when they were being consulted. ' (Interviewee,
Proponent)

As this is a PPP project, the private sector clearly plays a vital role. Hence, the
industry of property development should be regarded as one of the key stakeholders which
the government has to consult in advance. As commented by an interviewed proponent,
the industry was not sufficiently consulted in that the government has only taken into
account the selected views of one or two large property developers in Hong Kong.
Although the proponent is another large property developer in Hong Kong27 , his group had
not been consulted.
'In the development of the WKCD, relatively speaking, I don't think the
government has consulted the private sector, to be specific, the property
developers. Instead, what the government did is consulting one or two
property developers for policy direction.' (Interviewee, Proponent)

While the government had no intention of omitting the arts and cultural groups'
interests from the development of the arts and cultural policy and the WKCD, the degree
of their engagement is uncertain. To a certain extent, the cultural needs in Hong Kong
have been established and the industry generally welcomes and looks forward to the
establishment of a cultural district in Hong Kong (Subcommittee on West Kowloon
Cultural District Development, Legislative Council, 2006). Generally speaking, the
government has managed the community's expectations. However, the arts and cultural
groups have not been sufficiently consulted about the details of cultural district, such as its
location, the arts and cultural components in the district, development approach and mode
of financing. Hence, the project is not well-received by the industry nowadays.
As the end users of the WKCD, all Hong Kong citizens should be regarded as the
stakeholders. However, public involvement in the pre-IFP period is limited. Moreover, as
the project is located in the WKR, it is reasonable also to expect that residents nearby
should be consulted on the decision of the WKCD. Hence the Yau Tsim Mong District

27 Owing to the strict regulations in qualifying the proponent of the WKCD, it is obvious that all screened-in
proponents are large property developers in Hong Kong (See 6.3.3 for details).

111
Council is expected to have a certain degree of involvement in the pre-IFP period28 .
However, according to the minutes and papers of the Yau Tsim Mong District Council, its
involvement in the decision making process of the WKCD is questionable. In the pre-IFP
period, it is clear that the Yau Tsim Mong District Council has been actively briefed and
consulted on the progress of the drainage and highways-related development by the
Territory Development Department on WKR. The District Council was consulted also on
the development of additional arts and cultural facilities when the relevant department or
research institute were preparing for the HAB and LCSD reports (Home Affairs Bureau
and Leisure and Cultural Services Department, 2002). However, it is worth noting that the
decision of constructing a cultural district in the WKR was made in advance of any
consultation with the Council. More importantly, the idea of constructing an arts and
cultural hub in the WKR was first placed on the agenda of the District Council in 2002. As
the competition document had already contained the concrete details of the WKCD and
the District Council was not being consulted on the competition document, but only being
briefed on the result.
'It is clear that in the planning stage of the WKCD, no large-scale public
consultation was held. The government did not even inform the general
public or its representative - the District Council - about the plan, even the
residents nearby. '(Interviewee, Arts and Cultural Group)

'I think the involvement of the District Council is limited. Yes, the
government has sent us some documents and the related issues of the WKCD
have been placed on the agenda of the District Council. However, the
"consultation" is not conducted in a systematic or concrete way. '
(Interviewee, District Councilor)

According to the Arnstin's ladder of citizen participation, the participation of the District

28 Institutionally, the District Council is the advisory body advises the government on matters related to a
particular district. As stated in Article 97 of the Basic Law, "[d]istrict organizations which are not organs of
political power may be established in the Hong Kong Special Administrative Region, to be consulted by the
government of the Region on district administration and other affairs, or to be responsible for providing
services in such fields as culture, recreation and environmental sanitation" (Article 97, Basic Law).
Moreover, according to the District Councils Ordinance, functions of the District Council includes
"(a) to advise the Government-
(i) on matters affecting the well-being of the people in the District;
(ii) on the provision and use of public facilities and services within the District;
(iii) on the adequacy and priorities of Government programmes for the District; and
(iv) on the use of public funds allocated to the District for local public works and community activities;
(b) where funds are made available for the purpose, to undertake -
(i) environmental improvements within the District;
(ii) the promotion of recreational and cultural activities within the District; and
(iii) community activities within the District" (District Council Review Secretariat, 2006).

112
Council is at the third rung as only one-way communication and infonnation are provided
at the late stage so that the views of the Yau Tsim Mong District Council could not be fully
taken into account before the relevant decision was made.
From the analysis alone, it is clear that both arts and cultural groups and the District
Council, representatives of the public, were not consulted on either the decision to
construct an arts and cultural hub in the WKR or subsequent decisions on the details of the
WKCD. Whilst for the private sector, there was clearly a lack of relevant consultation too.
All in all, in managing community expectations, the government has failed to meet key
stakeholders expectations as to adequately accountable decision making.

6.4 Concluding Discussion: Accountability Secured in the Pre-Invitation for Proposal

period

With reference to the conceptual framework developed in Chapter 4, the concepts of

communal, managerial and public accountability have been used to examine the
accountability at the initiation of PPPs. In general, accountability has not been well
secured in the pre-IFP period in that some existing accountability mechanisms either failed
to function properly and effectively or were bypassed.

6.4.1 Communal Accountability

Responding to the expectations and needs of stakeholders during PPP initiation and
reaching consensus among stakeholders are both crucial elements for communal
accountability.
As stated in 6.3.5, arts and cultural groups were not sufficiently consulted about
either the details of the cultural district, such as its location, the arts and cultural
components in the district, development approach or mode of financing. Hence, while the
government loosely identified cultural needs through conducting several studies and the
industry, generally, welcomes the idea of establishing a cultural district in Hong Kong, at
this stage, the government can not be regarded as 'responding to the expectations and
needs of stakeholders' successfully.
Further, consensus has not been reached among the arts and cultural groups. In the
post-IFP period, the groups continued to hold mixed views towards several issues,
including the relationship between the hardware and software development in Hong Kong
and the development approach.
Participation of the local community's representatives in the District Council, III

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particular, the Yau Tsim Mong District Council, is likewise found to be limited. Instead of
being consulted before the relevant decisions of the WKCD were made, it was briefed
afterwards. This definitely limited the scope within which the public views could be
heeded in the decision-making process. Hence, communal accountability does not appear
to have been well secured in the pre-IFP period.

6.4.2 Managerial Accountability

Managerial accountability is an accountability mechanism for internal monitoring.
Usually, it refers to internal reporting mechanisms like implementing and evaluating the
achievement of outcomes against standards or the holding of monthly review meetings
which aim to ensure that efficiency and effectiveness can be achieved in service delivery.
In the Hong Kong context, the Executive Council is regarded as an important internal
monitoring mechanism. Constitutionally, the Executive Council is the advisory body
which assists the Chief Executive in policy-making. However, as the Council should be
consulted by the administration on important decisions in advance, to a certain extent, the
Executive Council can be regarded as the watchdog which scrutinizes the government
internally.
In Section 6.2.1, the role of the Executive Council in policy-making for the project
was studied. It was concluded that, similar to the case of the Legislative Council, the
Executive Council played a limited role in securing accountability in the pre-IFP period
and it seems that in the early stage of this 'landmark development', it was sometimes
bypassed. Hence, managerial accountability to the Executive Council was not well secured
in the pre-IFP era.
Further, managerial accountability processes can also be defined to include
'monitoring whether [PPP] projects are achieving the objectives identified in the business
case and the contract itself. This process involves monitoring of services, usually, by users
of [PPP] services, private sector facilities manager and contract manager from the public
sector' (Demirag et aI., 2005). Therefore, it is vital to examine the extent that the
objectives of the project are clearly defined. From the previous discussion, it is apparent
that the government does not have clearly defined objectives for the WKCD. Since the
concept of the WKCD 29 was first proposed in 1998, the government reiterated several
times that the construction of the WKCD would 'enhance Hong Kong's position as Asia's

29 It should be noted that the original concept is not constructing a cultural district. Instead, it aims at
building a new performance venue at the WKR.

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premiere centre of arts, culture and entertainment and create a new look for Victoria
Harbour' (Housing, Planning and Lands Bureau, 2001). Later, when the IFP was launched,
the government further stated clearly that 'the West Kowloon Cultural District (WKCD)
will be a landmark development that enhances Hong Kong's position as a world city of
culture' (Housing, Planning and Lands Bureau, 2006a). However, 'enhancing Hong
Kong's position as a world city of culture' is a relatively vague objective. Moreover, as
previously discussed, the government did not conduct a business case for the project.
Potentially, lack of clear objectives and targets would potentially harm the degree of
managerial accountability that can be secured at the implementation stage.

6.4.3 Public Accountability

The Legislative Council, Audit Commission, Ombudsman, media are the mam
watchdogs to secure public accountability. In the pre-IFP period, the roles of the Audit
Commission and the Ombudsman were very limited or even non-existent. Whilst for the
role of the media, it is found that their reporting on project-related issues was only
occasional. With limited information provided by the government and media reports, a low
level of public awareness towards the project resulted. In this context, the Legislative
Council, which represents the public, is regarded as the only channel able to secure some
degree of public accountability.
As described in 6.2.2, the role of the Legislative Council, however, is limited.
Relatively, although it was regularly informed by the government on the progress of the
project, the Council was not given sufficient opportunities to explore and discuss the
development approach and the mode of financing. Information regarding these two key
areas was not provided by the administration until July 2003, two months before the
official launch of the IFP. The views of the Legislative Council therefore could not be
fully taken into account as these important decisions had already been made in advance.
From this perspective, although the Legislative Council was given several chances to
question the general direction of the project, public accountability should not be regarded
as being well secured.

6.5 Summary
This chapter which has examined the policy making processes entailed in
establishing the WKCD has shown that accountability has not been well secured in
pre-IFP period. Several existing accountability mechanisms such as consultation with key

115
stakeholders failed to function properly and effectively or were being bypassed. This was
particularly noticed with the Executive Council's role in securing managerial
accountability. Once the IFP had been issued new aspects of accountability became
important. However, the resignation of the then Chief Executive, Tung Chee-wah, marked
a turning point and so the next chapter examines how accountability was being secured in
the post-IFP period under Mr. Tung's leadership. This will then be followed by Chapter 8,
which will examine accountability issues in the project after the change of Chief
Executive.

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 Chapter 7
Accountability Secured in the Post-Invitation for Proposal Period under Tung's
leadership

7.1 Introduction
The last chapter discussed the development of the WKCD and how accountability
was secured in the pre-IFP period. In the post-IFP period, 'how to secure accountability in
the development of the WKCD' has remained a key issue among the residents, key
stakeholders and politicians. The resignation of the former Chief Executive, Mr. Tung
Chee-wah, on March 7, 2005, marked a turning point for the project because the
government has changed its stand and attitude since then. This chapter, however, studies
the accountability secured in the post-IFP period under Tung's leadership. It begins by
introducing the development of the WKCD, and the details of the Invitation for Proposal
document. It also discusses the roles and major concerns of the different parties, including
the arts and cultural groups, different pressure groups, the Legislative Council and the
proponents, as well as the government's approach in handling the project and in
integrating the different views of the community.

7.2 Development of the West Kowloon Cultural District

An IFP for the WKCD with a March 2004 deadline was issued in September 2003. In
the IFP document, the government clearly prescribed the BOT-type PPP and
single-developer approach. The private partner would be required to plan, design, finance,
and construct the district and to operate the core arts and cultural facilities for 30 years.
Following the official launch of the IFP, different stakeholders, for instance, the
Legislative Council and the Real Estate Developers' Association, expressed their
disappointment and objections towards the IFP. In November 2003, in response to the
urging of the Legislative Council, the deadline for submission of proposals was extended
to June 2004 so that the government could conduct further consultation with stakeholders
whilst potential proponents could also have more time to prepare their bids.
At the end of the IFP period, the government received five proposals. After the initial
screening of bids against the mandatory requirements, three proposals were deemed to be
qualified. In order to enhance public involvement as to demonstrate government's aim to
be more accountable, the qualified proposals were put up for 15-week exhibition and
several public forums were organized. In response to the request of the Legislative

117
Council in mid-March, the exhibition was further extended to the end of June 2005 (three
months longer than the original plan) (see Chapter 8 for details).
In the public consultation period, many citizens and different stakeholders expressed
their concerns towards several issues. These included the driven policy of the WKCD,
relations between hardware and software development, technical feasibility and
maintenance of the canopy, single-package approach, financial feasibility of the project,
governance and the establishment of a statutory body to oversee the project and role of the
Legislative Council on the development ofthe WKCD.
Thus, before the resignation of Mr. Tung on 7 March 2005, the government took a
relatively strong stand as only two, relatively speaking, concessions were made in
response to the public outcry.

7.3 Invitation for Proposal

Before examining the stakeholders' involvement and the accountability secured in the
post-IFP period under Tung's leadership, details of the IFP document is introduced. The
IFP document can be regarded as the preliminary contract as it outlines the respective
roles, responsibility and liability of parties involved. In order to enhance flexibility and
innovation, the following are listed as the mandatory requirements:
* Three theatres with at least 2,000,800 and 400 seats respectively;
* A performance venue with at least 10,000 seats;
* A cluster of four museums at least 75,000 square metres in size;
* An art exhibition centre at least 10,000 square metres in size;
* A water amphitheatre;
* At least four piazzas; and
* A canopy covering at least 55% of the development area (Housing, Planning
and Lands Bureau, 2003a).

Other than that, the winner is obligated to provide or re-provide several Government,
Institution and Community (GIC) and Utility Facilities in the WKCD. The listed facilities
are as follow:
* Tsim Sha Tsui Fire Station Complex;
* Kowloon South No.2 Salt Water Pumping Station
* Police Post
* Electricity Substation Building;
* Public Toilets;
* Refuse Collection Point; and
* Contingency Space (Housing, Planning and Lands Bureau, 2003a).

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7.3.1 Output Specifications in the Invitation for Proposal
Specifying outputs are indeed very important for a PPP project. One of the main
differences between the traditional conventional procurement and PPPs is that the
output-based performance specifications of the latter usually give rise to improved
efficiency and effectiveness as most private partners may make good use of their
innovation capacity to save costs as they are only subjected to the output-based
requirements. Hence, it is important to provide clear output specifications from the early
beginnings of the development of a PPP project. This view is shared by Dr. Sarah Liao,
Secretary for Environment, Transport & Works. In her opening address to a conference on
PPP, she mentioned that 'the Government is mindful of the key issues which have to be
properly addressed before implementing a project through PPP... The output
specifications and performance requirements for the project should be clearly set out and
agreed with the private sector partner at the outset' (The Hong Kong Institute of Surveyors,
2004a). Theoretically, these should be provided clearly in the IFP. Hence, in this section,
output specifications listed in the IFP will be examined.
In the IFP document for the development of the WKCD, the government has listed
out the mandatory requirements for the project. However, it should be noted that flexibility
was given to the private sector so as to enhance innovation and at that same time, the
output specified in the response to the IFP may not be fully conforming. In the Important
Note for the IFP, the government articulates that 'all words and expressions in this
Invitation for Proposals .... which convey, or may convey, an obligation on the part of
Proponents in respect of the preparation and submission of their Proposals, are indicative
only of Government's Baseline and the obligations are open to the Proponents and are
subject to negotiations. Any failure on the part of a Proponent to submit a Proposal in
accordance with Government's Baseline will NOT render the Proposal non-conforming'
(Housing, Planning and Lands Bureau, 2003a: 3). For instance, in the IFP, 1.81 plot ratio
is adopted by the government in the project. However, plot ratios of all three screened-in
proponents are higher than the government's one.
Instead of providing only output specifications so as to enhance innovation,
flexibility in the manner of performance and improve the effectiveness and efficiency of a
PPP project, the government has included several input-based specifications. Take the
Museum of Ink as an example3o, in the IFP document, several input specifications are

30 Similar input-based specifications have been provided for all core arts and cultural facilities, the fire
station complex and all Government! Institution! Community facilities.

119
observed, including:
• the floor of all galleries should be covered by synthetic tiles laid with carpet tiles made
of looped and fire-rated fibres. All floor surfaces should be load bearing and can
withstand wear and tear;
• an insulation layer should be installed between the perimeter walls and the gallery
panels. The walls should be lined with load bearing gallery panels mounted with heavy
fabrics for displaying paintings and flat exhibits. The fabrics can be removed and
replaced. Materials like Hessian or other equally open weave fabric is preferable.
Provision of a picture rail hanging system on these panels is necessary;
• for security reasons, the ticket offices should have double doors. Provision for a strong
room is required;
• the Catering Facility should be adjacent to the entrance hall to provide convenient
access. An outside entrance/ exit should be provided so that it could operate
independently even ifthe museum is closed;
• for the 200-square metres design office/ studio in the Museum, a storeroom for design
material is required. Provision of natural light is preferred. Artificial lighting should be
a up-light system to provide reflective lighting. Suggested special equipment includes
machintosh computer network, scanner, A4 and A3 printer, 36"-48" designjet printe,
Xerox machine, fax machine, light box, spray booth and projection screen (Housing,
Planning and Lands Bureau, 2003a: 275-300).

For the Painting Laboratory proposed in the Museum of Ink, detailed input specifications
are listed in the IFP (see Appendix 2 for details). Other than that, instead of asking the
private partner to provide brief information on its financial models and annual financial
assessment, it requires the private counterpart to state clearly 'all assumptions adopted ...
with basis and source of assumptions elaborated' (Housing, Planning and Lands Bureau,
2003a: 60). Also, the private counterpart has to provide not only the estimated revenue for
each facility in the WKCD, but also the estimated revenue item by item. For example,
break down of the revenue for the core arts and cultural facilities should include the
following items: '(1) entrance feel turnstile revenue/ ticketing; (2) venue rental income; (3)
concessions with detailed breakdown of components; and (4) other income (including, for
example, any funds to be set up or means for channeling revenue from commercial
developments in the Project towards the operation of the Core Arts and Cultural Facilities
provided that it is consistent with [the IFP], (Housing, Planning and Lands Bureau, 2003a:
61-62).
In the broad sense, it seems that the government has successfully provided only
output specifications in the IFP document. However, this is not the fact. Some
interviewees share this view:
'If you take a look of the Invitation for Proposal, you will find that it is very
ridiculous. It clearly states everything [in the museums], even the material of
the light bulb. But you can't write down such details. Different ceiling height

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 requires different type of lighting or light bulbs. Differences even exist
between light bulbs made in Europe and those made in Asia. Lighting or light
bulbs used depends also on the type of exhibits. So, how can you write down
what kind of lighting or light bulbs should be used in the Invitation for
Proposal?' (Interviewee, Arts and Cultural Group)

'Have you taken a look of the Invitation for Proposal? Actually, the
government has been very detail-minded in the sense that it even articulates
the number of washroom should be constructed in each core facility. Hence,
we are just given the flexibility in designing the outlook of the building.
Other than the outlook, I am sure the spacing or details are the same among
we three [proponents].' (Interviewee, Proponent)

Therefore, instead of providing output specifications with limited essential input items, the
government has gone too far by providing details of the spacing and materials used in the
design and construction of the core arts and cultural facilities. As output specification is
crucial in establishing a business case, and a well established business case is one of the
activities to achieve contractual accountability at the set-up stage of a PPP project
(Demirag et aI., 2004a). Hence, detailed input specifications that found in the IFP
document, to a certain extent, has limited the degree to which contractual accountability
could be secured.

7.4 Stakeholders' Involvement

As stated in Chapter 6, one of the main tasks of the government in establishing a PPP
policy is to manage community expectations. To secure accountability and public interest,
public voice should be incorporated in the whole process in PPPs, both before and after
the tender is awarded. Taking a broad definition, all Hong Kong citizens are regarded as
stakeholders of the project. Hence, in this section, involvement, i.e. role and major
concerns, of the citizens involved in arts and cultural groups, different pressure groups, the
District Council and the Legislative Council are studied respectively.

7.4.1 Role and Major Concerns of the Arts and Cultural Groups
Arts and cultural groups must be regarded as key stakeholders in the development of
the cultural district. Theoretically, they should playa substantial role in the project, with
their major concerns being highlighted and addressed. In the last chapter, however, it was
found that although the government had consulted the groups in the pre-IFP period, arts
and cultural sector members felt that they had not been sufficiently consulted about the
details of cultural district such as its location, the arts and cultural components,

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development approach and mode of financing. Hence, communal accountability does not
appear to have been well secured.
In the post-IFP period, after the screening process, a large-scale, six-month public
consultation took place3 !. During this period, two discussion forums were designated for
the arts and cultural groups. However, the arts and cultural sectors actively voiced out
their concerns and opinions in public, through the media and by attending forums or
seminars organized by different organizations, instead of just using the official discussion
forums. In general, there were two schools of thought. From the interviews conducted, it is
evident that the 'supporting' camp believes that the project serves as a golden opportunity
to foster Hong Kong's arts and cultural development. Moreover, a supply-led approach in
developing new cultural facilities is acceptable as the 'cultural sense' of the community
and new arts and cultural programmes would be developed with the provision of
additional facilities. Some 'supporters' who signed mutual agreements with proponents or
those who are regarded as the strategic partners of proponents did stand up and speak very
loudly in the public, for instance, Clifton Ko Chi-Sun, a producer of drama and Chief
Executive of Spring-Time Productions. Because of this, some members of this camp have
been labeled as 'beneficiaries' by the public. They have even been criticized by legislators
as cultural hatchet men (South China Morning Post, Feb 1,2005).
'There is no problem regarding the supply-led approach. The provision of
additional facilities will lead to the development of the cultural sense of the
community and in consequence, interest for the arts and cultural programmes
will be generated. Further, it is nonsense to say that the software in Hong
Kong has not yet been ready as the government has spent so much money to
nurture local arts talent every year.' (Interviewee, Arts and Cultural Group)

'May be because I worked in the government before, some of my views are

similar to that of the government. But I have traced the arts and cultural
development in Hong Kong for a long time. Hong Kong's arts and culture
[facilities] develop from very few ... At first, there is only one City Hall in
Hong Kong, right now, we have several. Also, there are various arts and
cultural programmes. And there are lots of artists. At the time when the City
Hall first came to operation, no one can imagine that Hong Kong's arts and
culture can develop to the current scale and status.' (Interviewee, Arts and
Cultural Group)

'The reason that I support the development is that this is a golden opportunity
to develop and help promoting arts and culture in Hong Kong. Although the
Ink Museum is one of the preferred themes as listed by the government, this
does not mean that all proponents must follow. It is evident that one of the

31 Originally, the consultation exercise was scheduled to last for 15 weeks. The period was later extended by
the government in response to the urge of the public and the Legislative Council.

122
 proponents proposes to build the Children's Interactive Museum instead of
the Ink Museum. Nevertheless, I am still in support for the West Kowloon
Cultural District. So, this is not a matter of interest allocation and I am not
supporting the project because I am one of the beneficiaries.' (Interviewee,
Arts and Cultural Group)

'I attended a Legislative Council's hearing on the West Kowloon Cultural

District. Lots of arts and cultural groups attended that meeting too. We have
expressed our opinion. At that time, a legislator said that 'in order to secure
our benefit, you all came to the Legislative Council to support the West
Kowloon Cultural District'. I felt so bad immediately ... If I can generate my
response immediately, I will say to that legislator that as all of us
(representatives of the arts and cultural groups) are no longer young, if we
are coming for our benefit, we will suggest the construction of additional
elderly facilities. This may fit our needs better. [Supporting the development
of the project] has nothing to deal with the benefit. For a 'real' artists or
someone who work in this field, the West Kowloon Cultural District just like
a hope or a dream. To be realistic, Hong Kong is small with very little
available land. Right now, we have a place... no matter what the driven
motives of the government are, it is good that she wants to include several
arts and cultural facilities on this piece of land.' (Interviewee, Arts and
Cultural Group)

In the mean time, the opposition camp raises its voice against the development of
the WKCD. In their opinion, without a clearly designated cultural policy and the conduct
of relevant research (see Chapter 6 for details), the WKCD would not be successful as the
content may mismatch with the actual needs. Hence, they believe that software should
come before the hardware. Further, from their point of view, although it is difficult to book
a venue for arts and cultural activities, there is no urgent need of additional cultural
facilities as the problem can be solved through reviewing the current rental policy.
'We have the Hong Kong Academy for Performing Arts and Hong Kong
Cultural Centre right now. Why the cultural sense of the community fails to
be fully developed? This definitely contradicts with the rationale of adopting
a supply-led policy: the cultural sense of the community would be developed
with the provision of additional facilities? Are you saying that we have zero
hardware in Hong Kong? ... Devil in the detail. Have you study the rental
policy of the Leisure and Cultural Department? Do you know how
bureaucratic they are? ... The reason you can't reserve a place in the Hong
Kong Cultural Centre is that the government has reserved for its own use
which may not be cultural-related. Why land sale must take place at the Hong
Kong Cultural Centre? Why can't the government reserve a conference room
or rent a room in the Hong Kong Convention and Exhibition Centre for land
sale? Why you have to use our cultural facilities for land sale? Why
congregation of primary schools have the priority in renting the cultural
facilities? ... This kind of artificial factor can be eliminated easily. You don't
have to wait for 10 years.' (Interviewee, Arts and Cultural Group)

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 'Hardware and software cannot be separated. Those who support this
(supply-led policy) have no knowledge of venue management. Usually, they
are the artists. Having venue for performance is the number one priority for
them ... Actually, operating a cultural facility is not easy. Even as simple as
constructing a museum, the vision of your museum should be reflected in its
design. For instance, if your target group is the general public, your museum
should have lots of facilities, including nursery room for babies, play room
and children room. The design will reflect the vision of your museum.'
(Interviewee, Arts and Cultural Group)

'We are facing this issue (wrong design of the cultural facilities) continuously.
People always claim that we don't have enough exhibition halls in Hong
Kong. In reality, we are not having zero exhibition halls. You can take a look
of the exhibition halls in Sai Wan Ho Civic Centre and the Hong Kong
Cultural Centre. No one use the exhibition-related facilities there. Why? This
is because although we have the hardware there, the design can't match with
the actual needs of the users. ' (Interviewee, Arts and Cultural Group)

Apparently, the development of the WKCD is of potential benefit to the arts and
cultural groups and, it, in general, regardless of their diversified interests, the sector
welcomes the development of a cultural district in Hong Kong. Hence, to a certain extent,
the current scenario is strange that instead of urging for the early implementation of the
project, some arts and cultural groups advise the authority to slow down. However, it is
worth noting that the lack of rehearsal places, identified by studies conducted or
commissioned by the Hong Kong Tourism Association and Planning Department
respectively, and the difficulties to rent a performance venue for arts and cultural activities
are undeniable problems that the sector is facing. In this sense, one of the quick solutions
is building additional facilities. Although building new facilities does not guarantee a
'great leap forward' in the arts and cultural development, this will definitely facilitate its
growth in a long run. Hence, it is understandable that some arts and cultural groups
support and urge for the early implementation. Their deep sincerity towards the idea that
the WKCD can provide a better environment that fosters the arts and cultural development
in Hong Kong should not be discredited. Therefore, the writer argues that the WKCD can
really benefit the overall arts and cultural development in Hong Kong, not only the alleged
'self-interests' of the supporting camp among the arts and cultural groups.
However, some other arts and cultural groups' strong reservations and opposition
towards the project are not incomprehensiveable either. Their claim is that a 'quick
solution does not equal to good solution'. Indeed, finding a good solution should be the
first priority. Hence, they argue that some researches or additional rounds of consultation

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with the arts and cultural sector should be conducted so as to assess the cultural needs and
developing an overall arts and cultural policy. Although this view was raised in the pre-IFP
period, the government did not response to such expectations and needs. To a certain
extent, the opponents in this field are blaming the government for its lack of communal
accountability.
Further, since the announcement of the three screened-in proposals in November
2004, proportion of 'arts and cultural' facilities in the WKCD has been greatly challenged
by the public. Because all screened-in proponents have proposed a higher than expected
plot ratio, ranging from 2.5 to 4.232 (Hong Kong Economic Times, Nov 11, 2004), there
was a fear that the arts and cultural component in the WKCD would be given second place
to property development. Arts and cultural development in Hong Kong thus might not
benefit as much as possible from the WKCD. Clearly, this fear is shared by different
stakeholders, especially the arts and cultural groups.
'This [the Cultural District] is a property development project. The WKCD is
not for arts and cultural development of Hong Kong ... The intention of the
government is very clear. They want to use the most 'attractive reason' to
develop the site into a large-scale property-related project. This would not
only provide a legitimate basis for the property developers, but also the
government itself... Therefore, there will be canopy, several large-scale arts
and cultural facilities, together with bundles of residential and commercial
buildings.' (Interviewee, Arts and Cultural Group)

'Definitely, this is a property development project. It is evident that the

policy formulation and decision-making are in the hands of the Housing,
Planning and Lands Bureau, but not the Home Affairs Bureau ... Although
the government has introduced a set of new development parameters and
conditions for the WKCD project (see Chapter 8 for details), it has nothing to
deal with the arts and cultural elements. Obviously, this is a property
development project.' (Interviewee, Arts and Cultural Group)

'This is a property development... This is Cyberport the second. What do

you remember about Cyberport right now? You remember the residential
there. Can you find the high-technological component there? Other than
stating that the 3D animation of the file 'Kung Fu' is produced in the
laboratory located in the Cyberport, what else can you think of? Is this the
vision and mission of the Cyberport when Mr. Tung (the former Chief
Executive of Hong Kong) was first presented with the idea? I am sure that Mr.
Tung would not believe that also.' (Interviewee, Legislator)

As this fear of the project being primarily favoured towards property development is shared
by different stakeholders, especially the opposition camp of the arts and cultural sector, the

32 The plot ratio of three proposals are higher than the Government's baseline, i.e. 1.81

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government has reiterated its stand on this issue on different occasions.
'Unfortunately, this arrangement [BOT-typed PPP] has been criticized as 'a
property project in disguise'. But this criticism, if viewed objectively, does
not hold water for a number of reasons. First, the developer selected will be
required to build the specified arts and cultural facilities and operate them for
30 years. Second, we have set a plot ratio parameter for the WKCD site and
any departure from this parameter must be justified... Third, the draft
development plan of the WKCD project will be gazetted for public
comment. .. The Government has, from the outset, prudently handled the
WKCD because it is such a huge and long-term investment project. Stringent
monitoring procedures have been put in place on top of extensive
consultation and a high degree of transparency' (Tsang, Nov 20,2004).

'We will study whether the commercial/residential element is over-weight,

and consider whether an adequate proportion of the revenue generated
therefrom will go to the development and operation of the cultural facilities
to ensure their sustainability. We wi11listen carefully to the views expressed
by the public during the consultation period on this point. If members of the
public have strong views against high-density development and the
proponents fail to justify their proposed development density, then the
Administration will not accept their development proposals' (Tsang, Nov 24,
2004).

'The presence of certain commercial elements in a cultural development is in

itself not a bad thing. They give lifeblood to the development .. .I want to
stress, at this point, that a number of mechanisms will be put in place to
ensure that cultural significance and objectives of the West Kowloon project
are met and maintained' (Tsang, Dec 6, 2004).

The proponents have also joined hand in convincing the public that this is not a property
project in disguise by claiming that
'This is not a property project. The property developments in West Kowloon
are to support arts and cultural activities ... Paris in the past few hundred
years has successfully attracted the best arts talent. I envisage [that] Hong
Kong can do it with West Kowloon... We would like to see the cultural
district live a very long life. It would be irresponsible if, 30 years later when
we return the project to Hong Kong, it is losing money. Not every arts and
cultural facility will lose money', said Sun Hung Kai Properties executive
director Alfred So Chung-keung 33 (South China Morning Post, Nov 11,
2004).

'Henderson Land vice-chairman Colin Lam Ko-yin said the company's

proposed World City Culture Park was also not a property project and was
only intended to make "very little profit" while protecting its shareholders'
interests. Sino Land's executive director Yu Wai-wai said the company's plan

33 Sun Hung Kai and Cheung Kong Holdings were bidding for the project under a joint venture, Dynamic
Star International.

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 would raise cultural and economic standards 34 , (South China Morning Post,
Nov 11,2004).

'The project will not be in failure and it is clear that we all [the proponents]
have committed to this cultural project, as a cultural project, not just a
property project. We will not bet on our reputation. Definitely, this is not a
property project.' (Interviewee, Proponent)

Unfortunately, both government and the developers have failed to convince the public,
especially the arts and cultural sector that the WKCD will not be too commericalized. To a
great extent, worries of the sector are justified as there is no cultural policy that serves as
the backbone for the development of the WKCD. Critics thus argue that without a clear
government cultural policy in place before proceeding to the development of the WKCD,
the government has totally relied on the private partner to 'steer' arts and cultural
developments of the WKCD as the latter is responsible for formulating not only business
plans, but also deciding the themes of the museums35 and writing up the mission and
vision of the core arts and cultural facilities. Further, the governance structure of the core
arts and cultural facilities, are likewise proposed by the proponents (Housing, Planning
and Lands Bureau and Home Affairs Bureau, 2003). It is clear, therefore, that government
has aimed to leave to the private counterpart the roles of both steering and rowing from the
outset. More importantly, the Court shares the view by stating that the project has been
'sold to the public as a cultural endeavor but legally the West Kowloon Cultural District
project is principally a commercial and residential scheme' as 'less then 30 percent is
reserved for what is described as core arts and cultural facilities' (The Standard, Apr 26,
2005)36. Hence, worries that the WKCD may be transformed into a commercial district do
appear to be justified.
Although the sector, in general, welcomes the ends, there are contrary views on the
details of the project. Hence, it is difficult for the government to demonstrate communal
accountability through reaching consensus among varies arts and cultural groups.
However, another way to achieve communal accountability is to be responsive to them.

34 Sino Land has formed Sunny Development with Wharf (Holdings) and Chinese Estates Holdings to bid
for the project.
35 As previously mentioned, although the government has listed the preferred themes of the museums,
proponents are given the flexibility to propose alternative themes if the themes are supported by
justifications.
36 The High Court ruled that the WKCD is principally a commercial and residential scheme in dismissing
the judicial review application of the Association of Chinese Authors and Publishers in Hong Kong and
Macau. The Association sought for a review of the membership of the Proposal Evaluation Committee as
members of the Hong Kong Arts Development Council is being excluded, which it claimed to be
inconsistent with the Basic Law (The Standard, Apr 26,2005; Brewer and Hayllar, 2005).

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 The government tried to convince the arts and cultural groups that the project would
not turn into a commercial development under the 'label' of 'arts, cultural and
entertainment district' on the other. Whilst for other concerns of the sector, like the
organization and mode of operation of the core arts and cultural facilities, the authority has
reiterated several times that 'the Government maintains an open mind on the issue'
(Information Services Department, Jan 6, 2005). Relatively speaking, the government is
not responsive to the arts and cultural groups in Tung's era. On these issues, however, the
sector obviously has no power for negotiation. Hence, arts and cultural groups were being
consulted and thus should be regarded as 'participated in participation' in accordance with
Arnstin's ladder of citizen participation.
On the other hand, it is worth noting that the government remains silent to some
fundamental questions like the relation between the WKCD and cultural policy (hardware
vs software) and the rationale for developing new cultural facilities (supply-led vs
demand-oriented) even though the sector has voiced out these concerns in the pUblic. On
these issues, similar to the relevant findings in the last chapter, non-participation, to be
specific, manipulation of the Arnstein's framework, was resulted. The government was not
only non-responsive towards the issues, but also with no intention of consulting the arts
and cultural groups both before and after the decisions were made.

7.4.2 Role and Major Concerns of different Pressure Groups

WKCD is a cultural project. At the same time, it is also an urban planning project and
a property development project. Hence, key stakeholders should not be limited to the arts
and cultural groups. In practice, different pressure groups with diverse interests and
concerns have joined the debate. Their role in the development ofthe project should not be
overlooked and should be regarded as one of the indicators in assessing how
accountability in the development of the WKCD has been achieved. In this section, the
roles and major concerns of different pressure groups are examined.
In the post-IFP period, several pressure groups participated actively in the
WKCD-related debates. Generally, regardless of their diversified interest they touched
upon, there are some common issues and topics. For example, the necessity for and
maintenance of the canopy, the single package arrangement, and the assessment and
selection criteria. These groups, again, made good use of different channels to voice out
their opinions, including attending discussion forums organized by different organizations,
the media and the Legislative Council. Their views and concerns are summarized in

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Appendix 3.
For some pressure groups, other than pressurizing the government, they provide
professional or technical advice in accordance with their expertise. These include the
Hong Kong Institution of Engineers, the Hong Kong Institute of Planners, the Hong Kong
Institute of Architects, the Hong Kong Institute of Surveyors and Association of
Engineering Professionals in Society. For instance, the Hong Kong Institute of Surveyors
has been very critical towards the procedures adopted by the government in developing
the WKCD. It strongly criticizes the government for not preparing a sound 'business case'
which includes the construction of a PSC at the initial stage which is inconsistent with best
practices elsewhere37 (The Hong Kong Institute of Surveyors, 2005b). Moreover, the
Hong Kong Institute of Architects gave its professional advice on the canopy by
suggesting that 'technically it is entirely feasible and appropriate to implement Foster's
Sky-Canopy and conceptual design phase by phase. WKCDDB [the suggested
development board to oversee the project] should handle technical coordination with
reference to a set of established Control Drawings' (The Hong Kong Institute of Architects,
2003). The Association of Engineering Professionals in Society shares this view. However,
as the costs are outweighed by the benefits, the Association concluded that it would be
best to drop the canopy as a mandatory requirement:
'whilst the professional engineers in Hong Kong are capable of producing an
elegant technical solution so that the signature design feature could be put in
place, there are still many other issues related to the canopy structure in need
of detailed address. These may include terrorism attacks (e.g. aeroplane strike
and bomb threat) and natural disasters (e.g. typhoon, tsunami and
earthquake) ... Taking into account of the above considerations, the AES
[Association of Engineering Professionals in Society] has the view that
landmark is not necessarily restricted to the canopy option' (Association of
Engineering Professionals in Society, 2005).

As these professional groups should also be regarded as key stakeholders of the

project, it is necessary to examine the extent that these groups had been consulted formally
by the government. According to the interviews conducted, these groups are not convinced
that they were being 'consulted' although numerous consultation forums had been
organized.
'I don't know what kind of 'interactive mechanism' we have in the
development of the WKCD. According to the government, there were
numerous consultation forums which aim for consulting the public and
relevant stakeholders. However, interaction doesn't mean ... does attending

37 Constructing a PSC is regarded as a best practice of other countries. For details, please refer to 6.3.3.

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 meeting [consultation forums] a means to foster interaction between the
public and the government? Attending meeting [consultation forums] doesn't
equal to two-way communication. Right now, what is happening ... is that. ..
we have meetings [consultation forums] but not interaction or two-way
communication.' (Interviewee, Professional Group)

Other than these professional groups, some pressure groups, especially the Real
Estate Developers Association of Hong Kong and the People's Panel on West Kowloon
have, played a vital role in the development of the project. The former is chaired by Dr.
Stanley Ho Hung-sun. At first sight, as the project is to be developed through
pUblic-private partnerships with heavy involvement of the business sector, in particular,
real estate developers, it would seem that the for-profit sector should welcome and be
supportive to the project. However, in reality, the Real Estate Developers Association
strongly opposed the project and, in particular, the single package approach. Other than
that, it also urged the government to answer three fundamental questions regarding the
project:
* Are the various arts and cultural facilities prescribed by the Government in its
Invitation for Proposal document the ones we need?
* Do we need a separate cultural district to house all such facilities?
* Given the current fiscal situation, can we afford them, in terms of both capital
expenditure and operating costs? (The Real Estate Developers Association of Hong
Kong, 2003)

Other than submitting position papers to the relevant panel of the Legislative Council, the
Association also makes good use of the press. Dr. Stanley Ho expressed his
disappointment and queries towards the single developer approach through the media. He
also proposed an alternative scheme which he assured the government would bring the
administration $210 billion in profit based on a multiple package approach and a plot ratio
of 12 times and that would leave the core arts and cultural facilities to the government
(South China Morning Post, Jan 21, 2005). He further stated that '[the single developer
approach] equals to sending the real estate developers a big gift by the 7 million citizens in
Hong Kong. How can that be fair? He [the developer] is so fat that cannot wear the socks
himself (Sing Pao, Jan 8, 2005)'. Also, all members of the Real Estate Developers
Association, except the three screened-in proponents strongly oppose the single developer
approach and support the idea of splitting the 40-hectares land into several pieces for
tendering (Ming Pao, Jan 12, 2005).
It is difficult to assess the actual influence of the Real Estate Developers
Association on the project. However, the views of Dr. Stanley Ho have, definitely,

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strengthened the request for dropping the single developer approach. When James Tien,
the legislator and chairman of the Liberal Party, commented on the development of the
WKCD in January 2005, he predicted that the government would re-evaluate its approach
as it has strongly opposed by the Real Estate Developers Association and the Legislative
Council. The latter had just passed a motion that urged the government not to adopt the
single package approach (Wen Wei Po, Jan 8, 2005). Moreover, in July 2005, the Chief
Secretary for Administration, the person-in-charge of the WKCD development, agreed at
the lunch appointment with Dr. Stanley Ho that more developers should be involved in the
project in principle. In response to the press enquiries, the Chief Secretary for
Administrations Office confirmed the lunch appointment with Dr. Ho and did not deny the
statement that 'the government agreed that more developers should be involved in the
project in principle' (Sing Tao Daily, Jul 21, 2005). Later in October, the Chief Secretary
for Administration put forward a revised proposal which introduced additional
development parameters and conditions that, to a certain extent, abandoned the single
package development approach (see Chapter 8 for details). From this perspective, the role
of the Real Estate Developers Association and its influence on the project should not be
underestimated in that its strong opposition has been partially taken into account by the
government in the decision-making process. As the government has been, albeit in rather
limited fashion, responsive to the Association and, in turn, the industry, a certain degree of
accountability towards the real estate industry has been achieved.
Another pressure group that has played a vital role in the development of the WKCD
is the People's Panel on West Kowloon (PPWK). Generally speaking, this group was
formed in November 2004 by an alliance of nine organizations from civil society and
cultural sectors, solely to monitor the development of the West Kowloon Cultural District.
Other than calling for the extension of the original 5-week consultation period, the PPWK
aims at 'organizing [a] group of 800 to form a rational and knowledge base advocacy
platform to re-examining the IFP: 1. with emphasis on legality, governance and financial
issues; 2. re-examination of cultural and urban development policies; and 3. public
consultation process' (People's Panel on West Kowloon, 2005). In order to better equip
citizens with relevant knowledge on the WKCD, it organized several docent tours to the
exhibition held by the government. After gauging the public opinion on the issues through
several self-organized consultation forums, conferences and questionnaires, it proposed an
alternative to the government titled 'Re-defining West Kowloon'. This proposal urged the
government to 'suspend the "choose one from three" process, and to re-plan WKCD

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swiftly through broad-based public consultation by establishing metropolitan cultural
think tank' (People's Panel on West Kowloon, 2005). Again, its actual influence is difficult
to assess. However, it should be noted that forums organized by the Panel found
'attractive' to the government officials, in the sense that they had attended the forums,
(South China Morning Post, Jan 18,2005) and were well-received in the community. Also,
members of the Panel have frequently commented on the development of the WKCD in
the press. Furthermore, the government has formally responded to the position paper of
the People's Panel on West Kowloon (Home Affairs Bureau, 2005b). To a certain extent,
the government is held accountable communally by the Panel. In April 2006, according to
the membership list of the consultative committee of the WKCD development and the
three advisory groups38, three core members, including the convener of the People's Panel
on West Kowloon, have been appointed to the consultative committee and two advisory
groups respectively. To a certain extent, the group has heated up the debate and aroused
the attention of the government. Hence, other than providing alternatives, the People's
Panel on West Kowloon may have facilitated political communication between the
authority and the public, articulated interests and acts as an external means to monitor the
government and to hold the government accountable.
From the above analysis, it seems that pressure groups have played a vital role in the
development of the WKCD. It is worth noting that not all pressure groups achieve the
same degree of success. Some pressure groups may encounter some difficulties in
generating their views or in formulating their position on the project.
'I explained several times to different people, including the Legislative
Council and government officials that the canopy [canopies proposed by all
proponents] is different from the Foster's one in the sense that it is not
glass-made and non-transparent. .. 1 have sent the Legislative Council a
written submission on the issue. But up till now, legislators still believe that
we are going to have the transparent canopy ... I also wrote to the government
officials and proponents, but still haven't received any positive response from
them ... other than getting the reply saying that thank you for your opinion or
something like that.' (Interviewee, Pressure Group)

'Very little [consultation by the government has been conducted]. 1 think our
group [professional group] has not been well-consulted. However, on the
other hand, we should take a certain degree of responsibility too. Our group
has our difficulties. Within our profession, we have 16 disciplines. Our
members include both big and small companies. Some of them has already

38 In February 2006, as bidders indicated that they were no longer willing to proceed under new terms, the
government announced that the project will be 'delayed' and in the mean time, a consultative committee,
with three advisory groups will be formed to re-examine the context of the WKCD.

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 participated and worked for the project. .. Then, who should we consult?
Whose opinion should we take into account when we are generating our
views?' (Interviewee, Pressure Group)

However, most pressure groups share something in common in the development of

the project, i.e. the government regarded them as part of the wider public and, before the
decision-making process of the project, did not formally consult them as the groups which
share similar views and membership characteristics (Lam, 1994).
'As far as I know, the industry [real estate industry] was not consulted by the
government in advance. Instead, the government has consulted one to two big
real estate companies in Hong Kong to assure that they are interested in the
project.' (Interviewee, Proponent)

It is uncertain whether the Real Estate Developers Association has been consulted by the
government in advance or not. However, in view of the fact that the Association sent the
government a letter concerning their strong opposition towards the single developer
approach after the launch of the IFP (Sing Pao, Oct 8, 2003) and meeting was conducted
by the Association on October 10, 2003 so as to consult its members on the development
approach of the WKCD (Ming Pao, Oct 17, 2003), together with the observation of the
interviewed proponent, it is plausible that the Association may not be properly consulted
in advance.
To conclude, although not all pressure groups have been as successful as the Real
Estate Developers Association or possibly the People's Panel on West Kowloon in holding
the government accountable for its decisions, the role of pressure groups in the
development of the WKCD should not be overlooked, even though they do not have a
structured or institutional role in the development of the WKCD. Generally, they all
facilitate political communication between the authority and the public, heat up the debate
on the issue, articulate interests and demands of the community they represent and act as
an external means to monitor the government and hold the government accountable in the
post IFP-period under Tung's leadership. Although they have actively taken these roles,
most of them appear to have been informed, instead of consulted, by the government on
the project in that there was only one-way communication. Whilst for the Real Estate
Developers Association and the People's Panel on West Kowloon, two-way
communication is observed and they have exerted some pressure on the government, in
terms of the ladder of citizen participation, they should be placed on the rung of placation.

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7.4.3 Role of the Legislative Council
In the last chapter, it was found that involvement of the Legislative Council on the
WKCD-related issues in the pre-IFP period should not be regarded as rare. However, its
role is limited and its view, to a certain extent, cannot be fully taken into account in that
decisions have been made in advance. In the post-IFP period under Tung's leadership,
generally speaking, there is not much improvement regarding Legislative Council's
involvement. Instead, shortly after the official launch of the IFP, the public, including
legislators, considered the Legislative Council to have been bypassed. Since then, the
Council has participated more actively in scrutinizing the development of the WKCD. The
establishment of a subcommittee to oversee the project is an example of the active
involvement of the Legislative Council. In this section, the role of the Legislative Council
is studied so as to examine the degree of public accountability achieved.
Consultation and involvement of the Legislative Council are listed in Table 7.1 (for
the details of the motions passed, please see Appendix 4). In general, the Legislative
Council meetings, meetings of Panel on Planning, Lands and Works and Panel on Home
Affairs were used as the platform for the exchange of views and information on the project
between the government and legislators before 2005. Since January 2005, the
Subcommittee on the West Kowloon Cultural District Development under the House
Committee of the Legislative Council was set up so as to scrutinize the project in more
depth. Hence, the involvement of the Legislative Council should not be regarded as rare
although its level of participation is uncertain. Owing to the fact that the IFP process has
already been launched, and the initial screening of the bids against the mandatory
requirements as purely technical, the Legislative Council was kept informed about the
progress ofthe project instead of being consulted in the post-IFP period.

Table 7.1 Consultation and Involvement of the Legislative Council in the Post-Invitation
for Proposal period under Tung's era
Date Consultation and Involvement of the Legislative Council
18 November - Panel of Planning, Lands and Works (PLW) and the Panel on
2003 Home Affairs (HA) met deputations to receive views on WKCD.
- The Panels discussed further information provided by the
Administration on issues highlighted in the public response to the
launch of the IFP for Development ofthe WKCD.
25 November PLW and HA continued to meet deputations to receive views on
2003 WKCD.
26 November A motion moved by Wong Sing-chi as amended by Ma
2003 Fung-kwok on the WKCD Project was passed.

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Date Consultation and Involvement of the Legislative Council
27 April 2004 - PLW discussed the progress of the Development of WKCD
since the Motion Debate on 26 November 2003, and the planned
arrangements for enhanced involvement of the public in the
Invitation for Proposals exercise.
- The Panel also discussed the report by Legal Services Division
on whether the Government had circumvented the normal
procedure of seeking approval for expenditure in public works,
and whether the Government had breached its usual accounting
practice.
- A motion was moved and passed opposing the land and financial
arrangements proposed by the Administration for the WKCD.
14 July 2004 - PLW discussed the outcome of the Invitation for Proposals for
development ofWKCD.
- The Panel circulated to members an Administration's paper
providing information on the arrangements for assessment of the
proposals received for the development of WKCD, the public
consultation to be conducted and the tentative time table for the
whole process.
30 November - The Panel discussed the progress of the development of the
2004 WKCD project and was informed of the detailed arrangements for
public consultation on the screened-in Proposals.
- Three motions were moved and passed.
16 December PLW discussed Legislative Council's Brief on 'Development of
2004 the West Kowloon Cultural District: Screening Result of
Proposals'. The Panel was briefed on the three screened-in
proposals by the proponents and received public views on the
subject.
5 January 2005 Amotion moved by Alan Leong Kah-kit as amended by James To
on the Development ofWKCD was passed.
21 January 2005 Following the passage of motion at the meeting of 5 January
2005, the House Committee decided to set up a subcommittee to
study issues relating to the development ofWKCD.
4 February 2005 The first meeting of the Subcommittee. The Terms of Reference
was drawn up: 'To study and follow up issues relating to the
development of West Kowloon Cultural District including its
interface with arts and cultural development, land use and
planning, environmental considerations, financing implications
and arrangements, and other related matters. '
18 February The Terms of Reference of the Subcommittee were noted by the
2005 House Committee (HC). HC also circulated to members several
updated information on the West Kowloon Cultural District
development.
21 February The Subcommittee discussed the land use and planning issues in
2005 relation to the development ofWKCD.
Sources: Legislative Council (2006); Subcommittee on West Kowloon Cultural District
Development, Legislative Council (2005b).

Other than placing the development of the West Kowloon Cultural District on the agenda of

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the relevant panels, subcommittee and the Legislative Council meetings, question raising is
another means to secure accountability. Legislators have also made good use of latter
means in the post-IFP period under Tung's leadership (see Table 7.2 for details).
Table 7.2 Questions raised by the legislators which are related with the West Kowloon
Cultural District development in the post-IFP period under Tung's leadership
Date Questions
12 November 2003 James Tien raised a question on the single-developer approach,
arrangement of another round of public consultation and
monitoring measures ofthe WKCD.
19 November 2003 Albert Ho raised a question on amendments to Draft South West
Kowloon Outline Zoning Plan.
3 March 2004 Ma Fung-kwok raised a question on the recommendations of
the Culture and Heritage Commission and the development plan
oftheWKCD.
12 May 2004 Lau Ping-cheung raised a question on the professional jobs
created by the WKCD development project.
19 May 2004 Wong Sing-chi raised a question on the canopy and
single-developer approach ofWKCD.
23 June 2004 Abraham Shek raised a question on submitted proposals on
development ofWKCD.
24 November 2004 James To raised a question on establishing cultural needs,
preventive measures to ensure that arts and cultural elements
would not be seconded to the real estate development and the
possibility of establishing a statutory body to monitor the
WKCD project.
15 December 2004 Lee Wing-tat raised a question on the mandatory provision of a
canopy for WKCD.
26 January 2005 Again, Lee Wing-tat raised a question on the mandatory
provision of a canopy for WKCD.
Source: Legislative Council (2006).

From this perspective, in the development of the WKCD, it seems that the authority
has been accountable to the public through the Legislative Council as the Council has been
regularly involved in monitoring the development of the project. However, most citizens
and politicians disagree with this statement and claim that the Legislative Council was
being bypassed. As the WKCD is a PPP project in which the government do not have to
spend a single penny except granting the winning bidder the 40-hectares land, the
government regards it as 'facilities to be used by the public' instead of public works and
hence no approval from the Legislative Council is required (South China Morning Post,
Nov 17,2003). The Subcommittee on the West Kowloon Cultural District Development of
the Legislative Council, established in January 2005, strongly opposes this by arguing that
the 40 hectares of land which will be granted to the private partner in reference to the IFP

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should be regarded as public resource and thus the project is not financially free-standing
in reality (Subcommittee on the West Kowloon Cultural District, Legislative Council:
2005b). Even though the arrangement (no approval from the Legislative Council is needed)
is proved to be legitimate and consistent with the relevant Ordinances, from the
perspective of the legislators, this aims at bypassing the Legislative Council and deprives
it of its right to scrutinize the project. This also could set a precedent for other PPP
projects, especially as the government has committed to adopting PPPs whenever feasible
(Efficiency Unit, 2003), and suggests that the Legislative Council may no longer be able
to exercise fully its constitutional role to monitor the government. Although some people
may argue that impacts have been exaggerated and the arrangements had been justified by
the Introductory Guideline to Public Private Partnerships39, it is clear that consultation
with the Legislative Council has been rare in that the it was being briefed and informed,
instead of being consulted on the project-related issues since the early beginnings of the
project (see 6.2.2 for details). Views of the Legislative Council, thus, have never been
fully taken into account in that decisions have generally been made in advance of
discussion with the Legislative Council.
Instead of acting passively and waiting to be briefed and informed by the government
on the updated progress of the project, the Legislative Council had participated much more
actively since November 2003, two months after the IFP was launched and after the
project was classified as 'facilities to be used by the public'. Since then, the Legislative
Council has actively met deputations to receive views on WKCD, and passed motions that
urge the government to take certain actions. From September 2003 to February 2005 4°, six
motions have been passed (see Appendix 4 for details). Obviously, motions passed by the
Legislative Council can exert varying degrees of pressure to the government. For instance,
on 26 November 2003, the Chief Secretary for Administration announced that the deadline
for submitting proposals has extended from 19 March 2004 to 19 June 2004 so that the
government could conduct further consultation with the stakeholders whilst the
proponents could have more time to prepare their bids. The announcement was made
during the Legislative Council's meeting to debate a motion that originally urged the

39 The Introductory Guideline to Public Private Partnerships states clearly that 'it is possible that a
financially free-standing project would require no formal legislative or fmancial approvals form the
Legislative Council. However, it should be borne in mind that most PPP contracts are likely to be lengthy
and of relatively high value. Client departments are advised to seek Legislative Council support (e.g. by
consulting the appropriate Legislative Council Panel) in line with policies on accountability and
transparency ... A project where the government intends to grant land for less than the paid-up market value
would normally require consultation with the Legislative Council (Efficiency Unit, 2003: 10)'.
40 The then Chief Executive, Mr. Tung, resigned in early March.

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government to 'comprehensively reVIew the project and extend the deadline for
submission of development proposals' (Tsang, Nov 26, 2003). There were two
amendments to the motion: one, by Ma Fung-kwok that calls on the government to review
the project comprehensively and thoroughly consult all stakeholders with the deadline for
submitting the proposals extended passed finally (see Appendix 4 for details); the other by
Albert Ho Chun-yan, 'urged the Government to openly consult all sectors in the society
afresh and temporarily shelve the whole project' (Tsang, Nov 26, 2003). To a certain
extent, the move by the government to extend the deadline for submitting proposal,
successfully convinced the legislators for against the Albert Ho's tough amendment. The
motion was finally defeated by two votes (Legislative Council, 2003b). Moreover, in his
speech, Chief Secretary for Administration stated clearly that
'but if Members passed the amended motion by the Hon HO Chun-yan ...
Invitations that were sent all over the world will also be withdrawn by
tomorrow, 27 November 2003. The relevant policy bureau would then
reconsider afresh the whole project. .. This is because I know deeply that if
Hon Members now vote for shelving the project, the Legislative Council will
continue to criticize every aspect of the project even that we have stated
clearly our intention to consult Members on the successful proponent's
proposal and to extend the consultation time with various sectors. The
Government's efforts would never be endorsed by this Council' (Tsang, Nov
26,2003).

It seems that the government was well aware of and did not underestimate the potential
impacts of the motion for urging to shelve the project. Although this may be the
technique used in persuading the Legislative Council not to urge for the shelving the
project, it is clear that the Legislative Council has exerted some degree of pressure to the
government.
It seems, further, that the Legislative Council has been successful in scrutinizing the
project once it played a more active role in demanding government's accountability for
the project. In reality, government officials, including the Chief Secretary for
Administration and relevant Secretaries41 , did frequently attend the meetings of the
Legislative Council to explain the project. However, the government took a strong stand
towards inquiries or criticisms of the legislators.
'The Legislative Council would not be that heartless, it would not defeat their

41 Before the establishment of the Subcommittee on the West Kowloon Cultural District development in
January 2005, principle officials, including the Chief Secretary for Administration, Secretary for Home
Affairs and Secretary of Housing, Planning and Lands usually attend the meeting of the Legislative Council.
Civil servants were officials who explain the project to panel members of the Legislative Council.

138
 decisions that they have endorsed (support the development of the West
Kowloon Cultural District) a year ago after the launch of the worldwide
tendering process. And the government would not be unjust and shove the
proj ect off by halting it.', said the Chief Secretary for Administration (South
China Morning Post, Nov 25, 2004).

'Right now, if we are asked to exclude the single package approach or the
canopy from the mandatory requirement, and halt the public consultation
conducted under the existing development blueprint of the West Kowloon
Cultural District, it is difficult for the government to follow', said the Chief
Secretary for Administration in response to the motion moved by Alan Leong
in January 2005 (Ta Kung Pao, Jan 7, 2005).

Furthermore, legislators also urged strongly for disclosing the financial information of the
project. As it may weaken the bargaining power of the government at the negotiation stage,
the authority refused, arguing it could leave it with no room for negotiation. However,
legislators were dissatisfied with the given justifications. In order to hold the government
accountable, three major political parties of the Legislative Council, including the
Democratic Party, the Democratic Alliance for the Betterment of Hong Kong and Liberal
Party, discussed the possibility to 'force' the government to release the relevant information
by using the Legislative Council (Powers and Privileges) Ordinance (The Sun, Jan 15,
2005). Although the Council has been united and actively participated through scrutinizing
the project, especially on this issue, its opinions failed to be taken into account by the
government in that the government has taken a very strong stand on upholding its own
stated position. It is evident that the Legislative Council has tried to strengthen its role in
the project but in reality, its role remained very limited in Tung's era. This, to a large extent,
confirms a lack of institutional power in policy making of a PPP project and in holding the
government accountable.
Probably, the main reason accounting for the limited participation of the Legislative
Council in the development of the WKCD is that only levels of tokenism (in Arstein's
ladder of citizen participation) has been achieved. As stated in Chapter 6, although the
Legislative Council has its institutional role in scrutinizing the government, it was
constantly informed by the government about the progress instead of being involved in
the decision-making process. It is evident that this practice is maintained in the post-IFP
period by categorizing the project as 'facilities to be used by the public' so that the
institutional role of the Council and its involvement would be reduced. Since then, the
Council has actively scrutinized the project by passing motions and raising questions.
Obviously, these exert a certain degree of pressure on the authority and in response to the

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urging of the Council and the public outcry, two concessions were made - extending the
deadline for the IFP exercise and launching a public consultation exercise after screening
the bids. Although two-way communication was fostered in some sense, the level of
Legislative Council's participation is at the stage of placation as the authority has the
final say in the development of the WKCD and the role played by the Legislative Council
in this period was no different from the advisory body.

7.5 Involvement and Role of Proponents

In the development of a PPP project, private sector involvement is essential. Since
the launch of the IFP, potential bidders have been actively involved and playa crucial
role in the project. Their active involvement does not end after the submission of
proposals. Instead, screened-in proponents have to promote their proposals to the public
during the public consultation period. In this section, their role and involvement after the
launch ofIFP in Tung's era are highlighted.
As previously mentioned, the government has relied on the private sector to fill in
several gaps. For instance, the IFP document requires the bidders to write up the business
plan, which includes details like the mode of governance, mission statement, business
strategy and operation plans, for each of the core arts and cultural facilities. Other than
the 'software' gap, proponents have to conduct the feasibility study on the canopy that is
listed as a mandatory requirement of the IFP. From the information pamphlets provided
by the screened-in proponents, it is clear that all of them have consulted and involved
professionals of the relevant fields, such as urban design, architecture, arts and culture
and engineering, when filling in these 'hardware' gaps and preparing their submissions.
In order to fill in the 'software' gap, the proponents consulted arts and cultural
groups. Some of them even reached the partnership agreements with some groups.
According to the interviewed proponents, they have tried their very best to conduct an
extensive consultation exercise with the arts and cultural sector so as to suit the actual
needs of the sector. Opinions of the groups were taken into account when proponents
were drawing up their proposals. Some interviewees from the arts and cultural sector also
confirmed that they had been consulted by the proponents. From this perspective,
proponents have tried to achieve communal accountability at the very early stage of the
project, when they were preparing their proposals.
'In our scheme, we had consulted more than 300 local arts and cultural
groups and amended our design to accommodate some of these views.'

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 (Interviewee, Proponent)

'Our group has consulted most key stakeholders, like the arts and cultural
groups, before working on our design. Owing to the urge of the arts and
cultural groups and some key stakeholder, we have included some other
non-mandatory arts and cultural facilities in our schemes, like the education
centres and concert hall ... I have tried my best to consult the arts and cultural
groups. It's true that I first approached the big and flagship groups. Through
their introduction, several small groups have been consulted too. It should be
noted that with the limited time, it is reasonable for adopting such approach
and we did try our very best. During our first interview with the arts and
cultural groups, we have already sent them questionnaire to identify their
needs. We spent a month to figure these out before working on any design.'
(Interviewee, Proponent)

Moreover, from the point of view of proponents, adopting PPPs for developing the
WKCD is beneficial to all parties, especially the arts and cultural groups in that they can
make use of the network of the private sector to promote their programme42 •
An interviewed proponent stated a problem that encountered by his group when
trying to be accountable to the public was the insufficient chances to explain his proposal
clearly to the public, even though it seems that his group is given many opportunities like
participating at the public discussion forums. The 'misunderstanding' or 'lack of
knowledge towards the proposals', to a certain extent, gave rise to the heated debate on
the project in the sense that some issues raised have already been addressed in the
proposal. For example, the arts and cultural groups have strongly urged for having a
statutory board to govern the core arts and cultural facilities. However, this opinion has
already been taken into account and hence a similar governing board had been proposed
by the interviewee's own group. Furthermore, some people worried about the potential
financial problems that might arise owing to the long 'leasing' period. Nevertheless, this
has been addressed by one of the government's additional requirements and hence every
proponent had to provide a performance bond. With this, there will be enough money to
operate the facilities for 30 years. Hence, the interviewed proponent is of the view that
there is a lack of opportunities for him to address some public concerns in a clear manner
and being responsive to the pUblic. Therefore, proponents were demanding the public, in
particular, the arts and cultural groups, to listen to their views and explanation so as to

42 This is because all screened-in proponents are large real estate developers who own many residential,
shopping malls and commercial buildings in Hong Kong. The interviewed proponent claims that the arts and
cultural groups can make good use of this 'network' in promoting their cultural programmes. For instance,
posters which promote the cultural programmes would be posted in all shopping malls that owned by the
bidder without charging for a single dollar, other than the printing cost.

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facilitate a two-way communication which is essential in achieving public and communal
accountability.
'We and the government have not been given opportunities to explain the
project or our proposal to the public in full and in a clear manner. It takes at
least half an hour to brief the public about our proposal, but the fact is, we are
usually given several minutes to do so at the discussion forums. But I
understand that this is one of the constraints ... Therefore, although some
public concerns may have already been addressed in our proposal, the public
fail to recognize it.' (Interviewee, Proponent)

'One of the advantages of adopting PPPs is that the arts and cultural groups
can use our 'network'. What I mean is we can act as the facilitator and reduce
their cost of promotion. Instead of spending a huge amount of money on
promoting the arts and cultural activities, we can help by posting their posters
or leaflet or any promotion materials in our shopping malls and hotels. What
they have to pay is just the printing cost. This will definitely reduce their
financial burden. At the same time, this would not have much financial
implication on us in the sense that what we may have to do ... is asking our
security guards to put on the posters. It should be noted that mutual benefits
would be achieved in the sense that promotion may bring more audience to
the arts and cultural activities. At the same time, it brings people to the
WKCD, too. They will spend their money there. So, this is the win-win
situation.' (Interviewee, Proponent)

'The project has become too politicized ... Arts and cultural groups always
urge us [the proponent] to listen to their views. But they have to listen to ours
too. Communication should be two-way', said Dynamic Star, a proponent of
the WKCD (Ming Pao, Nov 24, 2004).

In response to the demands, the opposition camp of the arts and cultural sector
doubts the sincerity of the businessmen in fostering the long term development of the arts
and culture in Hong Kong. Hence, the camp insist that core arts and cultural facilities
should not be operated by the private sector as the profit-oriented mindset of the
businessmen would, to a certain extent, harm the long term development of Hong Kong
arts and culture.

'I doubt the sincerity of the proponent in fostering the long-term development
of the arts and culture in Hong Kong .... Ask them to do that [helping the arts
and cultural sector in terms of cash subsidy and non-cash subsidy like posting
the posters that promote the arts and cultural programmes for free] right now.
Ask them not to support the arts and cultural development just because they
are now bidding for this project. I think the 'sincerity' is fake. If you are
really supportive to the arts and cultural development, you should not only
post it for 3 months. Last year, all Park'n Shops has put up the poster of the
Hong Kong Sinfonietta, but it only lasts for three months ... Why those who
do not bid for the WKCD do not show their support to the arts and cultural

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 sector? Then why the proponents are so supportive to the industry right
now? ... In order to strive for the benefits that will be generated from the
WKCD, they [the proponents] have to pretend to be supportive to the sector.
But they are just acting. This is just part of the public relations.' (Interviewee,
Arts and Cultural Group)
'The involvement of the for-profit sector in the operation ofthe core arts and
cultural facilities will have negative impact on the long term arts and cultural
development of Hong Kong. This is because they are not the professionals in
these areas. If you ask Lee Ka-shing to discuss the contemporary arts with
me, I am sure that he even has no knowledge ofthe name of the artists. Then,
how can he know how to develop the modem arts? They are expert in real
estate development; so, just ask them to work on real estate.' (Interviewee,
Arts and Cultural Group)

From the above analysis, it is evident that there is a lack of trust on the BOT-typed PPP
arrangement in that the arts and cultural groups are not convinced that the private sector
can perform satisfactory in either identifying needs appropriately or in operating the
facilities. With their non-confidence vote towards the PPP arrangement, it is clear that the
institution, i.e. the arrangement, itself cannot generate any trust. Without trust, it is
understandable that efforts of the proponents in securing public and communal
accountability would not be highly appreciated and well-received in the community.
With limited confidence towards the institution itself and to the government, the
project has been strongly criticized by the public who have been different stakeholders and
urging the government for the implementation of certain accountability mechanisms (e.g.
a statutory governing body which oversees the project and a statutory governing board for
each core arts and cultural facilities) so as to secure accountability and public interest
throughout the tendering period.

7.6 Government Approach in Handling the Project and Integrating Different Views
in the Community

The government plays an essential role which can be regarded as the most important
actor in the initial stage of a PPP project. Clearly, after the launch of the IFP of the WKCD
in Tung's era, the government still dominates the whole decision-making process even
though there was a strong opposition from different stakeholders, the public and the
Legislative Council. In handling the project and integrating different opinion in the society,
as previously mentioned, the government took a relatively strong stand in that it refused to
make any concessions after the decision of launching a public consultation after screening
the bids was made.

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 In September 2002, a Steering Committee for Development of the West Kowloon
Cultural District, chaired by the Chief Secretary for Administration, was established. After
the decision of adopting the Foster plan as the masterplan for the project was made in
October 2002 and the launch of the IFP in September 2003, originally, the government
planned to award the tender in late 2004 or early 2005 and thus construction would be
commenced by April 2006. Core arts and cultural facilities should then be completed
earliest by late 2009 (Housing, Planning and Lands Bureau, 2003b).
Since the launch of the IFP, there was a heated public debate on WKCD. Different
stakeholders raised their concerns and urged the government to take their views into
account in the decision-making process of the project43 . In response to the urgings of the
public, other than extending the deadline for the proposal submission, the only concession
is launching a public consultation exercise after screening the bids.

7.6.1 Stand Taken by the Government

Since the launch of IFP, there has been heated debate especially on the issue of
single-developer approach and the inclusion of the canopy as the mandatory requirement.
As the public watchdog, the Legislative Council has also been actively scrutinizing the
development. However, the government took a strong stand towards some inquiries or
criticisms of the legislators. For instance, in response to the questions concerning the
development of the WKCD on 12 November 2003, the Chief Secretary for Administration
reiterated his strong stand towards the project, stating
'The site of the WKCD has been used for lawn maintenance for nine years ...
We think that no matter how we will be blamed, how we will be pushed, even
though some legislators may comment that 'we deserve the failure', we
believe that as this is for the public interest, we must carryon anyway.'
(Legislative Council, 2003a)

A softened stand of the government is noted in the debate on the motion of shelving
the project in November 2003. Other than announcing the extension of the deadline for
submitting the development proposals, the government has stressed the importance of
public opinion and views of the Legislative Council in the project.
'The government is ready to listen to the public views on these issues,
particularly those of the cultural and arts sectors. There are plenty of flexibly
in these issues and no decision is yet taken at this stage ... But if Members
passed the amended motion by the Hon HO Chun-yan without taking into
account all the research and consultation conducted by the Government and

43 In the previous sections of this chapter, the writer has analyzed concerns of different groups.

144
 other organizations over the years, without taking into account your
endorsement on the project in the past, without taking into account the
project is for public good, without taking into account the economic benefits
and job opportunities to be brought along, then I cannot ignore the decision
by the Hon Members but to humbly shelve the project as per your decision'
(Tsang, Nov 26, 2003).
However, at the same time, the Chief Secretary for Administration has also reiterated his
desire of the early implementation of the project and, confirmed that the single-developer
approach would be adopted anyway, even there is a public outcry urging the government
for dropping the single package approach.
'We have already explained the demerits of developing the West Kowloon
Cultural District as a cluster of split projects in this Council a fortnight ago ...
So far, a total of twelve consortia have indicated their interest, including three
overseas ones. Therefore, the allegation that only one or two consortia are
capable of making a bid is groundless ... I wish Hon Members would bear in
mind that since the year 1996, the Government has already spent seven years
for research, planning and consultation on the West Kowloon Cultural
District development project.. .Up till now, the site has been laid idle for ten
years. I wish you all scrupulously consider whether we should waste this site
for seven more years and stall the people of Hong Kong for another seven
years, simply because of the hazy suggestions by the Hon HO Chun-yan's
amended motion' (Tsang, Nov 26,2003).

The debate has not been cooled down by the relatively softened stand of the
government. It is obvious that there were mixed views on the project. On one hand, some
arts and cultural groups urge the government for early implementation of the WKCD so
that their immediate need would be suited. On the other hand, as some arts and cultural
groups, pressure groups and legislators disagree with the proposed approach and context
of the district, they call on the government for slowing down the process so as to extend
the consultation time with different sectors. In response, the government announced that
public consultation would be launched after the screening process of the IFP in March
2004, claiming that:
'The feedback collected so far ... has shown that there is a strong opinion
that instead of being presented with the selected proposal, the public should
be given the opportunity to view the various proposals received, so that they
can offer their comments ... After careful consideration, we agree that,
without undermining the integrity of the assessment exercise, there is scope
for involving the public further so that their views can also be taken into
account in the selection of a preferred proposal', said Donald Tsang
(Information Services Department, Mar 19, 2004).

This large scale public consultation can be regarded as a means in integrating public views
on the development ofthe WKCD. Its effectiveness is analyzed in Section 7.6.2.

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 Other than these two extensions, under Tung's leadership, the government
maintained its stand especially on issues like insisting on the single-developer approach
and construction of the Foster canopy. For instance, the government stated clearly that
there would be no change in the mandatory requirements of the IFP in April 2004
'There is also no question of the government changing the single package
approach in taking forward this very important project for the benefit of the
community. Indeed, apart from extending the deadline for submission by
three months to June 19, 2004, there has been no significant changes to the
fundamental requirements in the IFP since its launch in September, 2003 ...
As stated in the Important Note of the IFP, proposals which fail to comply
with any of the mandatory requirements will be treated as non-conforming
proposals and will not be considered further' (Information Services
Department, Apr 28, 2004).

Further, on May 19, 2004, in response to a canopy-related question raised by legislator

Wong Sing-chi, Michael Suen, Secretary for Housing, Planning and Lands, reiterated the
stand of the government by claiming that
'I would like to reaffirm here that the canopy design is a distinctive and
major feature of the integrated design of the West Kowloon Cultural District
development. The Government does not consider that the design of the
canopy and its financial aspects will affect the viability of the project.
Proponents must include the canopy design in their proposals, otherwise they
will not be considered by the Government' (Information Services Department,
May 19, 2004).

As the 'extra' round of public consultation exerCIse was launched after the screening
process of the IFP, bidders whose designs are inconsistent with mandatory requirements
had already been screened-out and hence, obviously, the previously mentioned issues
which concerned the public most were not on the agenda for consultation. There was thus
no room for consultation or negotiation on these 'fundamental' issues.

7.6.2 Public Consultation

The public consultation consists of three main parts: (1) discussion forums 44 ; (2)
main exhibition; and (3) comment cards (see Appendix 5) which collect written comments
from the pUblic. At first, the government had no intention of launching another round of
public consultation after the issue of IFP. Hence, to a certain extent, the extension of the
deadline of IFP and the 'additional' round of public consultation can be regarded as

44 There were 8 discussion forums. Each discussion forum targets at different groups, including the
stakeholders. For instance, 2 discussion forums target at collecting opinion from the arts and cultural groups,
2 of them with the target population of professionals.

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concessions that the government made in response to the public and the Legislative Council.
However, at the same time, the concessions themselves reflect that the public are not
satisfied with the consultation done in the pre-IFP stage. In the development ofthe WKCD,
however, launching an 'additional' round of public consultation is, somehow, meaningless
as the public was dissatisfied with the 'skeleton' of the project, i.e. mandatory requirements.
They were opining on issues like whether a canopy should be built, whether a single
developer approach should be adopted and how many additional arts and cultural facilities
should be included in the WKCD. As all screened-in bids must comply with those
mandatory requirements, the public consultation launched after the screening process could
not be greatly successful as the public regarded these as the fundamental problems and the
scope of aspects on which they could be consulted is limited by the IFP. This is the main
reason why the design of the comment cards has been strongly criticized45 •
'I prefer the government not to consult the public in that it has made the
decision already. Just like your mother has already cooked and the food are
ready. Then, she comes to you and asks you whether you want to have dinner
or not, but not asking you what do you want for dinner ... what kind of
consultation this is!' (Interviewee, Arts and Cultural Group)

Definitely, the exercise itself shows the sincerity of the government in wanting to
show it was consulting the public as 'such a large scale of public consultation on a
particular public work is rare in foreign countries. And this is the first time in Hong Kong'
(Ming Pao, Nov 11, 2004). In order to solicit public views in a systematic and holistic way,
the government further commissioned the Public Policy Research Institute of the Hong
Kong Polytechnic University to analyze the views received during the public consultation
period through various channels, including the forums, comment cards, other written
submissions, telephone polls and opinion presented in the meetings of statutory and
advisory bodies (Information Services Department, Jan 11, 2005). Through involving an
independent research institute in soliciting the public view, credibility of the public
consultation exerCIse itself is enhanced. However, as the government has preset a
framework for the public consultation exercise46 , the content to which the public are being

45 The government targets at consulting the public on the three screened-in proposals. Thus, comment cards
are design to suit this need. However, as the public urge the government for rethinking the scope and
mandatory requirements of the WKCD, some of them criticize the government for 'leading' the public in
that they are only allowed to compare and then choose among the three proposals. Although there is a part at
the end which address the possibility of that all proposals should not be taken forward by the government,
the layout of the comment cards has, to a certain extent, limited its credibility.
46 The content of the public consultation exercise is preset by the IFP, i.e. mandatory requirements and
single-developer approach.

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consulted is limited, so is the scope of public participation in the project. This weakened
the credibility of the exercise. It was further weakened by the design of instrument,
including the structure and layout of the comment cards and polls.
'I don't think the government is really consulting the public on the
development of the WKCD, instead, she is just informing the public. In order
to 'generate' public support, a series of public consultation exercise takes
place. But you can see that result of the exercise can be easily manipulated by
the government. Reliability of the result and credibility of the exercise are
hence doubtful.' (Interviewee, Proponent)

In the telephone polls, some questions were regarded as leading questions47 • Furthermore,
the various channels in collecting the comment cards, i.e. collected in the main exhibition
venues where all visitors are given the comment card at that entrance of the venue, through
Internet, by fax and by mail, posed several limitations to the study in the sense that citizen,
could submit more than one comment card without any preventive measure. In justifying
the credibility of the exercise, the government has clearly stated that
'the Comment Card was designed to facilitate members of the public in
expressing their views after visiting the exhibition. As such, the questions in
the Comment Card focused mainly on various aspects of the screened-in
Proposals .... Respondents were free to express views on aspects other than
the Proposals... Government collected public views through different
channels to gauge and triangulate views from various sources ... In this
consultation exercise, one of the channels for collecting views was through
random telephone polls. This was done through a scientific sampling method
and in an unbiased manner' (Housing, Planning and Lands Bureau, 2005c).

Nevertheless, this opens a gap for some parties to 'manipulate' the results generated from
the consultation. For instance, it is found that staff of one proponent had been driven to
attend the exhibition on weekdays under the arrangement of their company (Hong Kong
Economic Times, Jan 18, 2005). Further, citizens who are willing to fill in a 4-page
questionnaire conducted by the marketing institute that is owned by a proponent after
attending the exhibition were given a $20 coupon (Hong Kong Economic Times, Jan 12,
2005). With these incidents, credibility of the study had been weakened and challenged by
different parties, including the proponents. More importantly, 4,176 out of 33,416 comment
cards collected that contained similar responses were mailed with identical mailing label or
envelope (South China Morning post, Oct 8, 2005c). An interviewed proponent is critical
towards the exercise itself.

47 For example, questions number 9, 10,22,23,24,25,26 and 28 of the third round of telephone poll are
regarded as leading questions by Dr. Ma Ngok (Ma, 2005).

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 'Do you know what is going on right now? According to the current
assessment, proponent A will probably lose. In order to ensure that he
[proponent A] will be involved in the project, his group is now generating
some kind of public views through different channels, including the
Legislative Council and the media. And of course, the public consultation
exercise, to be specific, the comment cards, is the means for them to echo
views that is favorable to him. Proponent A has forced its staff to fill in the
comment cards and submit that to the government. Well, we have informed
the government and Polytechnics University [the research institute] about the
phenomenon. However, Polytechnics University said that this has little
impact towards the overall result! That's ridiculous. That's why I am being
critical towards the credibility of the exercise ... It should also be noted that
the Polytechnics University is the strategic partner of one of the screened-in
proponents.' (Interviewee, Proponent)

Clearly, although the objective of conducting a large scale of public consultation is,
somehow, to legitimatize the project, the government failed to achieve that as the public,
even the proponent, strongly challenged its credibility. Even though the government has
implemented several measures to enhance credibility at the beginning, like the open tender
for inviting an independent research institute to carry out the analysis of the public views, it
seems that someone has made good use of the lacuna in the public consultation exercise
(there is no mechanism to prohibit individuals or groups from filling in and SUbmitting
several comment cards with similar answer) to manipulate the result generated from the
exerCIse.

7.6.3 Information Disclosure

Furthermore, although the government has put up the proposal for public consultation
through holding an exhibition, limited information has been provided. Therefore, some
citizens found that they have no ground in selecting the best proponent. They even
criticized the public consultation exercise as a beauty contest. The Legislative Council has
pushed the government for disclosing the information contained in the proposals, especially
financial information (see 7.4.3 also). However, arguing that the disclosure would affect the
current assessment and might harm the bargaining power of the government at the
negotiation stage, the government refused, then, but promised to release such information
'before a provisional agreement with the selected proponent is signed and after obtaining
the agreement of the proponents' (Information Services Department, Jan 6, 2005). From the
interviews conducted, there are mixed views. Some interviewees regard the disclosure of
information, especially financial information, is essential in selecting the proponent. Thus,
relevant information should be made pUblic. One of the interviewed proponents also shares

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this view. Some interviewees from the arts and cultural groups also comment that without
releasing information related to the operation of the core arts and cultural facilities, such as
its mission, vision, and related plans, it is difficult for them to carry out their assessment
towards the proposals.
'We, as the artists, want to know more than just the financial information. We
want to know the plans for each of the core arts and cultural facilities which
are stated in the proposals. We want to know what kind of programmes or
software will be offered after 20 years. But now, we have no knowledge in
these areas. We can't see the direction for development ... not even the
mission and vision of a museum. In this case, how can we comment on these
screened-in proposals? ... Just looking at the outlook of the WKCD and then
asking for comment is meaningless. You can't generate any concrete
comments at all. The government provides us limited information on the
proposaL The proposal of Henderson comprised by piles of books. Two
bookcases are used to place that 'proposal'. But now, you see, information
we get can be put together in a thin booklet. .. We are given insufficient
information. We can't assess these proposals.' (Interviewee, Arts and Cultural
Group)

'I don't believe that [the disclosure of financial information will harm the
bargaining power of the government in the negotiation stage]. We have been
to Bibao. Not only the figures were made public, but also the feasibility study.
What is so confidential?' (Interviewee, Legislator)

'The Government has not been forth coming in disclosure of information

regarding the development of WKCD, including the technical and financial
one. We do not understand why this is the case: It is of public interest to
release the results of the marking of the submissions made by the proponents
on 19 June 2004.' (Interviewee, Proponent)

On the other hand, some interviewees feel that the government has provided sufficient
information. Some information disclosed may be too technical so that the general public
may fail to comment owing to the lack of knowledge.
'You should go and take a look of the IFP. It is comprised by 20 books. There
is lots of information there. How can you ask people with no knowledge to
understand all of them? How can you blame the government for not releasing
or disclosing sufficient information?' (Interviewee, Arts and Cultural Group)

'Just like the issue of plot ratio. Actually, the figure is meaningless in that
there is no big difference between 1.81 and 2.81 ... Unless you are working in
this industry, if not, you can't understand it.' (Interviewee, Professional
Group)

'I think the government has provided sufficient information for the public to
assess the proposals. ' (Interviewee, Proponent)

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 'You can put more and more information and people still find that it is not
sufficient. How much is enough is a difficult question. You have to do to say
look, that is enough for the debate to be engaged. Definitely, there is more
than enough as the debate has been going on. You know, you can actually be
overwhelmed by information. And that's part of the problem. The people
there are most interested in the issues: the arts and cultural groups and the
Legislative Council, have the certain level of understanding. People who
really matter in the public properly have a lower level of understanding ... I
think the government" has put out as much information as it can. Probably
more information than necessary.' (Interviewee, Advisory Group)

It is worth noting that view of an interviewee from the professional group on this issue is
mixed. On one hand, he feels that the government is, somehow, obliged to disclose the
financial information. He understands the difficulties that the authority encounters on the
other.
'I think the [financial] information should not be disclosed right now. But the
government should disclose that. That's why this is a dilemma. This is
because right now, the project is still at the tendering stage. The tender has
not yet been awarded. So how can you disclose the financial information of
the proponents? ... But you [the government] should disclose that. If not,
how can the Legislative Council perform its role as the public watchdog? ...
[Do you think the explanation of the government reasonable?] The question
is... the government is now urging the public to trust her. Alright, even
though the government discloses such information after the tender is awarded,
what if the Legislative Council disagrees with the decision of the government?
Is there any clause stating that if the tender will be cancelled if the
Legislative Council 'disapprove' that? That's impossible... That's why
information should be disclosed in advance.' (Interviewee, Professional
Group)

The dilemma is closely related to the low-trust political environment. Public trust
was very weak during the period of examination owing to weak governance of the
HKSARG and bad experience on holding the government accountable for other
private-sector participated public projects. As stated in Chapter 5 and 6, the government
has been accused of 'transferring benefits to the business' through PSI projects.
Suspicious precedents include Cyberport (a PPP project) and Hunghom Peninsula (a PSI
project). Moreover, previous PPP projects, including Cyberport and Disneyland, have
long been criticized for their lack of equity, transparency and accountability. The
Legislative Council has encountered also many difficulties in holding the government
accountable. Together with the idea that 'the Legislative Council is bypassed in the
WKCD', public trust was further weakened. The interviewed legislator who sits in the
subcommittee shared this view.

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 'Why I have to trust you [the government]? Do you think she [the
government] can be trusted? ... This is a matter of trust. The trust rests with
no foundation. Seeing is believing. I see no reason to trust the government
unless I have those documents in hand. I can't trust you just because you are
the executive branch, just because you are government officials!'
(Interviewee, Legislator)

At the same time, several interviewees identified trust and strong governance as crucial in
the development of the WKCD.
'The project itself is a good thing in the sense that the arts and cultural sector
will be benefited from it, especially as public resource is limited. Obviously,
private sector has to generate profit. That's the norm ... Right now, it is
impossible for us to know whether the WKCD can really foster the arts and
cultural development in Hong Kong or not and will the proponent 'leave the
arts and cultural elements alone' after getting the bids. We don't know yet.
What you can do is to trust them: trust the government and trust the
proponent. I think we should have this kind of faith.' (Interviewee, Arts and
Cultural Group)

'All of us [the proponents] are big companies in Hong Kong. We will not bet
on our reputation. The WKCD will definitely be successful. Why don't you
have kind of faith and believe us? ... Sometimes, I think the government
should be decisive and have to be strong when facing criticisms. '
(Interviewee, Proponent)

'Government officials asked me to trust the government. .. But how can I

trust you? There is no mechanism there. Also, the government refuses to
release relevant information. It is difficult to ask people to trust you. You can
see that, in response to the questions of the legislators, Michael Suen usually
refused to answer by claiming that this is not the right time or the information
can't be made pUblic... As I know very little, I can't trust you at all.'
(Interviewee, Pressure Group)

'The government should not be like this. Strong governance is needed. If we

have strong governance, this shouldn't be the case [the WKCD is 'on hold'
and would start over again as bidders indicate that they would not stay in the
race in February 2006]. Just wasting our time, wasting our energy.'
(Interviewee, Arts and Cultural Group)

The low-trust environment, together with the lack of transparency in the sense
that the government refused to release information upon request, means accountability is
not well-secured. More importantly, the weak accountability secured; and the response
and strong stand of the government further weakened the weak public trust in the
community.

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7.7 Concluding Discussion: Accountability Secured After the Invitation for Proposal
period in Tung's Era

In this chapter, contractual, managerial and public accountability, are the forms for
evaluating the extent of accountability that has been secured in the set-up stage of the
WKCD. From September 2003 to March 2005, i.e. after the IFP was issued and before
the resignation of the former Chief Executive Tung Chee-wah, these accountabilities, in
general, have not been well secured as, once again, the accountability mechanisms
adopted fail to function effectively.

7.7.1 Contractual Accountability

To achieve contractual accountability, PPP objectives have to be incorporated in the
contract and general standards have to be translated into more specific and binding legal
standards. Therefore, it is vital to examine the extent that the objectives of the project are
clearly defined. In Section 6.4.2, it is evident that the government did not produce a set of
clear objectives for the WKCD. It could be argued that this was intentional so as to
encourage and benefit from the private sector's capacity for innovation. However, this,
together with the fact that no business case is established in advance, limited the degree
to which contractual accountability could be secured. Hence, these arrangements should
be regarded as an inherent threat to contractual accountability.
During the period under examination, no contract has been drafted. However, the
IFP should be regarded as the preliminary contract in that it provides the blueprint on the
respective roles, responsibilities and liabilities of the parties involved. As stated in Figure
4.1, establishing a business case is one of the accountability mechanisms in this area.
Establishing a business case involves several actions. For example, both the guidelines
published by the Efficiency Unit of Hong Kong and the HM Treasury of the United
Kingdom, suggest that needs analysis, market testing and PPP feasibility studies are
essential. Also, both organizations recommend that a public sector comparator should be
prepared for benchmarking purposes48 • In particular, the HM Treasury has highlighted
that in a business case, the output specification should be given instead of "'how" the
service is to be delivered' (Demirag et aI., 2004b).
As analyzed in Chapters 6 and 7, it is evident that the government has not performed
satisfactorily in establishing the business case for the WKCD. Although the cultural needs,

48 Although the Efficiency Unit of Hong Kong has highlighted the importance of the public sector
comparator in developing a business case, it has stated clearly that 'this step can be skipped if qualitative or
policy predominate, or the project is fmancially free-standing' (Efficiency Unit, 2003).

153
to a certain extent, have been examined, identified and established through several studies,
no market testing or PPP feasibility studies had been conducted. In particular, the public
sector comparator is missing throughout the pre-IFP period and this is without any sound
foundation or argument for the omission.
Although the government has provided a large degree of flexibility in that proposals
fulfilling mandatory requirements are regarded as qualified bids, even though they fail to
conform to the Government's Baseline, it is clear that the given 'flexibility' is still rather
limited. For example, instead of providing output specifications so as to enhance
flexibility, detailed input requirements for the mandatory hardware are found in the IFP,
although the former has long been regarded as a crucial factor for achieving the potential
benefits ofPPPs.
To conclude, in the stage before awarding the tender, establishing a business case is
essential and is partiCUlarly important for facilitating contractual accountability.
Unfortunately, the government failed to provide a complete business case for the WKCD.
Further, in the IFP, the emphasis has been placed on extensive input, rather than output
specifications. From this perspective, the prospects for ensuring contractual
accountability for achieving required outputs in the pre-IFP period had not been well
secured.
Moreover, during September 2003 to March 2005, even though the government was
facing strong public pressure to rethink the mandatory requirements, it refused to change
these, claiming that the IFP (the preliminary contract) should be honored. Hence,
comparing with the usual expectations of .public accountability, it can be argued the
government has high regard for contractual accountability.

7.7.2 Managerial Accountability

Managerial accountability entails procedures to make 'those with delegated
authority answerable for producing outputs or the use of resources to achieve certain
ends' (Sinclair, 1995: 222). In particular the managerial accountability process 'involves
monitoring whether [PPP] projects are achieving the objectives identified in the business
case and the contract itself. This process involves monitoring of services, usually, by
users of [PPP] services, private sector facilities manager and contract manager from the
public sector' (Demirag et aI., 2005).
Theoretically, the Chief Secretary for Administration is accountable to the Chief
Executive for the decisions made, such as the preset framework outlined in the IFP.

154
Clearly, it is difficult to gain inside information necessary for assessing the degree of
managerial accountability achieved between the Chief Secretary for Administration and
the Chief Executive. However, it should be noted that there was a widespread rumor in
the community that suggested that other than being the landmark development in Hong
Kong, the WKCD was also designed to represent a lasting achievement under Mr. Tung's
governance (Ming Pao, Dec 24, 2004). Hence, some people, including an interviewee,
criticized that the WKCD was a project born to reflect the superior's will, i.e. the Chief
Executive's and that, being accountable managerially to the Chief Executive, the Chief
Secretary for Administration had to ensure that work on this progressed. There is no way
to check the reliability of the rumor. However, if it is one of the reasons that contributed
to the decision to construct a cultural district in Hong Kong, the tough stand taken by
Donald Tsang can be regarded as a way to demonstrate his managerial accountability to
the Chief Executive49 .
From the above analysis, the insistence of Donald Tsang on the preset framework
could be regarded as a way to secure managerial accountability to the Chief Executive if
the rumor is reliable. Hence, to a certain extent, the managerial accountability of the
Chief Secretary for Administration to the Chief Executive appears to have been secured.

7.7.3 Public Accountability

Public accountability, as defined in Chapter 4, refers to the channels for the public to
hold the government to account, to demand explanations and remedies, and to impose
sanctions and new directions, and include the Legislative Council, Audit Commission,
Ombudsman and media. Similar to the pre-IFP period, the role of the Audit Commission
and Ombudsman were limited or even non-existent in the post-IFP period. To examine
the extent to which public accountability has been achieved, public involvement and
participation as well as the role of the Legislative Council and the press need to be
studied.
From the above analysis, it can be seen that the arts and cultural sector could not
reach a consensus on the project, although the sector, in general, welcomes the idea of
establishing a cultural district in Hong Kong. The sector was divided mainly on several
issues. Primary concerns included the relation between the WKCD and arts and cultural

49 It is expected that if Mr. Tung regards the WKCD as an icon for his achievement, he might want to
materialize it as soon as possible. If this is the case, the insistence of Donald Tsang for early implementation
and for maintaining the canopy and single-developer approach as essential elements can be understandable
as a means to be accountable to the Chief Executive managerially.

155
policy and the number of facilities that should be included. On these fundamental issues,
it appears that 'manipulation', as defined in Arnstein's framework, has occured as from
the start, the government had no firm intention to consult the arts and cultural groups in
ways that would affect any decision made. However, this does not mean that a totally
'non-participative' and unaccountable approach was adopted. On other issues, such as the
organization and mode of operation of the core arts and cultural facilities, two-way
communication between the power holder and the sector was observed and achieved
through means that included the public consultation exercise. Nevertheless, as the sector
lacked any power for negotiation, the form of accountability secured was little more than
'consultation', as described in accordance with Arnstein's ladder of citizen participation.
The roles and major concerns of different pressure groups were analyzed in Section
7.4.2. In terms of their involvement in the development of the WKCD, most of them were
found to have been informed, instead of consulted, by the government and in that sense
there was only one-way communication. For the Real Estate Developers Association and
the People's Panel on West Kowloon, however, some two-way communication was
observed and they were able to exert some degree of influence on the government,
achieving for example a move away from the single-developer approach. Perhaps the
rung of placation (a rung within tokenism) would best describe this aspect.
Both proponents and the government tried to secure public accountability in the
post-IFP period in that the former have consulted within the sector when they were
preparing their bids and have been responsive to some of the concerns of key
stakeholders. Meanwhile, the government has conducted another round of public
consultation with four discussion forums, an official platform for exchanging views,
being organized particularly for the arts and cultural groups, and also for other pressure
groups (professional groups). However, with the uncertain involvement of such groups in
the project during the period under examination, together with the fact that the concerns
of both groups have not been well addressed or even not addressed at all, their
participation is regarded as non-participation or tokenism in accordance with Arnstein's
framework.
Moreover, as concluded in Section 7.4.3, the Legislative Council was found in the
post-IFP period under Tung's leadership to have only limited participation as the
government was informing, instead of actually involving the Council in formulating the
project. More importantly, the institutional role of the Council was further reduced by the
government when it categorized the WKCD as 'facilities to be used by the public' so that

156
it could argue that no approval by the Legislative Council was required to proceed with
the project. Since then, the Council has been actively trying to assert its right to hold the
government accountable by scrutinizing the project and by passing motions and raising
questions. Obviously, these put pressure on the relevant authorities and, in response to the
urgings of the Council and the public outcry, two major concessions were made -
extending the deadline for the IFP exercise and launching a public consultation exercise
after the screening of the bids. Through the launching of the Legislative Council's
meetings to discuss matters relating to the WKCD and its establishment of a
Subcommittee to oversee the project, more two-way communication was fostered.
However, the level of the Legislative Council's participation was barely beyond the stage
of placation as the government had still the final say in the development of the WKCD
whilst the views of the Council were seen by the government as not binding and as advice
only.
In the post-IFP period, the press played a major role in enhancing the public
awareness of the project. There are numerous reports on the updated development of the
WKCD. Also, different stakeholders, including the arts and cultural sector, pressure
groups and even legislators have actively expressed their views and even questioned or
criticized the government through the media. To a large extent, the media can be regarded
as the major platform for the exchange of public views. Without a doubt, public
awareness was enhanced by the media and constant media attention forced government to
reveal more about its plans and decisions.
Although, under the press of the Legislative Council and the public, the government
made two major concessions so as to enhance the level of public participation in the
project, the level achieved is still in the category of tokenism. This is because despite an
increase in some two-way communication, there has been no real power redistribution
achieved through negotiation between the authority and the public or its representatives -
the Legislative Council. From this perspective, although the public has questioned the
general direction of the project and demanded for explanation through different channels,
including the Legislative Council and the media, public accountability was not well
secured so that, other than pressurizing the power holders, the public can not 'ensure that
the PPP project is on the right track' owing to their lack of an empowered institutional or
structural role.

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7.8 Summary
This chapter has studied the accountability achieved in the post-IFP period under
Tung's leadership through examining roles and concerns of different groups, including
key stakeholders and the proponents and the government's approach in handling the
project and integrating different views in the community. It is concluded that during this
period of time, contractual, managerial and public accountability could not be regarded as
well secured.
As previously mentioned, the resignation of the former Chief Executive, Mr. Tung
Chee-wah, on March 7, 2005, marks a turning point of the project in that the government
has since changed its stand on the project. Accountability secured after March 7, 2005
will now be discussed in the next chapter.

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 Chapter 8
Accountability Secured in Tsang's Era

8.1 Introduction
In Chapter 7, accountability secured in the post-IFP period under Tung's leadership
was studied. Since the resignation of Tung in March 2005, two major changes have been
made on the WKCD - the introduction of the additional parameters and conditions in
October 2005 and the subsequent decision to 'repackage' the project. This chapter
investigates the accountability secured in these two policy changes and tries to explain the
changes by using the amended version of Sabatier's Advocacy Coalition Framework.

8.2 Development of the West Kowloon Cultural District

On the resignation of Tung on March 7, 2005, Donald Tsang, the former Chief
Secretary for Administration who had chaired Steering Committee for Development of the
West Kowloon Cultural District, was appointed as the acting Chief Executive. In June
2003, he formally succeeded Tung through winning the by-election (The Standard, Jun 17,
2005). Rafael Hui was then appointed as the Chief Secretary for Administration on
Tsang's recommendation and since then has chaired the Steering Committee. The above
changes in key personnel at the decision-making level thus took place at the late stage of
the public consultation exercise which ended in June 2005.
In July 2005, the Subcommittee on the West Kowloon Cultural District Development
of the Legislative Council submitted its first report regarding the deficiencies found in
planning the cultural district. As the public consultation period was just over at that time,
other than reiterating its stand and appreciates the efforts of the Legislative Council, the
government did not response positively to the recommendations listed in the report (see
Appendix 6 for details of the recommendations) (Information Services Department, Jul 6,
2005). With the personnel changes at the highest level of decision-making of the WKCD,
press reports started to appear stating that concessions, for instance, abolishing on the
single-developer approach and establishing a statutory body to oversee the development,
would be made so as to meet public aspirations.
At the special House Committee of the Legislative Council meeting, held on October
7,2005, the Chief Secretary for Administration, Rafael Hui, briefed the legislators on the
findings of the public consultation report and the amended policy direction of the
development. In response to public opinion, additional development parameters and

159
contract conditions were introduced (see Appendix 7). These included, for instance,
maximizing the plot ratio at 1.81, capping the residential development at no more than
20% of the total gross floor area, requiring at least 50% of the commercial and residential
gross floor area to be carved out for open bidding and establishing a $30 billion trust fund
to ensure that there are sufficient funds for the sustainable operation of the WKCD
(Information Services Department, Oct 7, 2005). As these changes were regarded only as
amendments to the September 2003 IFP, the project remained open to the three shortlisted
proponents alone. Proponents were given nearly four months to revise their proposals so
as to meet these additional parameters and conditions. If two of them decided to drop out
by the end of January 2006 (the deadline for responses), then the project would have to
start over again.
In the mean time, proponents and different stakeholders opined on the project and
requested the government to clarify some issues. In early January 2006, the Subcommittee
on the West Kowloon Cultural District Development published its second report studying
'primarily the mode of planning, implementing, management and financing for WKCD
with reference to overseas projects of a comparable scale' (Subcommittee on West
Kowloon Cultural District Development, Legislative Council, 2006: 5). In this report, the
Legislative Council recommended that instead of adopting a PPP approach, the
government should separate the cultural and non-cultural components and fund the
cultural facilities through land sales. Core cultural facilities would then be constructed,
operated and overseen by a statutory body (Subcommittee on West Kowloon Cultural
District Development, Legislative Council, 2006) (see Appendix 8 for other
recommendations). The government, however, did share this view as it would have to bear
all financial risks with the adoption of this 'outdated and unfeasible' mode of development
(South China Morning Post, Jan 7, 2006). Additionally, the advantages that could be
gained by adopting a PPP approach would not be achieved. The government further
reiterated that 'the new development parameters and conditions proposed in October last
year had, in substance, responded to the concerns of the public' (Information Services
Department, Jan 6, 2006).
Although all proponents had declared their interest in proceeding with the project as
amended by the additional parameters and conditions in late January 2006, they raised
several major questions towards the additional requirements for clarification (Ta Kung Pao,
Jan 28, 2006). Issues included 'arrangements for the carving out of commercial and
residential portions, use of sale proceeds from the carved-out portions, contributions

160
towards the $30 billion fund, etc' (Information Services Department, Jan 27,2006).
After the Phase II Report was published in early January, the Legislative Council
demanded the Chief Secretary for Administration to attend its meeting and to discuss the
various issues raised. However, the administration refused, with Rafael Hui stating that he
'does not see the need for him or the administration to meet with the subcommittee at this
stage' (South China Morning Post, Jan 28, 2006). The strong stand taken by the
government reinforced the conflict and weak accountability between the executive and
legislature. Hence, the chairman of the subcommittee intended to hold the Chief Secretary
for Administration accountable, by forcing him to attend the meeting through using the
Legislative Council (Powers and Privileges) Ordinance5o (South China Morning Post, Jan
28,2006).
In early February, Rafael Hui informed the Subcommittee that he would attend a
meeting after consulting the Executive Council on what the next steps in developing the
WKCD should be. On February 21, 2006, Mr. Hui attended the WKCD Subcommittee
meeting and the government announced that the project would be put 'on hold' as the
bidders had indicated that they would not stay in the race. The proj ect would start over
again and hence consultation committees were established. It is worth noting that although
the Legislative Council are not of the view that PPP is the appropriate means in
developing the WKCD, the government insisted that PPP would still be the preferred
strategy (Hui, Feb 21, 2006a). The details and accountability related activities and
relationships entailed in the developments are discussed further below.

8.3 Policy Change: Revised Proposal in October 2005

In October 2005, the government revised its proposal by introducing an additional set
of development parameters and contract conditions. In this section, the policy changes and
related impacts on accountability experienced are explained with reference to amended
version of the Advocacy Coalition Framework. In examining the policy change, the

50 According to the Legislative Council (Powers and Privileges) Ordinance, the Councilor its standing
committees 'may order any person, including a public officer, to attend before the Councilor a standing
committee to give evidence or to produce any paper, book, record or document. Other committees of the
Council, including the House Committee, a Panel, a Bills Committee or a select committee may also
exercise this power, if they are specifically authorized by a resolution of the Council (Legislative Council
Secretariat, 2006). The summoned person may be prosecuted if he refuses to attend the meetings or provide
relevant information without reasonable excuse. Furthermore, 'any witness who intentionally gives a false
answer or presents a false document commits a criminal offence and may be prosecuted' (Lau and Ho, 2001).
Although the Ordinance is a powerful tool that enhances both the investigation power of the Legislative
Council against maladministration or other public issues and answerability of government officials, the
Council lacks institutional sanctioning power to punish the officials with malperformance.

161
following processes are analyzed:
1. Interaction of competing advocacy coalitions within a policy subsystem;
2. Impact of the stable parameters on constraints and resources of subsystem actors;
3. External Changes towards the subsystem.

8.3.1 Interaction of competing advocacy coalitions within a policy subsystem

In the development of the WKCD, several advocacy coalitions were formed. With the
reference to the revised Framework as proposed in 3.5.3, there are two advocacy coalitions:
adherent and antagonist. In each coalition, several policy memes such as political parties,
different pressure groups, arts and cultural groups and concerned individuals are included.
For adherents, they share a particular belief that WKCD is beneficial to Hong Kong and
should be implemented as soon as possible. Whilst for the antagonists, they strongly urge
the authority to slow the project down. It should be noted that although members of a
single advocacy coalition all share some common beliefs, they are fundamentally different
from each others in term of their nature, organizational structure and strategies. Hence,
competition may also occur within a coalition. For instance, the Chinese Artists
Association of Hong Kong is in the supporting camp as it urges the government for the
early implementation ofWKCD. It is worth noting, however, that its hidden objective is to
strive for a permanent performance venue for itself in the WKCD. The industry of Chinese
Opera and Drama also has an immediate need of a permanent performance venue as the
contract of the Sunbeam Theatre can only be renewed for four years and will soon be
expired (Ta Kung Pao, Oct 8, 2005; Sing Tao Daily, May 6, 2006). Bruce Lee followers,
again, have urged the government and the proponents actively to construct and fund a
permanent exhibition hall for Lee (South China Morning Post, Dec 2, 2004). Similarly,
arts and cultural groups like Hong Kong Sinfonietta and Hong Kong Ballet obviously
want to have a permanent 'home,Sl. Hence, potential competition between these groups
results.
For the period between March and October 2005, the two coalitions became
relatively stable after being fluid and amorphous at the early stage. Clearly, members of
the opposition camp had raised their concerns loudly in the pUblic. The Legislative
Council, to a great extent, should be regarded as a member of the antagonist group (see

51 'Home' means having a relatively permanent rehearsal and performance venue. Hong Kong Sinfonietta
and Hong Kong Ballet want to have a home and hence became the strategic partner of Dynamic Star
International as the latter agreed to provide them a home once it wins the bid.

162
7.4.3 for details). The Phase I Report of its Subcommittee was critical towards the
government's approach and strongly recommended that the government should abandon
the single-package; establish an authority to oversee the project etc. These views are in
line with the urgings of the antagonists. Although its powers to enforce accountability over
the government are weak, ability of the Legislative Council to pressurize the government
should not be overlooked. Other than examples listed in Section 7.4.3, another issue is
related to the extension of the public consultation period. On 30 November 2004, the
Legislative Council has passed a motion on the public consultation period of the WKCD:
'That this Panel urges the Government to extend the consultation period for the proposals
for the development of the West Kowloon Cultural District from three months to six
months, and to re-consult the public on the West Kowloon Cultural District Project'
(Legislative Council, 2006). Later in mid-March 2005, the government demonstrated
some accountability to the Legislative Council and the public when it announced the
extension of the consultation period 'in response to the request of the Legislative Council
and having reviewed the progress made in the public consultation exercise' (Information
Services Department, Mar 16, 2005). Moreover, other members of this antagonist camp,
for instance, People's Panel on West Kowloon and the Real Estate Developers Association
of Hong Kong, have also expressed their disappointments and have criticized the
government loudly in public (see Chapter 7 for details). The strong press of the Legislative
Council and other parties in the antagonist group has definitely exerted a certain degree of
pressure on the government, however, neither the Legislative Council nor the public have
the powers and authority to enforce their requirements in government and the extent to
which they are able to hold government accountable to them in this matter is determined
by he government itself.
Although the supporting and antagonist coalitions are competing theoretically, the
voice of the supporting camp is not as apparent as its counterpart. Supporters only
gathered together to voice out their concerns loudly in the meeting of the Legislative
Council at early 2005. During that time, several arts and cultural groups attended the
meeting in person so as to send their overwhelming support to the project. These groups
include the Hong Kong Chinese Orchestra, Hong Kong Repertory Theatre, Hong Kong
Dance Company, Spring-Time Productions, the Hong Kong Academy for Performing Arts
and the Hong Kong Arts Administrators Association (South China Morning Post, Feb 1,
2005). Clifton Ko Chi-Sun, a producer of drama and Chief Executive of Spring-Time
Productions, is the 'spokesman' of the adherents as other supporters seldom speak up in

163
the public since the beginning of the public consultation period. Interaction between
coalitions is not rare. However, as most supporters seldom speak up in public, views from
opposition camp have dominated discussion in the community. Meanwhile the supporting
camp usually reasserts that WKCD is a golden opportunity that should not be missed and
claims that the debate has been 'too politicized' 52 (South China Morning Post, Feb 1,
2005). In response to the critics that arts and cultural activities would become too
commercialized with private sector involvement in managing core arts and cultural
facilities in WKCD, Clifton Ko states that
'It may not necessarily be a bad thing to fund arts and cultural activities
through money generated from property development once it can achieve the
objective ... whether it is a white cat or black cat, it is a good cat as long as it
can catch mouse. Property developers have been stigmatized as those who
cannot foster the development of arts and culture' (Sing Tao Daily, Nov 13,
2004).
Other interactions between the coalitions are discussed in Section 704.
It can be noted that the government has its own position in the project and is a
member of the supporting camp in Tung's era. It is evident that the government has tried
to convince the public that the project would not be 'a property project in disguise' (see
Section 704 for details). Hence, within the policy subsystem under Tung's leadership,
there are no policy brokers owing to the strong stands taken by the government and the
Legislative Council.

8.3.2 Impact of the stable parameters on constraints and resources of subsystem

actors

In the Advocacy Coalition Framework, attributes of the problem area; basic

distribution of natural resources; fundamental socio-cultural values and social structure;
and basic constitutional structure are regarded as the relatively stable parameters (see
Figure 304). These affect the partnership building process indirectly through posmg
constraints and limitations on the resources of subsystem actors.
In developing WKCD, the political system of the HKSARG, m particular the
executive-led government structure, has constrained the subsystem actors. The political
system in Hong Kong has been regarded as executive-led since the colonial days. The
Basic Law, the mini-constitution of Hong Kong, has preserved this and hence
constitutionally, the role of the Legislative Council has been limited by an unequal

52 According to the interviews conducted and documentary analysis, most supporting arts and cultural
groups and a interviewed proponent share this view.

164
distribution of power. Major features are summarized by Lau (2000) and Li (2001):
* The SAR Chief Executive and the bureau secretaries control most of the
policy-making power. Most government policies do not need the approval of the
legislature unless they entail changing of laws and appropriations;
* The Chief Executive has a superior constitutional status to other branches of the
government. The Chief Executive is elected by an Election Committee, thus elected
independent ofthe Legislative Council;
* The executive holds the initiative to legislations. Government bills have a priority to
get onto the Legislative Council agenda (Article 72(2)). All bills passed by the
Legislative Council need the signature and promulgation of the Chief Executive to
become effective laws;
* The Chief Executive has a wide range of appointment powers. He can appoint and
remove major government officials and almost all other public office holders.
Approval from the legislature or the courts is not required;
* If the Chief Executive considers a bill passed by the Legislative Council 'not
compatible with the overall interests of Hong Kong, he can return it to the Legislative
Council for reconsideration. The Chief Executive can dissolve the Legislative Council
ifhe does not want to sign a bill passed the second time by the Legislative Council, or
if the Legislative Council refuses to pass the annual budget or any important
government bills (Article 50) (as cited in Ma, 2002).

Other than that, Article 74 further restricts legislators from introducing bills that 'relate to
public expenditure or political structure or operation of the government'. Moreover,
'written consent of the Chief Executive shall be required before bills relating to
government policies are introduced'. Hence, checks and balances are, to a certain extent,
non-existing in accordance with the constitution.
The executive-led political system has also marginalized party politics. In colonial
Hong Kong, the British government did not tolerate any political activities and hence
party politics was non-existent until 1970s. From the 1970s, there was a rise in the
numbers of 'pressure groups' that sought to influence the government on various social
policies. The emergence of political parties is accompanied by the introduction of the
direct election of the Legislative Council in 1991 (Cheung, 2002). Although direct
elections have provided parties living space, party politics is relatively impossible under
the executive-led system. In accordance with Article 4 of the Procedure for Selecting the
Candidates for the First Chief Executive for the Hong Kong Special Administration
Region of the People's Republic of China and the Chief Executive Election Ordinance, it
is clear that the Chief Executive must not have any party affiliation (Cheung, 2002).
Hence, the role played by political parties in Hong Kong is not comparable to their
counterparts in democratic countries. This is another constraint that is posed by the
relatively stable parameters.

165
8.3.3 External Changes towards the subsystem
In the Advocacy Coalition Framework, external events like changes in
socioeconomic conditions, changes in public opinion, changes in systemic governing
coalition and policy decisions and impacts from other subsystems also influence to the
partnership building process. Obviously, there was little change in the socioeconomic
conditions and public opinion before the revised proposal took place. However, it is worth
noting that the Legislative Council has 'echoed' the urgings of the opposition camp
through publishing the Phase I Report of the Subcommittee on West Kowloon Cultural
District Development. Although the Legislative Council is not as influential as its
counterpart in other democratic countries, it has definitely exerted some pressure on the
executive branch (see 7.4.3).
As previously mentioned, the govermng coalition has undergone major changes.
When the first Chief Executive, Tung, resigned in March 2005, Donald Tsang, the former
Chief Secretary for Administration who chaired Steering Committee for Development of
the West Kowloon Cultural District, became his successor. Under the recommendation of
Tsang, the Chinese Central Government appointed Rafael Hui as the new Chief Secretary
for Administration. Hui then became the person-in-charge of the project. The governing
coalition, however, has undergone changes not only in the personnel level, but also in the
style of governance. Under Tung's leadership, HKSARG had long been regarded as a
weak government. Several scholars who observe Hong Kong Politics share this view.
Commenting on the post-handover political system, Scott (2000) notes that
[T]he relationships between the executive, the legislature and the
bureaucracy today are uncoordinated, poorly developed, fractious and
sometimes dysfunctionaL.. [W]ith a system which is neither parliamentary
fish nor presidential fowl, the executive, the bureaucracy and the legislature
(which is divided within itself) each pursue their own agendas, punctuated by
occasional skirmishes on the boundaries of their domains and by
subterranean campaigns to extend their jurisdictions (p. 29).

Moreover, Cheung (2002) shares this view and further states that it IS a system of
'disabled' governance.
[T]he present SAR government is constrained in power in terms of getting
things done and policies made ... What is worse is that ... none of the major
institutional actors feels that it is performing... and what the final picture
constitutes in real terms is a political system which is essentially "disabled" -
one where there is no winner and everybody is a loser (p.S7).

Loh and Cullen (2005) likewise view the problem of Tung's ineffective leadership as

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leading to the weak government.
The Chief Executive's inability to articulate coherent, consistent and
convincing policies and his failure to build the necessary consensus both
within the civil service and with the public contributed to the problems of his
First Term of Office (p. 156).

Although the Principal Officials Accountability System53 was introduced in 2002,

Tung's government remained weak. The July 1 protest in 2003 posed another crisis of
governance. More than half a million people demonstrated so as to urge the government
not to rush into the new national security legislation in accordance with Article 23 of the
Basic Law. The non-conforming action of the James Tien, chairman of the Liberal Party,
betrayed the government at the last minute and further weakened governance.
Therefore, since his election as Chief Executive, Tsang has committed to 'rebuild and
lead a strong government' (South China Morning Post, Jun 5, 2005). Moreover, he has
pledged to work closely with the Legislative Council and listen more to the views of the
public (South China Morning Post, Jul 8, 2005). The personnel change at the highest
decision-making level and the public commitments of Tsang have definitely posed some
constraints on other subsystem actors, in particular, Hui, the new person-in-charge of the
project (see below for explanation).
Other external events identified by Sabatier as being of critical importance are policy
decisions and impacts from other subsystems. As previously mentioned, some PSI projects
have been accused of 'transferring benefits to the business'. Suspicious precedents include
Cyberport (a PPP project) and Hunghom Peninsula (a PSI project). Moreover, previous
PPP projects, including Cyberport and Disneyland, have long been criticized as lacking
equity, transparency and accountability (see 5.5). On the other hand, the Legislative
Council has encountered many difficulties in holding the government accountable in these
cases. This may be one of the reasons why the Legislative Council and the public have
been critical of the government and strongly pushed the government to be accountable in
the WKCD project. The former has achieved this through passing motions, setting up a
subcommittee to oversee the project and publishing relevant reports. Whilst for the public,
they have participated actively through organizing several discussion forums to voice out
their views and by proposing some alternatives.

53 Other than appointing non civil servants to in charge of key portfolios, Tung co-opted leaders of
pro-government parties, including Liberal Party and Democratic Alliance for the Betterment and Progress of
Hong Kong, into the Executive Council so as to ensure the smooth passage of government bills and
finance requests in the Legislative Council (Cheung, 2005).

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 Other than previous PSI projects, it should be noted that the Article 23 controversy
has, to a certain extent, also played a role in the project. In the Article 23 controversy, the
government took a very strong stand and aggressive approach in pushing the unpopular
new security legislation regardless of the public outcry against it. After the protest of half a
million people on July 1, 2003 and the subsequent resignation of the chairman of the
Liberal Party from the Executive Council, the government first postponed the resumption
of a second reading of the bill and withdraw it finally in September 2003 (Cheung, 2005).
This controversy has definitely harmed the legitimacy of the government and the mutual
trust between government and the people and was regarded as a crisis of governance. As
the new governing coalition is committed to rebuilding a strong government under the
pre-requisite of 'better communication with the public and the Legislative Council', the
Article 23 controversy sheds light on the WKCD PPP in that both projects are
controversial in the community. More simply, the Article 23 controversy reminded the
government that the WKCD must be handled with care and skillfully as the dissension it
causes can potentially pose a fresh challenge to the governance of the new governing
coalition.

8.3.4 Advocacy Coalition Framework Explanation on Revised Proposal in October

2005

The government announced a revised proposal in October 2005, stressing its public
accountability by reiterating that the main reason accounting for the policy change was to
meet public aspirations. In this section, the decision-making process of the revised
proposal is analyzed using the amended version of the Advocacy Coalition Framework.
The relatively stable parameters and external events have posed several constraints
on the subsystem actors in the WKCD, who include different stakeholders (such as arts
and cultural groups, pressure groups and the Legislative Council), the community, the
government and proponents. With the new governing coalition which aims to rebuild a
stronger, more accountable government by working closely with the legislature and by
listening more to the public, and given the precedent, i.e. Article 23 Controversy, which
reminds the government that if the controversial project is ill-handled, it could be a crisis
of governance, Hui is now acting as the policy broker (in accordance with the framework)
and aims to minimize the conflict by generating some reasonable compromises. It should
be noted that under Tung's leadership, Tsang (the then Chief Secretary for Administration
who chaired the Steering Committee for the WKCD Development) took a strong stand,

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especially on defending issues relating to the mandatory requirements like the
single-developer approach and the canopy as these were regarded as the preset framework
of the WKCD (see Chapter 7 for details). Hence, Tsang had not really taken the role of a
policy broker as there was no room for negotiation in the preset framework even though
the government made some concessions - conducting a public consultation exercise after
screening the proposals against the mandatory requirements as listed in the IFP.
From the previous analysis, it is evident that there are two coalitions in the subsystem.
One strongly strives for early implementation of the project whilst the other one urges the
government on several frontiers, including the abandonment of the single-developer
approach, to scrap the canopy, conduct relevant researches and studies, establish an
overseeing statutory body, etc. The public, in general, shares the views of the latter. As the
policy broker, Hui amended the policy direction of the development by introducing
additional development parameters and contract conditions so as to 'generate' support
from the latter and the public. The additional set of parameters and conditions is a
concession by nature. For example, in the revised proposal, the single-developer approach
is abolished in that at least 50% of the commercial and residential gross floor area will be
carved out for open bidding. However, this is later strongly criticized as it still allows a
single developer to dominate the WKCD. Apparently, withdrawing the IFP and breaking
the project into multiple pieces for open bidding may not be a feasible choice for the
policy broker as this would largely harm the interests of the screened-in proponents and
this may damage the confidence of business in PPP projects and diminish further the
previously long-established trust between the business and the government. Although
HKSARG has been committed to adopt PPPs wherever feasible, Hong Kong is still at the
very early stage of adopting this strategy. Hence, it is important to uphold the confidence
of the business community on the strategy. This might be a reason accounting for the
unwillingness of the government to abolishing the single-developer approach in full.
Moreover, technical concerns that may arise have been stressed by Tsang as reasons for
not adopting a multiple-package approach and thus is also a matter that Hui had to
consider (see 7.6.1 for details). Facing these constraints and the public outcry for the
abandonment of the approach, this was perhaps the most reasonable compromise that Hui
could make so as to speed up the set-up process and then lead to the early implementation
of the project.
However, on some issues, the government is not compromising its principle. Also,
the parameters and conditions are tailored in accordance with the results of the public

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consultation exerCIse without harming much the interests or major concerns of the
supporting coalition, in particular, the government itself. For instance, according to the
findings of public consultation exercise, there is no overwhelming positive or negative
view on the canopy. Hence, the canopy is kept in the revised proposal. Since the
announcement of the mandatory requirements of the WKCD, it had appeared as if the
government was the only supporter for the canopy by claiming that it could be a new
landmark of Hong Kong. Whilst for the community and key stakeholders, some have
objected to it as the maintenance costs would be very high and may not be technically
feasible. The rest do not oppose the construction of the canopy, but not often do strongly
support it either (see Appendix 3). It should be noted public sentiments may also be
closely related to some constraints posed by the development itself. The canopy has been
regarded as a mandatory requirement since the launch of the IFP. More importantly, the
government has screened out two proposals as they do not comply with the mandatory
requirements. One of them was screened out previously because no canopy was included
in the proposal. Hence, if the government drops the canopy in the revised proposal, this
could not be regarded as the continuation of the previous IFP exercise. Instead, in order to
be fair, the government might have to conduct another round of IFP. As this would
probably cause further delays, it is possible that the government refused to compromise in
this area so as to ensure the early implementation of the project. From this perspective,
although an additional set of parameters and conditions are introduced, the government
may not necessarily be compromising its principles.

8.4 Revised Proposal: Accountable to the Public? Stakeholders' Views

From the government's point of view, it has generated some reasonable compromises
so as to minimize the conflict between the coalitions in order to gain for the early
implementation of the project. However, the public and different stakeholders may not
share its views. In this section, stakeholders' views on the extent to which they think the
revised proposal is accountable to the public or responsive to their concerns, are
summarized and analyzed.

8.4.1 Arts and Cultural Groups

In the previous chapters, arts and cultural groups were simply classified as being
either 'supportive' or 'antagonist'. For the supporting camp, it presses for early
implementation. The opposition camp of the arts and cultural sector, however, strongly

170
urges the government to formulate a clear cultural policy and to conduct relevant
researches. Also, they question the rationale for adopting a supply-led, instead of
demand-oriented approach in the development of the WKCD. Other than these
fundamental questions, arts and cultural groups have also doubted whether the project is in
reality a property project in disguise and they have urged the government to establish a
statutory body to oversee the project. With the establishment of a statutory body,
representatives of the sector may be appointed and thus the sector would have a say in
steering and maintaining the development. From their viewpoint, this mechanism allows
them to check and balance the power of the private sector and ensure that the WKCD will
not be too commercialized. Moreover, this is a means to secure accountability as their
views can be fully reflected and taken into account in the decision-making process on the
WKCD 54 •
Generally speaking, the concerns of the two camps have remained unchanged since
the pre-IFP period. Responsiveness of the government can be simplified into two main
types. On fundamental issues like relations between cultural policy and WKCD; and
supply-led and demand-oriented approach, the government has not taken any action and
appears to have been unresponsive to these issues. Whilst for all other issues, the
government has suggested it is more open-minded by claiming that public views would be
incorporated in the decision-making process as the government had not yet formulated its
view on the issues (Tsang, Nov 26, 2003).
Although the government claims that the additional parameters and conditions were
introduced so as to be responsive to the public, the views of the sector remain mixed. The
supporting camp regarded this as kind of concession that the government made in
response to the public outcry.
'To a certain extent, the revised proposal is responsive to the public ... There
are mixed views in the community. Like me, some people urge for early
implementation. But at the same time, some people want to slow down so as
to have more time to 'think' before 'act' ... obviously, the government is
being strongly criticized and now under pressure ... Instead of shelving the
project, the government is now trying to strike a balance and making
everyone happy ... Alright, you said developers will gain lots of profit
through selling flats. So right now, developers have to give up a large portion
of land ... Well, some people claims that developers cannot operate arts and
cultural facilities well. Alright, we now established a body to oversee the
project.' (Interviewee, Arts and Cultural Group)

54From their viewpoints, the statutory body should be established as soon as possible and 'replace' the
government to steer the development of the WKCD.

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 Miss Chan Kim Sing, chairman of The Chinese Artists Association of Hong
Kong, states that she is not familiar with the technical problems like
single-developer approach and the canopy plan and hence it is difficult for
her to comment on these issues. However, she reiterates that the WKCD
should be build as soon as possible. Contract of the Sunbeam Theatre can
only be renewed for four years and will soon be expired. The industry of
Chinese Opera and Drama need a permanent performance venue (Ta Kung
Pao, Oct 8, 2005).

In the opinion of Art Development Council Chairman Ma Fung-kwok, the

government has made big concessions in the wake of public opinion. 'It is a
good thing to separate the roles of the (winning) developer as a builder and
an operator. It has also addressed public concern if a property developer
knows how to operate a cultural project. .. It is also a good thing to adhere to
the 1.81 plot ratio so that more space will be allotted for cultural facilities,'
said Ma, who is also convener of New Century Forum (China Daily Hong
Kong Edition, Oct 10, 2005).

Although it seems that the revised was aimed at appeasing the public anger, and especially
that of the arts and cultural groups, the opposition camp has not been satisfied with the
'response' as fundamental issues are left untouched.
'What we are urging is a cultural policy and an exercise to review what we
need ... We can only decide the content of the core arts and cultural facilities
based on the findings of the exercise ... The revised proposaL .. well, that is
not a matter of being responsive or not. What we are urging are things that
the government should do. Well, as there is a tendering procedure, of course,
tendering should be opened to everyone, both large and small. The canopy ...
the government has left the canopy untouched and insisted that we are going
to build it anyway, even half of the respondents of the public consultation
exercise object it. .. why not the government go and consult the public again
on the issue before coming to the conclusion? ... For the statutory body,
obviously, even if we do not strongly push for that, the government should
establish one to oversee such a large scale project.' (Interviewee, Arts and
Cultural Group)

'The issues facing this Administration regarding WKCD are not only about
which developer should be awarded the contract, what percentage of land,
plot ratio, administrative authority, financing etc., but what kind of a society
do we envision for the future. Of what significance is culture and arts to
Hong Kong? How can we build and sustain culture? How do we transform a
society which has been traditionally financial-based into a multi-faceted
society? What changes in our consciousness and value system does that
require? Do we need to change the way we teach creativity, artistic
expression and artistic endeavour to out young? Do we need to strengthen
our commitment to arts education in schools so as to build up wider
participation and nurture artistic talent for the future (bottom-up), or do we
construct great facilities in hopes of encouraging the arts through them
(top-down)? Are we prepared to dig into the public purse to finance the arts
or are we trying to forge a partnership between the private sector and the arts?

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 How do we encourage more public support and participation from the private
sector?' (The Zonta Club of Hong Kong, 2005)

'What the government had revised [the introduction of additional parameters

and conditions] is on details only. And the revision aims to redistribute the
benefits among developers. Well, I am not sure whether it really "aims at",
but at least, this is what I perceived. The government did not do anything on
cultural issues. But of course, right now, we will have a statutory body to
oversee the project. But that's the normal practice. Whenever the government
fails to solve a particular problem, it will set up a committee or body ... So,
the government did not solve the problem. What it tries to be responsive ... is
to the developers ... To a certain extent, you may claim that the government is
being responsive to our needs. But there is nothing changes in the mandatory
requirements, so the only changes lie on details.' (Interviewee, Arts and
Cultural Group)

Other than claiming that the government did not reVIse the fundamental issues, an
interviewee of the opposition camp believed that there is no difference between the
original plan and the revised proposal.
'The revised proposal is the same as the original IFP, there is no differences
at all ... I don't think it is responsive to the public ... Originally, we are asked
to choose among combo A, Band C. Now, it is still combo A, B and C.
Although content of A, B and C were changed a little bit, you are still being
forced to eat and choose among A, B, C.' (Interviewee, Arts and Cultural
Group)

8.4.2 Other Pressure Groups

Unlike the arts and cultural sector, each pressure group has its own agenda with
diversified interest. Other than commenting on the overall development of the WKCD,
they actively urged the government in accordance with their own interest. Commenting on
the revised proposal, most pressure groups were not satisfied with the additional
parameters and conditions as, in their view, the project remained a property project in
disguise. This is because they are not convinced by the abandonment of the
single-developer approach and the lack of cultural policy. They consider the revised
proposal as a 'mini-single tender approach' in that the site for single tender is smaller than
the original plan.
'The revised package does not ease the fear of the single tender approach,
which is still there, and the government will still choose one out of the three
short-listed bidders ... As the operating authority is not yet in existence, it
will be for the winning property developer to build whatever cultural
facilities [are needed] ... It will be a big problem if the operating authority has
to bear the brunt of keeping some unsuitable facilities that were built before it
was set up ... It gives the chance for more property developers and they will

173
 shut their mouths,' said Vincent Ng, Vice President of the Hong Kong
Institute of Architects (China Daily Hong Kong Edition, Oct 8, 2005; South
China Morning post, Oct 8, 2005a). He further states that although it seems
that the government has abandoned the single-developer approach, in reality,
it is a single package for two-third of the site. More importantly, the winning
developer would not take any risk once $30 billion is paid (Hong Kong
Economic Times, Oct 8, 2005).

President of the Hong Kong Institute of Architects reiterates that according to

the survey done by the Institute, more than 60% of their members against the
construction of the canopy. He urges the government to listen to their
professional opinion (Apple Daily, Oct 8, 2005a).

On the other hand, keeping the canopy and the late establishment of the statutory body to
oversee the project disappoints the pressure groups, too. More importantly, some feel that
their professional advice has not been taken into account when the government was
formulating the revised proposal.
'I don't know why the government provides a chance for the private sector to
quit from the operating the core arts and cultural facilities for 30 years ...
That's the non-profit making component in the project! Moreover, I don't
think the statutory body can form a partnership with the private sector to
achieve what I expected the WKCD PPP can achieve at first [the private
sector would be responsible for operating the facilities for 30 years].'
(Interviewee, Pressure Group)

The new proposals add nothing to the public's expressed wish that the
Administration should have well defined cultural policy objectives and a
coherent cultural policy in spite of the Government's acceptance that the
public consultation pointed out the need for further public discussion on these
issues ... The new proposal goes some way to addressing public concerns in
this respect although the "hybrid" nature of the proposal could lead to
unlooked for difficulties. The devil will be in the detail (Professional
Property Services Limited, 2005).

The People's Panel on West Kowloon expressed bitter disappointment

towards yesterday'S announcement for four reasons. The project, in their view,
remains a real estate project. Besides, the single tender approach and the
canopy are still there, and cultural policy is still lacking. 'In the absence of a
cultural policy, any cultural project is no more than a skeleton that has no
soul. .. An operating authority should be set up now to discuss the cultural
policy and the content of the project with the government. Otherwise, it is
nothing more than a housekeeper and has to bear the brunt of running a white
elephant in future,' said Ada Wong, the convener of the People's Panel on
West Kowloon (China Daily Hong Kong Edition, Oct 8, 2005).

Albert Lai Kwong-tak, chairman of the Hong Kong People's Council for
Sustainable Development, said the planned statutory body would face a risky
situation because it had not played a role in designing the West Kowloon

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 facilities. The statutory body is just there to oversee the maintenance of
cultural facilities, Mr Lai said. It seems that the whole West Kowloon project
is like a human with no brain. There is no one setting a culture policy for it.
There is a vacuum in it (South China Morning Post, Oct 8, 2005a).

Some pressure groups share the views that the revised package needs second thoughts in
that the revised package may pose more challenges to the parties involved and the
government should clarify or make public some fresh issues that have arisen from the
revised proposal.
T. T. Cheung, President of the Hong Kong Institute of Surveyors, guesses that
the winning developer would still generate $10 billion profit in property sale.
He is disappointed by the decision of allowing the developers to step out the
operation of the core arts and cultural facilities without announcing the
development mode for the facilities (Apple Daily, Oct 8, 2005b).

Greg Wong, President of the Hong Kong Institute of Engineers, worries that
the abandon of the single-developer approach might raise fresh questions on
canopy. This is because the land may be owned by several property
developers, or even several thousands flat owners. Fresh problems like who
have to pay the maintenance fee and the liability may arise (Hong Kong
Economic Times, Oct 8, 2005).

8.4.3 Legislative Council

As a key member of the opposition camp, the Legislative Council has strongly urged
the government to rethink the development approach of the WKCD (see key findings and
recommendations of the Phase I Report of the Subcommittee on West Kowloon Cultural
District Development of the Legislative Council in Appendix 6). Although the revised
proposal aims to meet public aspirations, apparently, the Legislative Council is not
satisfied with the compromise that has been proposed by Hui, the policy broker.
Legislators criticize and doubt the feasibility of the revised proposal on several fronts.
First, they doubt whether the $30 billion could able to finance the operation of the core
arts and cultural facilities and the maintenance cost of the canopy and the Automated
People Mover (a train that links up various parts of the WKCD) for 30 years. Second,
although the single-developer approach is 'dropped', it is still a single tender in disguise as
a single developer would dominate the project. That developer would also have a big say
in which pieces of land would be carved out for open bidding and when the land would be
tendered.
'Did the revised proposal responsive to the Phase I report of the
Subcommittee? Definitely no .... the winner of the tendering process would
have 65% of land. Although 35% of land will be tendered through open

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 bidding, but which part ofthe land would be carved out and when would it be
tendered are decided by the winning developer alone. The winning developer
may keep the best plots, like the waterfront one, for himself. So, what's the
different between this and the single-developer approach? A single developer
dominates the whole project. He has the power to decide the location and the
timing for carving up the plots for open tender.' (Interviewee, Legislator)

'On the WKCD, what concern the Liberal Party most is the single tender
approach. Hence, I'm very happy to hear that the single tender approach has
been abandoned in the revised proposal. But what I want to know more is
that in the paragraph 10 and 11 of the document [that provided by the
government]. It states that the winning developer will be responsible to carve
up the site for land sales. I hope I have misunderstood that. This is because
we suggest the government to carve up part of the site to the winning
developer ... In paragraph 11, it states that the winning developer should take
up the role of coordinator. Do I have to worry that when you award the tender
to the winning developer, the winner will pick the best plot for himself.
Whilst for the land next to Canton Road, will it be carve up after 10 years? ...
Can you state clearly in the document that both the best plots and the less
favorable plots, and the seaside plots will be carved up? And they will all be
developed at the same time? We can't let the winning developer to get all the
best plots. Can you work on this way?' said James Tien, legislator (Special
House Committee, Legislative Council, 2005).

'The Chief Secretary for Administration and the Deputy Secretary for
Housing, Planning & Lands reiterate that they respect the Council. However,
the administration has only come to the Council three months after the Phase
I report of the Subcommittee on West Kowloon Cultural District
Development was published ... I think the government has not worked on any
of the six recommendations as listed in the report. But right now I just have
time to ask him an issue, that is the one related to the abandon of the
single-developer approach. According to what the Chief Secretary for
Administration say today, 65% of the site will be coordinated and constructed
by a single developer. That is, it is not 100%, but two-third of the site will
adopt the single tender approach ... Do you understand why we recommend
the abandon of single tender approach? This is because we want to encourage
competition ... I want to ask the Chief Secretary for Administration, does the
government consider the recommendation that is related to the single
developer approach listed in our report when you are formulating the revised
proposal?' said Alan Leong, legislator (Special House Committee,
Legislative Council, 2005).

Moreover, legislators strongly urged the government to clarify the details of the statutory
body, like when it will operate and who would be involved. Apparently, legislators believe
that the statutory body should be operated as soon as possible so as to ensure the public
voice would be heard by the authority in the planning stage. Furthermore, some legislators
also raise the importance of the driven cultural policy and the relationship between the
policy and the project. Lastly, they are angry towards the 'keeping' of the canopy.

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 'According to the government document given to us [legislators], I found that
"on the issue of the canopy, the result of the public consultation exercise
shows that there is mixed views on the construction of canopy". But it
follows by a sentence "the canopy receives a substantial public support and
hence there is no reason for amending this mandatory requirement". On one
hand, you state that there is no conclusion ... but from the document that the
government sent us, it is obvious that there is a conclusion on the canopy.
Further, that mandatory requirement has not been amended or altered by the
government. . . I know the research report that commissioned by the
government found that 51 % of the respondents support the construction of
the canopy. But according to the comment cards that filled in by people who
went to the exhibition, more than 30,000 people are against the canopy. If
they know that the maintenance cost is shared by the citizens ... that is no
longer be managed and maintained by the proponent. I believe that people
will against the construction of canopy overwhelmingly ... I hope the Chief
Secretary for Administration will not act like the magician, i.e. not to change
the fact', said Yeung Sum, legislator (Special House Committee, Legislative
Council, 2005).

'Actually, [what is suggested by the government] is that the winning

developer will get a large plot. Then carve out some to the other developers.
And finally, the West Kowloon Authority will be held accountable politically.
In case if the maintenance cost of the canopy represents a large proportion of
the expense, that means money spending on arts and cultural will be a small
proportion of the expense. Then people in the West Kowloon Authority will
have to accountable for this politically', said James To, legislator (Special
House Committee, Legislative Council, 2005).

With their concerns and criticisms raised, legislators are not fully satisfied with the
revised proposal. In early October, both Liberal Party and the Democratic Alliance for the
Betterment and Progress of Hong Kong stated that they welcomed and supported the
revised proposal in principle55 (Hong Kong Economic Journal, Oct 8, 2005). Whilst for
the democratic camp, they remained critical. For instance, James To, Democratic Party
legislator, worried that the winning developer would be given too much power in that he is
allocated with the responsibility of carving out and auctioning the plots (South China
Morning Post, Oct 8, 2005b). Moreover, Alan Leong, chairman of the Subcommittee on
West Kowloon Cultural District Development and member of the Article 45 Concern
Group, shares To's views and further asserts that the revised proposal was 'even worse
than the original package' (South China Morning Post, Oct 8, 2005b) as the winning

55 Although both parties support and welcome the revised proposal in principle, they still worry on some
issues. For instance, the Liberal Party believes that it would be inappropriate for the government not to take
the responsibility of auctioning the plots. Whilst the Democratic Alliance for the Betterment and Progress of
Hong Kong worries about the maintenance cost of the canopy and the role of the statutory body (Hong Kong
Economic Journal, Oct 8, 2005).

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developer is not obligated to operate the core arts and cultural facilities for 30 years.
Furthermore, Mr. Hui's decision of not to attend any Subcommittee's meeting on the
Phase II Study disappointed some legislators. Although Michael Suen and Patrick Ho,
Secretary of Housing, Planning and Lands and Home Affairs respectively, attended the
meeting, legislators were dissatisfied with Mr. Hui's decision. The Chairman of the
Subcommittee, Mr. Leong, claimed that the act of ignoring Legislative Council's request
for attendance implied that the general direction of the revised proposal could not be
amended (Sing Pao, Oct 16, 2005). From the above analysis, apparently, democratic
legislators are less satisfied with the revised proposal whilst the pro-government parties
feel that the government has been, somehow, accountable to the public.

8.4.4 Proponents
In response to the revised proposal, all screened-in proponents have reacted
cautiously by stating that they respected the government's decision and would have to
conduct a detailed feasibility study before coming to a conclusion (China Daily Hong
Kong Edition, Oct 8, 2005).
In the view of Lee Shao-kee, chairman of Henderson Development Group
who solely owns one of the shortlisted consortia, the profit margin would be
very low as a result of the reduced plot ratio and new conditions. The
company will have to study the revised package very carefully to find out if
they could manage a breakeven. Yet since the company has already input
financial resources in the preliminary study, they would still invest in the
proj ect as long as this is good for Hong Kong, he added. In a statement,
Dynamic Star International Limited said that they supported the government
proposal in principle, but the company needed to conduct a detailed study on
its content and feasibility. A spokesman for Sunny Development Ltd said
they respected the government's decision and would do their best to fulfill the
plan (China Daily Hong Kong Edition, Oct 8, 2005).

According to the interviews conducted, the two interviewed proponents have

different opinions on the issue. One believed that although the revised proposal seemed to
be accountable to the public, the main objective of proposing the amended framework for
developing the WKCD is to reduce the liability of the government instead of to reach
some reasonable compromises. This is because the new development parameters and
contract conditions are harsh and hence the profit margin would be very low. Hence,
screened-in proponents may not be able to stay in the race as they are still for-profit
enterprises. If this is the case, it provides the government with a legitimate reason for
withdrawing the IFP and replanning the site. He is thus not agreeing that public

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accountability was the main reason accounting for the revised proposal.
The other interviewed proponent reacted more cautiously on the issue. Although he
has convinced that the government was trying to be responsive and accountable to the
public in making such policy change, he admitted that the revised proposal posed a great
challenge to the proponents as profit margins would be very low. From his point of view,
opposition in the community should be viewed as a form of urging for a reallocation of the
recognition and influence of particular interest. The longer the set up stage of the WKCD
takes, the stronger the criticisms are. Therefore, although the revised proposal has posed a
greater challenge to the screened-in proponents, this is still the kind of compromise that
may make for the early implementation of the project.
It is worth noting that both interviewees have implied that the revised proposal may
not be responsive to the market and hence they might not be able to stay in the race owing
to its for-profit nature.

8.5 Concluding Discussion: Accountability Secured in October 2005

In examining the accountability secured in the revised proposal, the dissertation has
examined three key aspects, namely contractual, managerial and public accountability.
Although it seems that public accountability had been partially secured as the revised
proposal was tailored in accordance with some public concerns, it may not be very well
secured in reality. For contractual accountability, it is clear that the revised proposal has
violated the legitimate expectations of the screened-in proponents. Hence, it is not well
secured. With regards to accountability found within the hierarchy, managerial
accountability, Rafael Hui is accountable to the Chief Executive managerially and his
actions did seem to be consistent with what is known of his brief from the Chief
Executive.

8.5.1 Contractual Accountability

Incorporating the PPP obj ectives in the contract and translating the general standards
into more specific and binding legal standards are crucial in contractual accountability.
With the introduction of an additional set of development parameters and contract
conditions, the preliminary contract, IFP, has undergone some degree of amendment. In
the IFP, it is apparent that the proponents were given a relatively large degree of flexibility.
For example, proposals fulfilling mandatory requirements were regarded as qualified bids,
even though they failed to conform to the Government's Baseline. The additional

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parameters and conditions have restricted this flexibility. The proponents were now asked
to accept the new and relatively strict parameters and conditions including: that at least
50% of the commercial and residential gross floor area at the WKCD site would now be
carved out for open bidding; setting the maximum plot ratio at 1.81; capping the
residential development at no more than 20% of the total gross floor area; specifying a
minimum net operating floor area for core arts and cultural facilities of 185,000 square
metres; requiring the successful proponent to pay $30 billion for the establishment of a
trust fund (Information Services Department, Oct 7, 2005). The revised proposal has thus
introduced more clear, specific and binding standards. In Section 7.7.1, the author finds
that contractual accountability is not well secured in the IFP and lists several deficiencies.
The additional parameters and conditions, however, are not responsive to these
deficiencies. From this perspective, although contractual accountability, in terms of
translating general standards into more specific and binding legal standards, was enhanced
by the introduction, it still does not appear to have been well secured.
On the other hand, without a doubt, the introduction of additional parameters and
conditions has harmed contractual accountability. This is because the legitimate
expectation was that the government would choose final partner from among the
screened-in proponents and with reference to the criteria and requirements as listed in the
IFP. Clearly, the revised proposal is not formulated after negotiation with the screened-in
proponents and the new terms have violated this legitimate expectation. Hence, the
government could be accused of breaking the implicit 'contractual relationship' and has
thus not been fully contractually accountable to the screened-in proponents.
In order to 'compensate' the proponents, the government kept its requirement for the
canopy. As stated in Section 8.3.4, although there has a public outcry against the canopy, it
was kept in the revised proposal as it had been regarded as a mandatory requirement in the
IFP. Other than the reasons stated in Section 8.3.4, contractual accountability might also
be a reason accounting for this decision as one of the proposals had been screened out as
no canopy was included in its bid. Therefore, once the canopy is dropped, the preliminary
contract, IFP, might have to regard as officially scrapped. In order to be accountable
contractually to potential proponents, and in particular to the screened-out proponents,
another round of IFP must be launched. However, this contradicts with the goal of the
government, namely to achieve the early implementation of the WKCD and the official
scrapping of the IFP would formally demolish the contractual relationship and in turn, the
contractual accountability.

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 It should further be noted that while the government is prepared to amend and is
unwilling to break the 'contractual relationship' with the screened-in proponents, in theory,
there is no contractual relationship between the parties as the IFP is a non-legal binding
invitation document. However, in reality, Hong Kong is new to the PPP approach and trust
between partners is an important determinative factor towards the success of PPPs. This
view is shared Hofmeister and Borchert (2004) who state that 'the success of PPPs
depended both on a thorough understanding of the operational environment on each side
and a bond of trust as partners in PPPs' (as cited in Teicher, Alam and Van Gramberg,
2006). Hence, to maintain the contractual relationship and to be contractually accountable
to the proponents, it is clear that instead of terminating the IFP directly, the government
could only 'amend' the mandatory requirements and the 'revised project' thus could be
kept open to the three screened-in proponents alone. It would seem, therefore, that the
government has tried to be contractually accountable to the proponents, but without
translating general standards into a more specific and binding legal standards, or at least it
has tried to maintain its implicit contractual obligation to the screened-in proponents.
Although the government has tried to avoid harming the trust, nonetheless community and
private sector trust in the government's ability to fulfill its contracts might be weakened.
Overall, contractual accountability does not appear to have been well secured as at this
stage legitimate expectations had been violated by the government through the
introduction of additional parameters and conditions. Nonetheless, it had tried to do this in
a manner that enabled it to demonstrate also that it was still trying to fulfill its communal
and public accountability responsibilities at the same time.

8.5.2 Managerial Accountability

As defined in Chapter 4, managerial accountability entails making 'those with
delegated authority answerable for producing outputs or the use of resources to achieve
certain ends' (Sinclair, 1995: 222). In the period under examination, there was a personnel
change at the highest decision-making level. The original person-in-charge of the project,
Donald Tsang, was promoted to be the Chief Executive and Rafael Hui, who succeeded
him as the Chief Secretary for Administration, then steered the development of the
WKCD.
As argued in Section 8.3.4, the revised proposal was made under several constraints
that included being answerable to some of the new Chief Executive's concerns. For
instance, Donald Tsang is committed to building strong governance and had taken a strong

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stand on the key aspects of WKCD, such as the single-developer approach and the
construction of the canopy. It is clear that in the fonnation of the revised proposal, these
issues were still expected to be taken into account. Instead of pushing the project through
by adopting an aggressive approach, Rafael Hui tailored the mandatory requirements in
accordance with both the Chief Executive's and the public's views. Therefore, it was
hoped, the WKCD would not pose a challenge to Hong Kong's governance. In particular,
as Tsang had insisted on keeping several unchanged aspects of the WKCD when he was
the Chief Secretary for Administration, it is clear that Rafael Hui after examining the
revised proposal in depth did not abolish either the canopy or the single-developer
approach. Also important, early implementation of the project was still expected to be
achieved if 'public aspirations were met'. This, while Rafael Hui is accountable to the
Chief Executive managerially, from the previous analysis, it is clear that during this period
there was more of attempt to achieve a better balance between managerial accountability
and communal accountability to the public, but still keeping within the decision-making
boundaries set for him by the Chief Executive.

8.5.3 Public Accountability

In the period under examination, the roles of Audit Commission and the Ombudsman
were again very limited or even non-existent. In this section, therefore, it is the
participation of the Legislative Council and the media and the extent to which public
accountability was secured that are examined.
When the revised proposal was first announced, it seemed that the additional
development parameters and contract conditions could meet public aspirations, especially
as some of these were targeted at the criticisms of the single tender approach and of the
WKCD as being a 'property project in disguise'. However, most legislators and residents
did not share this optimistic view of the changes. Some even stated that the revised
proposal was much worse than the original one. Even though the Liberal Party believed
that the revisions were acceptable56 , it raised several fresh issues that it saw as being
generated from the revised proposal.
Similar to the findings in Chapter 7, the media played a significant role as a platfonn
for exchanging views in this second post-IFP period. Government officials, legislators, the
proponents and the public also now made good use of the media to express their views,

56 It is a political party that supports the revised proposal in principle.

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especially on the fresh issues arising from the revised proposal. For instance, proponents
once stated to the press that they would stay in the race even if the profit is marginal.
Moreover, they have urged the government through the media to clarify the additional
parameters and conditions.
One of the behavioral expectations of public accountability is that the public can call
the government to account, to demand explanations and remedies, and to impose sanctions
and new directions. Responsiveness is one of its laden values. Doubtlessly, some of the
public concerns raised during the post-IFP period under Tung's leadership were responded
to in the revised proposal (see Chapter 7 for details). For instance, there had been criticism
towards the flexibility given to the proponents. As proposals from bidding which did not
conform to the government's baseline were still regarded as qualified bids, some people
had criticized that there were no fair grounds for selecting the final bids as each of the
three screened-in proposals differed fundamentally. The revised proposal posed strict
requirements on plot ratio, gross floor area for residential development and net floor area
for core arts and cultural facilities (Information Services Department, Oct 7, 2005). Hence,
some public concerns had been responded to and addressed.
Moreover, the WKCD has long been challenged as 'a property project in disguise'
and for some critics there is the appearance of government-business collusion in the
project. To a certain extent, the introduction of the additional parameters and conditions
respond to these concerns also. Capping the residential development to 20% of the total
gross area at most and specifying the minimum net operating floor area for core arts and
cultural facilities have helped to reduce or 'eliminate' these worries. Requesting the
winning developer to establish a $30 billion trust fund and keeping the plot ratio to a
maximum of 1.81 further marginalized the profits of the private partner. Although, despite
these changes, some people may still regard the revised proposal as 'a property project in
disguise' or 'government-business collusion', other critics continue to highlight the lack of
cultural policy. Therefore, public accountability is secured only as far as the government
has been responsive to some, but not to all of the public's concerns.
One example relates to the existence or lack of a cultural policy that serves as the
backbone of the WKCD. According to the relevant authority, the arts and cultural policy of
Hong Kong is:
'to create an environment which is conducive to the freedom of expression
and artistic creation and which encourages participation in such activities.
The policy is based on several principles, which are as follows: (1) we
encourage pluralism and diversity; (2) we respect freedom of expression; (3)

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 we are a facilitator/ catalyst; (4) we provide various kinds of support,
including financial support, as and when appropriate. As a facilitator, we aim
to support the development of arts and cultural in certain aspects ... Our
blueprint of cultural policy is based on the Culture and Heritage Commission
Policy Recommendation Report' (Home Affairs Bureau, 2005c).

The Subcommittee of the Legislative Council clearly believes that it is necessary to have a
much stronger underlying cultural policy to serve as a foundation for the WKCD.
However, it does not share the view that the current policy mentioned above is either clear
or effective (Subcommittee on West Kowloon Cultural District Development, Legislative
Council, 2005b; Subcommittee on West Kowloon Cultural District Development,
Legislative Council, 2006) (also see below for explanation).
Moreover, in accordance with the Public Consultation Report commissioned by the
government, it is evident that most citizens believe in the necessity to formulate a sound
cultural policy before proceeding to the WKCD. From the analysis of public views, the
public do not have a clear mindset on either the broader cultural blueprint for Hong Kong,
or, in particular, on the WKCD.
'Comments from Comment Cards and written submissions call for providing
more opportunities to local arts and cultural groups. The majority want
emphasis to be given to Chinese and local culture, while some want more
emphasis on western culture and multi-culturalism, reflecting Hong Kong's
"east meets west" position. Concerns are raised on inadequacies in the
proposals regarding the promotion of arts and cultural awareness among the
general population. Many also advocate that more effort should be given to
the training and development of local artists, including the establishment of
funds for such purposes. The lack of a cultural blueprint for Hong Kong, and
the danger that cultural software might lag behind the hardware development
are also concerns. These concerns are shared by the Legislative Council,
which is of the view that the need for the development of arts and cultural
facilities in Hong Kong has not been properly identified.
The Telephone Polls show that 74.5% of the respondents indicate that there
should be more discussion on Hong Kong's cultural policy before proceeding
with the development of the WKCD' (The Public Policy Research Institute,
2005).

The public has clearly urged the government to review the cultural policy so that the
cultural software does not lag behind the hardware development. However, the
government has not addressed these concerns adequately, either before or after the revised
proposal was made public. The public and relevant stakeholders thus strongly urged the
government to review or formulate its 'for culture and arts education' and 'focus on the
development of a coherent, continuous and diversified curriculum, the provision of quality

184
support, and the promotion of partnership and community involvement before preceding
the WKCD' (Subcommittee on West Kowloon Cultural District Development, Legislative
Council, 2006: 14). However, other than reiterating the existing arts and cultural policy,
which is basically 'commitments to the operation, maintenance and management of
various arts and cultural facilities' (Subcommittee on West Kowloon Cultural District
Development, Legislative Council, 2006: 14), the government has not made any further
attempt to address or respond further to such public concerns.
'This is not a surprise because the Administration, in its response to the
Subcommittee on the need to develop cultural software, reiterates that its
efforts in promoting cultural software are represented by its commitments to
the operation, maintenance and management of various arts and cultural
facilities in WKCD. This understanding of what cultural software means is
apparently very different from that advocated by CHC, which states in its
report that "a policy for culture and arts education should focus on the
development of a coherent, continuous and diversified curriculum, the
provision of quality support, and the promotion of partnership and
community involvement" ... The Bilbao experience of the delegation of the
Subcommittee has reinforced the Subcommittee's belief that a cultural policy
is crucial for a government when it tries to decide what objectives a cultural
policy should achieve, which direction it should take and how it can be
delivered' (Subcommittee on West Kowloon Cultural District Development,
Legislative Council, 2006: 14-15).

As the government and the public have such different perceptions as to what a cultural
policy is, the response of the former has failed to address the concerns of the latter. Hence,
the public are dissatisfied with the responsiveness of the authority in this area.
Additionally, even though the single-developer approach was officially abandoned
under the revised proposal, the public do not share the view that this is enough change.
They claim that under the revised proposal, most of the land is still allocated to a single
developer under a single-package approach albeit in a reduced scale (see 8.4 for details).
Hence, public satisfaction remains low, the public feel that their concerns have still not
been fully taken into account and public accountability does not appear to have been very
well secured in the period under examination.

8.6 Policy Change: the February 2006 Decision to 'Delay'the Project

In February 2006, the government announced that the project is officially 'on hold'
and will start over again as all the bidders had indicated that they would not stay in the
race. For the way forward, consultation committees are established. Similar to the
approach in Section 8.3, analysis of the policy change will be formulated by using the

185
amended version of the Advocacy Coalition Framework to structure detailed analyses of
the interaction between competing coalitions, the impact of the stable parameters on
constraints and on the resources of subsystem actors, as well as external changes.

8.6.1 Interactions of Competing Advocacy Coalitions

As previously stated, two loosely formed advocacy coalitions were observed before
the revised proposal was announced in October 2005. Generally speaking, this situation
has remained unchanged and both coalitions have called on the government to clarify
some issues relating to the additional parameters and conditions. For example, the
opposition camp strongly urged the government to state the arrangements in carving out
the land, role and responsibilities of the proposed West Kowloon Statutory Body that will
now oversee the project, etc (see 8.4.3). Whilst for the proponents, their concerns mainly
focused on financial matters, like when the $30 billion trust fund will have to be paid, the
'arrangement for the carving out of commercial and residential portions, use of sale
proceeds from the carved-out portions, contributions towards the $30 billion trust fund,
etc' (Information Services Department, Jan 27,2006) (see Appendix 8 for other issues that
arose from the revised proposal)
However, the competing coalitions have also undergone some changes after the Phase
II Report of the Subcommittee on West Kowloon Cultural District Development was
published in early January 2006. The report aimed to investigate 'primarily the mode of
planning, implementing, management and financing for WKCD with reference to overseas
projects of a comparable scale' (Subcommittee on West Kowloon Cultural District
Development, Legislative Council, 2006: 5). Recommendations are listed in Appendix 9.
It should be noted, however, that one of the recommendations is that the government
should separate the cultural and non-cultural components and fund the core arts and
cultural facilities through land sales (Subcommittee on West Kowloon Cultural District
Development, Legislative Council, 2006). Hence, it implies that PPP is not recommended
to be adopted in the development of the WKCD. This recommendation has, apparently,
split the opposition camp. Although similar divisions may appear in the supporting
coalition, the split is not as obvious as the antithetical coalition. The opposition coalition
has now split on the issue as to whether the WKCD should be developed by PPP or not.
Under the revised framework, the WKCD is no longer a BOT-typed PPP in that the private
counterpart is not responsible for operating the core arts and cultural facilities. Instead, it

186
is a Developer Finance ProjectS7 • Several concerned individuals and parties disagree with
this new decision.
'I don't understand why a $30 billion trust fund should be set up. Why we
have to get $30 billion from the private sector? ... We [the HKSARG] are not
facing financial pressure ... Through providing a $30 billion trust fund, the
private sector can get rid of the responsibility of operating the core arts and
cultural facilities for 30 years. 1 really can't understand that ... Through
adopting PPP, you [the government] can make good use of their [the private
sector's] expertise, reputation, international networking etc in managing and
operating the facilities. This is what you [the government] can't achieve
without bringing in the private sector.' (Interviewee, Pressure Group)

'The new proposal asks that the successful developer to develop (design and
construct) the cultural and arts facilities but it is not clear whether the
developer will have the obligation to operate and maintain such facilities for
30 years, as required in the IFP. An up front payment of HK$30 billion to
establish an independent trust fund is required from the developer instead. In
the event when the developer are not charged with an obligation to operate
and maintain the CACF [core arts and cultural facilities], the canopy and the
communal facilities, there will naturally be a high tendency that the
developer will aim to minimize the development cost of the CACF to ensure
highest possible profit generated from the development of its portion in
WKCD. The control of the quality will then largely rely on the specification
written by the Government. Whether the then completed CACF, the Canopy
and the communal facilities will still be "world-class" as envisaged will
remain in serious doubt' (The Hong Kong Institute of Architects, 2005).

The recommendation of the Legislative Council further suggests that the whole PPP
concept should be overthrown and hence business would no longer have a say in the
development. The suggestion has, to a certain extent, upset some of its counterparts in the
opposition coalition.
'PPP should be operated on commercial principle. However, in the Phase II
report, the Legislative Council suggests that it should not be operated on
commercial principle and traditional development mode should be adopted,
i.e. land sales. It also claims that if you like, the strategy [partnership] would
be adopted in some areas like construction of the core arts and cultural
facilities. No one is interested in such deal, it is not attractive at alL That's
[the suggestion of the Legislative Council] too ideaL' (Interviewee, Pressure
Group)

'For the development of cultural facilities within the WKCD, it is noted that
various previous studies has consistently recommended partnerships with the
private sector. For instance, the "Study on the Feasibility of a New
Performance Venue for Hong Kong (1999)" recommended that the

57 In the Developer Finance project, through financing the construction or expansion of a public facility, the
private partner is granted for building residential, commercial stores, and! or industrial facilities at the site
(see 3.4 for details).

187
 performance venue should be operated on commercial principles. The
Planning Department Study (1999) also recommended greater private sector
participation for the development of the new cultural facilities. The
"Consultancy Study on the Provision of Regional! District Cultural and
Performance Facilities in Hong Kong (2002)" similarly stated that the
participation of the private sector through joint initiatives such as public
private partnerships should be encouraged. The "Culture and Heritage
Commission Policy Recommendation Report (2003)" also clearly
recommended that the Government should facilitate partnerships between
developers and the cultural sector in the development and operation of the
cultural facilities. As stated by the former Chief Secretary for Administration,
"in the past, the Government constructed a lot of cultural facilities. However,
without a business mindset, these facilities are somehow inadequate in
themselves." "The objective of the WKCD project is to foster a long-term
relationship between the Government and the private sector in the
development of world-class arts and cultural facilities ... by bringing in the
private sector's financial strength and commercial knowledge and expertise".
As stated in our previous submissions, HKlS also supports the Government's
plan to engage the private sector in the development of the WKCD.
Therefore, the PPP approach should be adopted unless the Government has
good reasons to change at this stage,58 (The Hong Kong Institute of
Surveyor, 2005c).

These members or 'memes' within the opposition coalition could no longer be regarded as
a single coalition in that there is now a clear division between their belief systems. Hence,
from this time onwards, there are three competing coalitions. One generally supports the
WKCD and urges for its early implementation and for adopting PPP as a means for the
development. The other two are split from the opposition camp, with one in support of the
PPP, if its conditions are met, whilst the other one is against the PPP adoption in principle.
Competition between these coalitions is, again, not that obvious in the civil society.
Although the Chief Secretary for Administration, acting for the government, has taken up
the role of 'policy broker' in formulating the revised proposal, this does not mean that he
has become an arbitrator who does not take sides. The government, ostensibly, remains
strongly in the supporting team. Perhaps the most noticeable interaction between
coalitions is that of the Legislative Council and the government's representation. On the
date that the Phase II Report was released, the government issued a press release to
comment on the report. The authority stated clearly that the recommendations were seen
by the government as being conservative and as deviating from the original plan of

58 Although the above paragraph is extracted from the submission of the Hong Kong Institute of Surveyors
in 2005, the strong stand of the Institute on adopting PPP in the development of the WKCD is clear. Hence,
to a certain extent, the Phase II report of the Subcommittee on West Kowloon Cultural District Development
might bring a division of the opposition camp on the issue of whether PPP should be adopted in the WKCD,
or not.

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adopting a PPP for the development (Information Services Department, Jan 6, 2006). As
the response was delivered through a press release, legislators were disappointed with the
way in which government response was not given directly to them, but through the media
(House Committee, Legislative Council, 2006). Alan Leong, chairman of the
Subcommittee, further stated that he was disappointed with the initial response of the
authority. Despite being invited to attend the Subcommittee meeting on 3 February 2006
so as to explain the way forward for the project, the Chief Secretary for Administration
refused actually to attend, stating:
'In particular, we have provided detailed views to the Subcommittee and
cooperated fully with the Subcommittee in preparing its Phase I and Phase II
Study Reports. We are aware of the Subcommittee's views on the WKCD
project, and wrote to the Subcommittee on 6 January providing our response
to the Phase II Report. The Chief Secretary for Administration therefore does
not see the need for him or the Administration to meet with the
Subcommittee at this stage... As indicated in our letter of 10 October 2005 to
you, after formulating more detailed proposals on the establishment of an
independent statutory body to take forward the WKCD development, the
Chief Secretary for Administration will be pleased to meet with the
Subcommittee' (Housing, Planning and Lands Bureau, 2006b).

This strongly independent stand of the government sets up a conflict between the
executive and legislature. Mr. Leong then announced his intention to hold the Chief
Secretary for Administration accountable, by forcing him to attend the meeting through
using the Legislative Council (Powers and Privileges) Ordinance. Thus, in his committee's
reply to th~ Chief Secretary for Administration, Leong states that
'At the meeting of the Subcommittee held yesterday, members have asked
me to write to you on their behalf to express their deep disappointment at the
refusal of the Administration to attend the meeting ... [The reports] reached
remarkable consensus. Strong concerns are expressed and pressing issues are
identified, in consequence of which recommendations are put forward. All of
them would command the careful response of any accountable government. ..
We are astonished that the Administration could have taken an attitude of
evasion and avoidance under a language of disengagement and unconcern,
and moreover evinced the intention to proceed with the government's set
plans as if the reports have never corne into existence ... The absence of the
Administration cannot assist public confidence in the SAR Government as a
whole. We are also concerned that if the same attitude is maintained in the
forthcoming debate, the community will be justifiably scandalized ...
[M]embers are confronted with the unprecedented situation in which the
Chief Secretary, by long practice the bridge between the Legislature and the
Executive, has become itself subject of dispute. There is the suggestion that
we may have to resort to reminding the Chief Executive of his responsibility
under Article 48(2) to implement the Basic Law which includes the proper

189
 functioning of the constitutional framework as a whole; or resort to our
power to compel the appearance of witnesses and production of documents
under the Legislative Council (Powers and Privileges) Ordinance; or to the
collective expression of disapprobation of the Council as a whole' (Leong,
2006).

More importantly, from the list of issues that the Subcommittee sent to the Chief Secretary
for Administration for clarification, it is clear that there is considerable distrust between
the executive and legislature (see Appendix 10). For instance, points 2 and 3 suggest that
there may be 'a sleight of hand' . Definitely, this perception comes from the lack oftrust on
the executive branch. Point 7 has further highlighted the distrust and tense
executive-legislature relationship as the Subcommittee asserts clearly that '[t]he mode of
development under the IFP is regarded as an attempt of the Administration to circumvent
the powers and functions of the Legislative Council under the guise of a public-private
partnership (PPP) project' (Leong, 2006). Questions raised have highlighted the inability
of the Legislative Council to hold the government accountable even when legitimately
scrutinizing the project. It seems that the Council is now taking the advisory role and is
trying to press for a stronger role to play in the accountability process.

8.6.2 Impact of the Stable Parameters on Constraints and Resources of Subsystem

Actors

As suggested by the Advocacy Coalition Framework, stable parameters could affect

the partnership building process indirectly through posing constraints and through the
limited resources of subsystem actors. The findings in Section 8.3.2 are applicable in this
Section too as there has been no significant change in the stable parameters since October
2005. It is worth noting that Sabatier considers 'basic attributes of the problem area' as a
stable parameter. In the pre-October 2005 context, the problem area was closely related to
the handling approach of the government, such as the way in which the authority
consulted the public and adopted a single-developer approach. There was a little
discussion as to whether a PPP should be adopted or as to what role the private or even
third sectors should play in the project59 • However, it seems that the Subcommittee has
altered its perception on the problem area, from being a technical one to more of a one of

59 The Subcommittee of the Legislative Council has been critical on the justifications for adopting the PPP
approach. Hence, it strongly urges the government to 're-examine the extent of private partnership for
WKCD based on objective value-for-money analysis and fmancial viability studies (like public sector
comparator) (Subcommittee on West Kowloon Cultural District Development, Legislative Council, 2005b).
However, the Subcommittee shows no objection of developing the site through a PPP approach at that time.

190
principle. From the Phase II Report, it appears that the Subcommittee now regards
adopting the PPP approach to develop the site as a whole is the problem area, even though
the Subcommittee has made it clear that it is not against PPP in principle:
'The Subcommittee must reiterate that it is not in principle against the
adoption of PPP approach for developing any infrastructure. The decision of
the most appropriate approach for developing the cultural facilities in WKCD
should be left to the statutory body, and it is important that a pragmatic
approach be adopted' (Subcommittee on West Kowloon Cultural District
Development, Legislative Council, 2006: 90).

8.6.3 External Changes towards the Subsystem

In the period under examination, there were limited changes in the socioeconomic
conditions and systemic governing coalition. However, external changes in the field of
public opinion and policy decisions and impacts from other subsystems are investigated in
this Section.
After the revised proposal was made public in October 2005, there was a discussion
as to the extent to which the revised proposal differed from the original one. Views of
different groups have already been analyzed in Section 8.4. Apparently, both camps 'insist'
on their viewpoints and hence no breakthrough is observed. It should be noted that some
groups have posed their objection towards the revised proposal on the issue related to the
operation of core arts and cultural facilities. Originally, the private enterprise was to be
obligated to operate the core arts and cultural facilities for 30 years and to maintain the
WKCD before transferring it back to the government. However, this obligation was
dropped as the plan now is for the statutory body that oversees the project might take over
the responsibility. Instead, the winning developer is required to establish a $30 billion fund
for accountability (see 8.6.1 for details).
As mentioned in Section 8.6.1, after the publication of the Phase II Report, further
division in public opinion was observed. The public is divided not only on whether the
process of tender selection should be continued, but also on whether any PPP approach
should be adopted in developing the WKCD. On the latter issue, again, there are mixed
views in the community. Some groups think that PPP should be adopted so as to achieve
the benefits of PPPs - including bringing in creativity, flexibility, capital and the expertise
of the private sector. Others, however, do not see the need for involving the private sector
as they consider its for-profit nature is harmful to the development of arts and culture in
Hong Kong. Therefore, it has been suggested that the government should adopt the
recommendation of the Subcommittee of the Legislative Council - separating the cultural

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and non-cultural components and adopting the traditional way, i.e. land sale, to fund the
cultural component.
Another identified external change is related to the policy decisions and impacts from
other subsystems. The impacts and policy decisions of the Fifth Report on Constitutional
Development has had some implications for governance in Hong Kong, and hence on the
WKCD indirectly6o. This Report which proposed revised methods for selecting the Chief
Executive and the Legislative Council in 2007 and 2008 respectively, was published on 19
October 2005. As no timetable for the dual elections of the Chief Executive and
Legislative Council by universal suffrage thus given, the pro-democratic camp of the
Legislative Council was dissatisfied with the report. They also held very strong views on
the role of appointed District Council members in the election of the Chief Executive
(Tsang, Oct 19,2005). As to pass the constitutional reform proposal required support from
two-third of the legislators, the Chief Secretary for Administration adopted several
different means to generate public support. For instance, he met with different District
Councilors. However, it seems that his efforts were not highly appreciated. On December
4, 2005, there was a protest by more than 80,000 people calling for the introduction of
universal suffrage (South China Morning Post, Dec 5, 2005). The strong stand taken by
the government was then softened slightly in that the Chief Executive indicated that
'limited changes may be possible to the government's reform package' (South China
Morning Post, Dec 5, 2005). Later, on 19 December 2005, two days before the relevant
debate in the Legislative Council, Rafael Hui, the Chief Secretary for Administration made
a concession by announcing the plan to phase out appointed District Council seats by 2016
at the earliest (Information Services Department, Dec 19,2005). Although the concession
is limited in scope, it is regarded as a positive step towards the democratic development by
some parties. Unfortunately, as the scope of the late-coming concession is limited, it failed
to secure sufficient votes from the democratic camp in reality. The constitutional reform
proposal was thus finally defeated on 21 December 2005 when it failed to secure a
two-third majority in the Legislative Council (South China Morning Post, Dec 22, 2005).
The constitutional reform has had some implications for Hong Kong governance in
general and which in tum affects the WKCD development. The voting down of the reform
has highlighted the looming legitimacy crisis that the HKSARG is facing. It has further
weakened the government's already weak policy and administrative capacities and hence

60 This is because the development of the WKCD is closely related to the governance and legitimacy of the
HKSARG.

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governance of Hong Kong. Similar to the implications that were brought by the Article 23
controversy, the defeat of the constitutional reform proposal reminds the government that
the WKCD must be handled with care or it might pose a further challenge to the
governance, public trust and legitimacy. In this way, the weakened governance, to a
certain extent, has made it difficult for the government to push for the WKCD in the face
of continued strong opposition from the legislature and the pUblic 61 .

8.6.4 Advocacy Coalition Framework Explanation on the February 2006 Decision

In response to decisions by the bidders to withdraw, the government announced that
the project will be put 'on hold' and will start over again. The decision-making process is
investigated further using the amended version of the Advocacy Coalition Framework.
According to the Framework, external events and relatively stable parameters pose
constraints on subsystem actors. It is noted that since the announcement of the revised
proposal in October 2005, the government has long been attacked and challenged,
especially by the legislature for conducting under-table transactions with the proponents. It
is evident that there is a lack of trust between the executive and legislature and that
between the government and the public. The working relationship between the executive
and the legislature was getting tenser during the period under examination, especially after
the defeat of the constitutional reform package in December 2005. Moreover, the defeat of
the package also pinpointed the fact that the honey-moon period between the new
governing coalition and the legislature has already passed. Hence, the governing coalition,
which aims to build a strong government, has had to handle the WKCD with care so as not
to pose any further challenge to the legitimacy of the HKSARG and its governance.
Further, in January 2006, the Subcommittee of the Legislative Council published its Phase
II Report which called on the government to overthrow the whole PPP concept. Although
there are mixed views in the community, even within the opposition coalition, this call
from the Legislative Council generates another round of public discussion and the spot
light is then 'returned' to the project.
As the public and the opposition camp, do not perceive the revised proposal as a
reasonable compromise. With the shift in perceptions as to the problem area: from
technical concerns to the PPP adoption (see 8.4 for details), together with the tense

61 It should be noted that some interviewees argue that the WKCD development has been politicized and
hence the government has to be decisive. Decisive here refers to the idea that to push the WKCD even
though the Legislative Council and the public strongly oppose it.

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executive-legislature relationship and the low-trust political environment, it is expected
that the project will remain heavily criticized if the project carries on. Unchanged doubts
on under-table transactions or government-business collusion remain, even though the
government has already cut the profits ofthe winning developer to the margin62 •
The low-trust environment and doubts of the public, and in particular, of the
Legislative Council, has contributed to the decision to put a 'hold on' the project.
Although the apparent reason for 'delaying' the project is the unwillingness of the
proponents to stay in the race, this is not the only reason. In the statement made by the
Chief Secretary for Administration at the meeting of the Subcommittee on the West
Kowloon Cultural District Development of the Legislative Council on 21 February 2006,
he stated that
'The three screened-in Proponents responded to the Government in late
January 2006, indicating that they were still interested in pursuing the
WKCD project. They have also raised some specific questions about the
proposed development parameters and conditions ... We believe that we
should not conduct any negotiation with the screened-in Proponents at this
stage. To do so would be against public views ... Therefore we have sought
from the Proponents an unequivocal expression of positive commitment to
accept all conditions and continue to participate in the WKCD project under
the current development framework as modified by the October Package of
last year. All three Proponents reverted yesterday and did not give a positive
response ... We have to accept that there is a significant gap between public
demands and market reality. Therefore the Government will not pursue the
WKCD under the Invitation for Proposals (IFP) process' (Hui, Feb 21,
2006a).

From Hui's speech, it is clear that the main reason for no longer pursuing the WKCD
under the IFP process is that the government's response to 'some specific questions about
the proposed development parameters and conditions' did not satisfy the proponents.
Hence, though the proponents were originally interested in staying in the race, they gave
up finally as they felt unable to give 'an unequivocal expression of positive commitment
to accept all conditions and continue to participate in the WKCD project under the current
development framework as modified by the October Package of last year' (Hui, Feb 21,
2006a). The government took a very strong stand and refused to negotiate or generate any
further compromise on the additional parameters and conditions so this stance would not

62 Under the revised proposal, it is expected that the winning developer would only earn marginal profits.
However, doubts on the 'government-business collusion' or 'under-table transaction' remains. Hence, it is
believe that the doubts would not be eliminated and the project would still be heavily criticized on this
aspect if it continues.

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go against the public VIew. To a certain extent, the government stressed its public
accountability by refusing to be accountable to the market. In the decision-making process
to 'delay' the project, Hui no longer acted as a policy broker seeking to minimize the
conflict through making reasonable compromises, he now reverted instead to his role as
prime decision maker answerable for maintaining the government's formal and final
position
Although there are mixed VIews on the project in the community, both many
members of the public in general, and several stakeholders have welcomed the decision to
construct an arts hub in Hong Kong. The government cannot ignore their demands and
abolish the idea of building a cultural district on the West Kowloon Reclamation
completely. Clearly, abolishing the arts hub would also be potentially damaging to the
legitimacy of the HKSARG. Hence, the idea of 'delaying' the arts hub seems to be the best
the way forward - establishing consultation committee so that greater public involvement
is achieved on one hand, and the public would not perceive government as now having
decided to abolish the cultural district.

8.7 Decision to 'Delay' the Project: Accountable to the Public? Stakeholders'Views

In February 2006, WKCD was officially put 'on hold' as no bidders had stayed in the
race after the introduction of the additional development parameters and contract
conditions. The original plan towards the project, together with the controversial canopy,
would be scrapped or renewed and started again once the consultation committee was
established. How did the stakeholders and the public react to the decision?
First, the opposition camp welcomes the decision and believes that, III general,
through conducting another round of public consultation, a need-based cultural hardware
could be developed. This then might lead to the construction of a 'real' 'cultural district'.
More importantly, the 'delay' implies that public opinion might be incorporated in the new
plan once the consultative committee and advisory groups, which are comprised by
different stakeholders and representatives of the public, are established.
'It is still a good opportunity to go back and actually consider what the public
want from the development. We still don't think this is the best way to go
about reviewing the development. .. Cultural facilities should not be looked at
from a tourist angle. We have to be realistic about why tourists come to Hong
Kong, and it is not to visit a cultural development... This is really for the
people of Hong Kong, a city of 7 million residents, that desperately needs a
proper cultural facility,' said Ada Wong, a member of People's Panel on West
Kowloon (South China Morning Post, Feb 22, 2006).

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 'I support the decision of the government. I hope I can be involved in the
planning of the "new WKCD",' said Timothy Calnin, Chief Executive of the
Hong Kong Philharmonic who had criticized that the proposed performance
venue at the WKCD is not the world-class one. He further adds that the
'delay' provides him an opportunity to strive for a world-class performance
venue (Hong Kong Economic Times, Feb 22, 2006).

'We have an opportunity now to build a holistic cultural plan for this city,'
said Paul Zimmerman, convenor of the civic group Designing Hong Kong
Harbour District (South China Morning Post, Feb 22, 2006).

It is worth noting that however, although the opposition camp, including the
legislators, welcomed the decision to 'delay' the project, they nonetheless believed that the
project would go ahead.

'It was a wise decision. Since the government has listened to all views from
the public, developers and the cultural sector, it should roll out its new plan
as soon as possible,' said Stewart Leung, vice-president of the Real Estate
Developers' Association (The Standard, Feb 22, 2006a).

'We welcome the decision of the government. Restarting the project is the
only choice of the authority. I hope the government would listen to the
Legislative Council and establish the statutory body that oversees the
development of the WKCD as soon as possible. Further, it is hoped that
through establishing a transparent trust fund, the WKCD project would be
able to operate in a long-term [and uphold the self-financing principle],' said
Ho Chun-yan, vice president of the Democratic Party (The Standard, Feb 22,
2006b).

Article 45 's Alan Leong, chairman of Legislative Council's subcommittee on

West Kowloon Cultural District, 'welcomed' the announcement, saying it
'addresses many of the concerns' of lawmakers set out in two reports. Still,
he said, there is room for improvement. 'The most obvious thing that has not
been adopted is our recommendation that there should be an immediate
consultation of the cultural and arts sector,' Leong said. 'Secondly, we still
recommend that there should be a West Kowloon Cultural District Authority
set up. There hasn't found itself into the announcement' (The Standard, Feb
22,2006b).

Whilst for the supporting camp, there is not much media reporting on its response.
However, from the interviews conducted, some members of the supporting camp clearly
are not satisfied with the decision. From their point of view, the decision is no different
from 'dropping' the project. Even though Rafael Hui has given assurances that the WKCD
will not be scrapped and will 'eventually go forward at full speed, once [the] high-level
advisory body chaired by him studies what facilities are needed at the West Kowloon site

196
(The Standard, Feb 22, 2006b), the interviewee did not share his view.
'I am very angry about the decision [the project would start again]. When are
we going to have the WKCD? When are we going to have the new cultural
infrastructure? Unknown. No one knows. We have been long-awaited for the
WKCD. We have put lots of effort into it. But now, we have to wait again. I
don't know how long it will take.' (Interviewee, Arts and Cultural Group)

Furthermore, some professionals have also expressed their disappointment towards the
decision.
Joseph Ho, managing director at LCH (Asia-Pacific) Surveyors, said the
government's plan was workable but 'unfortunately became politicalized'. A
plan for providing cultural facilities required a subsidy to work but it was
difficult to meet the interests of developers, Ho said. 'Only those with heavy
financing will be able to do it.' Any new plan that allowed more developers
to take part would still need the government to run the facilities, he said. 'As
to whether the government has the ability to handle such a big thing and how
it intends to run it is quite an interesting point,' Ho said (The Standard, Feb
22,2006a).

8.8 Concluding Discussion: Accountability Secured in February 2006

This chapter has focused mainly on three aspects, namely contractual, managerial and
public accountability. It is evident that in this period contractual accountability to the
proponents has not been well secured. Public accountability has improved, however, as the
'new plan' and the abandonment of the original one, generally, meet the public aspirations.
Similarly, Rafael Hui's decisions might be regarded as reflecting his managerial
accountability to the Chief Executive as the main reasons for 'delaying' the project are to
achieve the policy objective of still materializing the WKCD and better utilize the
resources whilst simultaneously conceding some points to meet the public outcry and not
harming the popularity of the Chief Executive.

8.8.1 Contractual Accountability

In examining the accountability secured in February 2006, aspects relating to
contractual accountability need comment. In abolishing the IFP and in deciding to
'repackage' the project, the existing contractual accountability relationships are effectively
ended. This is because the main reason contributing to the decision to start the project over
again is that no bidder is willing to stay in the race under the revised terms and hence the
implicit contract between the three proponents and government is now ended. In order to
still be able to materialize the project, the government needs to restart or delay it and

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launch another round of IFP, if necessary. Put simply, neither the private sector nor the
government feel able to remain accountable to each other under the changed
circumstances. Contractual accountability thus has not been secured effectively. As
discussed in Section 8.5.1, the introduction of additional development parameters and
contract conditions has violated the legitimate expectations of the screened-in proponents
and hence, contractual accountability was harmed even though the government claimed to
have maintained its implicit contractual obligation and feel able to remain accountable to
each other under the changed circumstances by not opening the race to other developers.
For the screened-in proponents, their decisions to drop out of the race were based on the
fact that it has the government that first 'violates the "contract" (IFP), and that changes the
terms of the initial offerings too much to be acceptable. As a consequence, contractual
accountability does not appear to have been well secured although the HKSARG is not the
one who terminates the 'contractual relationship' officially. However, whilst the decision
effectively ended one set of contractual accountability relationships, it opened the door for
the late establishment of new and more clearly defined contractual and accountability
arrangements. In this sense, in the long term once the project has restarted, effective
contractual accountability might be secured.

8.8.2 Managerial Accountability

Managerial accountability is secured when the delegated authority is answerable for
the outputs or the use of resources (Sinclair, 1995). Without doubt, the public, in general,
welcomes the decision to delay the project (see 8.7 for details). Since then, the concern has
shifted to the question of how best to materialize the project. In response to this concern,
Rafael Hui has reassured the public, the Chief Executive, Executive and Legislative
Councils that the WKCD will not be scrapped and hence the consultative committee has
been established. Although approval of this approach is not shared by all parties,
materializing the project under the constraints listed in Section 8.6.2 and 8.6.3 is now the
policy objective. As the official delegated with prime decision making responsibilities, Mr.
Hui has to ensure that this objective would be met and, the most feasible option is to
restart the project in a way that will be somewhat more responsive than before. Therefore,
the Chief Secretary for Administration has tried to be accountable both to the public
politically and to the highest levels of government managerially.
Moreover, as discussed in Section 8.5.3, Mr. Hui's 'decision making power' on the
project is limited by the boundaries set for him by the Chief Executive. Hence, he had

198
tried to strive a balance between managerial and public accountability within these
boundaries so as to fulfill the 'main concerns of different parties in the community' (Hui,
Oct 7, 2006). From his point of view, the revised proposal was the most effective and
efficient way to carry out the project without an official termination of the IFP. However,
it soon became clear that the framework had failed to secure support from either the public
or the proponents. It is expected that if the IFP had continued, more resources would have
had to be spent on the project. On one hand, the negotiation stage would take a long time
as, from the press report, it is clear that the attractiveness of the contract had been reduced
significantly by the revised proposal and so potential private partners would require
considerable reassurance as to the continued commercial viability of the project.
Additionally, more efforts would have had to be made so as to secure public support and
to convince the public that the project is being negotiated fairly and would be carried out
in a transparent and accountable way. As Mr. Hui stated:
'First of all, the project is far from on its knees. The project, in fact, is up
and running. The reason is very simple - only the IFP process cannot be
continued ... in reality, there is going to be any delay because had we
continued with the IFP process by further negotiating with the three
proponents, that, I think will inevitably take a lot of time. Now that this
process has drawn to an end, in fact it gives the Government a greater
degree of flexibility and scope to determine not only the core facilities but
also, more important, a wider choice of financing options, and therefore at
the end of the day you may find the entire so-called timetable is shorter than
the original IFP. Now, by September, I don't think there is any difficulty in
confirming the core facilities and then, thereafter, we are into the process of
making preparations for the setting up of the statutory body. In fact, this is
shorter than the original intended timetable that we had under IFP,' said Hui
(Information Services Department, Feb 21, 2006).

Therefore, the February 2006 decision can be regarded as a managerial decision which
aimed at better utilizing the resources on one hand, while not harming the public
accountability on the other.
Again, owing to the lack of information and evidence, it is unclear, however, to what
extent or how Rafael Hui is held accountable to the Chief Executive managerially.
However, it is worth noting that some people suggest that the main reason for 'delaying'
the project is to ensure that this would not harm the popularity of the Chief Executive
(South China Morning Post, Mar 1, 2006). Although additional parameters and conditions
were introduced in October 2005, much of the public remain dissatisfied with these. If
Rafael Hui had pushed the project any harder by adopting a more aggressive approach,
this would definitely have harmed the popularity of the Chief Executive who will need to

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seek reappointment within one and a half year.
From the previous analysis, managerial accountability to the public can be
regarded as secured in that Rafael Hui might be regarded as accountable to the Chief
Executive managerially if the main reason for 'delaying' the project is not to harm the
popularity of the Chief Executive.

8.8.3 Public Accountability

When public accountability is well secured, the public can demand explanations and
remedies, and urge the government for imposing sanctions and new directions. Hence, the
Legislative Council, Audit Commission, Ombudsman and the media are the main
watchdogs to secure public accountability. In the period under examination, again, the
roles of Audit Commission and the Ombudsman are very limited or even non-existent.
Regardless of the real intention of the government to withdraw the IFP of the WKCD,
it is clear that the general direction of policy has been altered and the 'new direction' is in
line with the public aspirations (see 8.7). The most obvious example is the canopy. The
government had reiterated several times that the canopy was mandatory and could not be
scrapped. Under the revised proposal, the canopy was kept and the government was
strongly criticized for this. Public views were thus perceived as being ignored in
formulating the revised proposal.
'According to the government document given to us [legislators], I found that
"on the issue of the canopy, the result of the public consultation exercise
shows that there is mixed views on the construction of canopy". But it
follows by a sentence "the canopy receives a substantial public support and
hence there is no reason for amending this mandatory requirement". On one
hand, you state that there is no conclusion ... but from the document that the
government sent us, it is obvious that there is a conclusion on the canopy.
Further, that mandatory requirement has not been amended or altered by the
government... I know the research report that commissioned by the
government found that 51 % of the respondents support the construction of
the canopy. But according to the comment cards that filled in by people who
went to the exhibition, more than 30,000 people are against the canopy. If
they know that the maintenance cost is shared by the citizens ... that is no
longer be managed and maintained by the proponent. I believe that people
will against the construction of canopy overwhelmingly ... I hope the Chief
Secretary for Administration will not act like the magician, i.e. not to change
the fact', said Yeung Sum, legislator (Special House Committee, Legislative
Council,2005).

A public opinion poll by Hong Kong University found 77 percent of

respondents strongly objected to the canopy. Although the survey told
respondents the canopy would cost HK$40 billion to build, instead of the

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 HK$4 billion to HK$7 billion estimated by industry experts, subcommittee
chainnan Alan Leong said the different figure was insignificant. "The
Legislative Council has always taken the view that it should not be a
mandatory requirement of the project. It is too costly to build and maintain,"
he said (The Standard, Feb 22, 2006c).

However, in the later decision to substantially 'repackage' the project, Hui made it clear
that it could now be possible for canopy to be scrapped, which is in line with the public
view (The Standard, Feb 22, 2006c). Therefore, some people, particularly in the
opposition camp, regard this potential change of policy direction as the victory for the
people in that it appears that the sanction of public opinion has influenced the
government's decision.
Further, the announcement to reassess the project through establishing a consultative
committee and advisory groups demonstrates the strengthening of accountability and is
responsive to the expectations and needs of stakeholders. Meanwhile, many members of
the public, including the arts and cultural groups, have urged the government to conduct
another round of consultation and to work on relevant studies before proceeding to the
WKCD so that it can eventually better meet the real cultural needs of Hong Kong. In
particular, they have urged the government to rethink the proj ect and to tenninate the IFP
so that 'real' consultation could be conducted, and without being constrained within a
finnly preset framework. When reviewing the objectives and memberships of the
consultative committee and advisory groups, it does seem that there is now a greater
likelihood that public expectations and cultural needs will be met as cultural needs would
be re-examine and reconfinn, and public views would better be incorporated through
appointing different concerned individual and representatives of the arts and cultural
groups into the Consultative Committee and Advisory Groups (see Appendix 11 for
details).
Somewhat surprisingly, when the decision to 'repackage' the project was announced,
the Chief Secretary for Administration reiterated most strongly that this would not delay
the project.
'First of all, the project is far from on its knees. The project, in fact, is up and
running. The reason is very simple - only the IFP process cannot be
continued. The development of West Kowloon into a world class cultural,
entertainment and tourist regional centre, is very much alive. That is the
reason why we are continuing with confinning the core arts facilities. We are
also in the process of preparing for the stage where a statutory body will take
over from the Government in developing that particular part of Hong Kong.
So it is in fact not on its knees, delayed. I don't think, in reality, there is going

201
 to be any delay because had we continued with the IFP process by further
negotiating with the three proponents, that, I think will inevitably take a lot
of time. Now that this process has drawn to an end, in fact it gives the
Government a greater degree of flexibility and scope to determine not only
the core facilities but also, more important, a wider choice of financing
options, and therefore at the end of the day you may find the entire so-called
timetable is shorter than the original IFP. Now, by September, I don't think
there is any difficulty in confirming the core facilities and then, thereafter, we
are into the process of making preparations for the setting up of the statutory
body. In fact, this is shorter than the original intended timetable that we had
under IFP' (Hui, Feb 21, 2006b).

Even though Mr. Hui's speech failed to fully convince the public, as many public worries
on the materialization of the project (see 8.7 for details) had been extensive, to a certain
extent, the new approach is responsive to their concerns.
From this perspective, in this period public accountability is being better secured as
the public was able to question and even alter the policy direction through the influence
brought for bear by the institutional and non-institutional channels like the Legislative
Council and the media.

8.9 Summary
The two policy changes and their implications on accountability have been studied in
this chapter respectively. It is evident that although the revised proposal made public in
October 2005 was aimed at meeting public aspirations, contractual, managerial and public
accountability were not being very well secured in reality. Whilst for the latest decision to
'repackage' the project, it is evident that contractual accountability between the
government and the proponents does not appear to have been fulfilled. Public
accountability, in the said period, however, has improved as the 'new plan' for proceeding
with the project, in general, meets the public aspirations. Similarly, Rafael Hui might be
regarded as accountable to the Chief Executive managerially as main reasons for
'delaying' the project are facilitates to achieving the policy objective of materializing the
WKCD whilst not harming the popularity of the Chief Executive.

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 Chapter 9
Conclusion and Recommendations

9.1 Introduction
The findings of this dissertation show accountability for the WKCD project was not
well secured until early 2006. In addition to summarizing the findings from the previous
chapters, this chapter highlights the lessons drawn from the case study and concludes by
identifying critical factors that facilitated or undermined the accountability secured. It also
draws some theoretical lessons on the value of the conceptual frameworks used. Finally,
positive directions for further studies are recommended.

9.2 Accountability Secured in Establishing the WKCD

A framework that focused attention on key aspects of communal, contractual,
managerial and public accountability was adopted to help examine the accountability
secured at different stages of the establishment of the WKCD 63 . From the analysis it is
evident that accountability was not well secured until early 2006. This was so even though
the project had experienced several phases including the launch of IFP in 2003 and the
introduction of additional parameters and conditions in October 2005.
Before the IFP was officially launched in 2003, the government did not carry out the
business case and feasibility studies normally expected. In particular, it failed to construct
the PSc. More importantly, perhaps, the cultural needs of Hong Kong had not been
examined properly and there is no clear policy direction with regards to arts and cultural
developments. Although the government later tried to claim that the decision to construct
the WKCD was based on the cultural needs identified by several studies, in fact these
studies were mostly published only after the decision was made. The government's
approach in the pre-IFP period appears to have been inconsistent with the best practices
elsewhere as well as with its own internal guidelines.
In order to secure communal accountability, key stakeholders should be sufficiently
consulted. Through the documentary analysis and interviews, it is evident that most arts
and cultural groups did not believe they had been sufficiently consulted about needs for

63 According to the conceptual framework proposed in Chapter 4, communal, managerial and public
accountability - the dominant forms of accountability - are adopted as aspects to examine the accountability
secured at the initiation stage of the WKCD, i.e. before the Invitation for Proposal is launched. Whilst
contractual, managerial and public accountability are used to study the accountability secured at the set up
stage, i.e. after the Invitation for Proposal is launched.

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and the details of cultural district, such as its location, the nature of and balance between
the arts and cultural components in the district, the development approach and mode of
financing. Equally, the direct participation of the District Council, in particular, the Yau
Tsim Mong District Council 64 , was minimal, only being briefed after the relevant
decisions of the WKCD are made, rather than being consulted before. Hence, one-way
communication was observed. This has definitely limited the scope within which both the
views of the public and their representatives, as well as the views of the arts and cultural
groups, could be heeded in the decision-making process. Hence, without appropriate
means to ensure such views were heard and adequately considered, communal
accountability does not appear to have been well secured in the pre-IFP period.
Given the limited roles of the Executive and Legislative Councils, in either the
internal or external monitoring mechanisms, or in the decision-making process of the
WKCD in the pre-IFP period, plus the limited press reporting on the early stages of the
project, both public and managerial accountability are not well secured. More importantly,
as the business case was not formulated clearly at the initiation stage of the project, and
given the very vague objectives of the WKCD, the degree of contractual and public
accountability that could be secured at the later stages have been undermined. Each of the
above factors has acted as a barrier to securing accountability for this PPP project.
For example, the IFP, by nature, is a preliminary contract that provides a blueprint on
the respective roles, responsibilities and liabilities of the parties involved. Hence, the IFP
is referred to when examining the degree of contractual accountability that has been
achieved. With no clear policy objectives for the WKCD, and with an established business
case, market testing, PPP feasibility study, output specifications and the PSC lacking,
contractual accountability does not appear to have been well secured in the IFP and its
related documentation.
After the IFP was launched, 'how to secure accountability in the development of the
WKCD' has remained as a key issue among the residents, key stakeholders and politicians.
Before the resignation of the former Chief Executive, Mr. Tung Chee-wah, on March 7,
2005, the government held a strong stand towards the development of the WKCD, in
particular on the mandatory requirements that listed in the IFP document. Although the
government had extended the deadline for submission of proposals and an 'extra' round of

64 The proposed WKCD is located in the district of Yau Tsim Mong. Thus, residents nearby are expected to
be consulted on the project in advance.

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public consultation was launched after their initial screening65 , the heated debate in the
community did not cool down and no 'real' public participation, including that of the arts
and cultural groups, had been observed66 . With reference to the role played by the
Legislative Council, it is evident the Council did at times actively scrutinize the project by
passing motions, raising questions and establishing a Subcommittee to oversee the
development. However, its participation was barely beyond the stage of placation as the
government had the final say on the project and views of the Council are seen as advice
only. Owing to the lack of institutional or structural role for the key stakeholders, public
and its representative67 - the Legislative Council - in the development of the WKCD,
public accountability does not appear to have been well secured. However, compared with
the degree of achieved public accountability in pre-IFP period, some slight improvements
were observed as time went by. This is because later on there was some two-way
communication be~een the powerholders and the public in the post-IFP period under
Tung's leadership.
Despite the increasing two-way communication that was observed, this does not
necessarily mean that accountability to the public has been secured more effectively. It is
worth noting that at times different accountabilities needed to be balanced against each
other. For example in the early stage there was a rumor that Mr. Tung was the one who
was pushing the project through and thus the insistence of Donald Tsang at that time on
maintaining the preset framework could be regarded as reflecting a greater emphasis on
managerial accountability to the Chief Executive rather than on communal accountability
to the pUblic.
The resignation of Mr. Tung in March 2005 served as the turning point of the project.
With new actors in the highest decision-making level of the WKCD 68 , two major changes
were made. These included the introduction in October 2005 of the additional
development parameters and contract conditions, for instance, maximizing the plot ratio at

65 No further public consultation would be conducted in the original plan of the government.
66 Although the government has tried to secure public accountability through the launch of the public
consultation exercise and conduction of several discussion forums, key stakeholders' involvement remains
uncertain. Together with the fact that concerns of key stakeholders have not been well-addressed or even
have not been addressed at all, their participation is regarded as non-participation or tokenism in accordance
with Arnstein's framework.
67 According to the government, the role of the Legislative Council in the development of the WKCD is
limited. This is because the project is classified as 'facilities to be used by the public' and hence no approval
from the Legislative Council is required.
68 Originally, Donald Tsang was the person-in-charge of the project. Since he succeeded Tung as the Chief
Executive, Rafael Hui took Tsang's original position as the Chief Secretary for Administration and the
chairman of the Steering Committee.

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1.81, capping the residential development at no more than 20% ofthe total gross floor area
and requiring at least 50% of the commercial and residential gross floor area to be carved
out for open bidding, as well as the subsequent decision in February 2006 to 'repackage'
the project.
The additional parameters and conditions significantly amended the IFP and
inevitably impacted on the extent to which contractual accountability was being secured.
The newly adopted terms and conditions however did not arise in response to any
deficiencies found in the IFP. Instead they reflected increasing public demands for
evidence of greater responsiveness to public views and for enhanced communal and public
accountability. Despite the reasons for the changes, compared with the pre-IFP era, there
were certain improvements in terms of providing more clear, specific and legal binding
standards in the IFP. Although there is no formal 'contractual relationship' between the
screened-in proponents and the government, the latter was still trying to be accountable to
the former contractually by at least keeping the canopy in the revised proposal. In this way
it remained fair to keep the race open only to the screened-in proponents 69 . However, it
can be argued that all bidders had a legitimate expectation that the government would
follow normal tendering procedures by choosing from only those of the screened-in
proponents whose bids conformed to the criteria and requirements listed in the IFP. Hence,
the government's unilateral changes to the IFP's terms and requirements has damaged this
legitimate expectation and violated the implicit 'contract' of the IFP. From this perspective,
contractual accountability has not been well secured.
Although the government claimed that the revised proposal was formulated to meet
public aspirations and demands for greater communal accountability, most legislators and
residents do not share this view. Some have even stated that the revised proposal is much
worse than the original one. From their perspective, the WKCD remains as 'a property
project in disguise' as there is a lack of a clear, underlying cultural policy. Moreover, the
single-developer approach70 has not been abolished in reality and some fresh issues have
also emerged from the revised proposal. Such critics argue that their views have not been
responded to or taken into account appropriately in the decision-making processes of the

69 This is because the canopy was regarded as a mandatory requirement in the IFP and a proponent was
screened-out in the initial screening process as no canopy is included in his proposal. Once the canopy is
dropped, the IFP would be considered as officially scrapped and another round of IFP must be launched so
as to uphold the principle of fairness.
70 In the revised proposal, the winning proponent has to carve out part of the site for open bidding in the
market. However, as the winning proponent has the ultimate power to decide which part would be carved out
and when the carved-out portions would be tendered, the development mode of project is regarded as a
'mini' single package approach in this dissertation.

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revised proposal. Thus, with continuing low public satisfaction, public accountability does
not seen to have been well secured.
Managerially, it is clear that Rafael Hui has been answerable to the Chief Executive
for the revised proposal. To a great extent, the original strong stand on the canopy and
single developer approach that was taken by the Chief Executive when he was still the
Chief Secretary for Administration and was chairing the Steering Committee, have preset
the framework under which Mr. Hui can operate. Thus, given Rafael Hui's managerial
accountability to maintain Donald Tsang's stand on the canopy and single package
approach, this meant that neither were abolished when announcing the revised project
even though there was a significant public outcry on these issues.
In February 2006, the government officially announced that the project was to be put
'on hold' as the three screened-in bidders had indicated that they would not stay in the race
under the revised terms and conditions. This decision effectively ended the contractual
accountability relationships on one hand, but secured better public and managerial
accountability on the other.
Although the IFP and related contractual accountability relationships were officially
scrapped by the decision to start the project over again, whether it was the government-
with its unilateral violation of the original IFP's terms and conditions or the screened-in
proponents' decisions to withdraw that were primarily to blame is debatable. However,
whilst the decision effectively ended one set of contractual accountability relationships, it
opened the door for the late establishment of new and more clearly defined contractual and
accountability arrangements. In this sense, in the long term once the project has restarted,
more effective contractual accountability might be secured.
As previously mentioned, members of the opposition camp had been critical in many
aspects and did not appear to be satisfied with the revised proposal. They argued that as
'fundamental issues', for instance, the single developer approach, the canopy- and
software-related issues, had not been touched or responded to properly by the government.
Clearly, since the launch of the IFP, they urged the government to rethink the project and
to terminate the IFP so that 'real' consultation could be conducted, and without being
constrained within a firmly preset framework. Apparently, the decision to start the project
over again through establishing the Consultation Committee did better meet the
expectations of the opposition camp 71. At the same time, the establishment of the

71 It is worth noting that members of the opposition camp include key stakeholders, legislators, concerned
individuals and the public who are against the construction of the WKCD on different grounds.

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consultation committee, to a certain extent, highlighted the government's political
commitment to materializing the project whilst also meeting the needs of those who are in
support for the WKCD. Therefore, public accountability does appear to be better secured
at this late stage.
Moreover, it IS believed that the decision to 'delay' the project also reflects
managerial accountability to the Chief Executive. This is because materializing the project,
rather than sticking to a preset framework, has now become the key policy objective. As
the prime decision maker, Mr. Hui has to be accountable managerially for achieving this
policy objective. Facing the response of the community on the revised proposal and
constraints as listed in Section 8.6.2 and 8.6.3, it is clear that starting the project over
again is the most feasible way to materialize the project without posing further challenges
to the Hong Kong's governance. Some critics have suggested that the main reason for
'delaying' the project is to ensure that the controversy surrounding the project would not
harm the popularity of the Chief Executive, who must seek reappointment within one and
a half years. Clearly, once the revised proposal failed to receive public support even
though it was formulated 'to meet public aspirations', and given the decision-making
boundaries set by Mr. Tsang, Rafael Hui had to adopt a different strategy so as to be able
to carryon the project. Trying to do so too aggressively would definitely harm the
popularity of the Chief Executive. From this perspective, therefore the Chief Secretary for
Administration has been trying to balance the needs both for managerial accountability to
the Chief Executive as well as the government's accountability to the public.
To sum up, it is clear that in response to the public outcry and the subsequent
personnel changes at the highest decision-making levels of the WKCD, accountability has
better been secured as time has passed. Although it seems that the revised proposal and
subsequent decision to 'delay' the project have, in general, now met the public
aspirations72 better, the government's original intention may not have been to 'please' the
public. This perception is generated as Rafael Hui seldom spoke up before the revised
proposal and the subsequent decision to 'delay' the project were announced. In particular,
for a while he even refused to attend the meetings of the Legislative Council whose
legislators wished to be updated on the progress of the WKCD. Further, under Mr. Tung's
earlier leadership, managerial accountability to the Chief Executive appeared to be the

72 The revised proposal is claimed to be fonnulated so as to meet the public aspirations, even though it fails
to gain public support. The decision to 'delay' the project, in general, is in line with the public aspirations
and is well-received in the community.

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most significant accountability that had been secured. As a consequence, the researcher is
of the view that, together, contractual and managerial accountability to the Chief
Executive dominated over communal and public accountability in the establishment of the
WKCD to such a degree that the integrity of the project itself was harmed and became
unsustainable in its IFP formulation.

9.3 Lessons drawn from the WKCD

9.3.1 Factors That Facilitated the Accountability Secured
As previously analyzed, accountability, in general, cannot be regarded as well
secured until early 2006.
Since the handover, Hong Kong has transferred from a British colony to a Special
Administrative Region of China. According to the Basic Law, Hong Kong enjoys a high
degree of autonomy and hence a mentality of 'Hong Kong people ruling Hong Kong' has
developed. With the 'encouragement' of greater democracy by the colonial Hong Kong
Government shortly before the handover73 , greater political awareness and participation of
the Hong Kong citizens had begun to develop. This awareness and participation were
further enhanced by the 'success' of the July 1 protest in 2003 74 • On one hand, the July 1
demonstration weakened the governance capacity and legitimacy of the HKSARG. On the
other, it showed the public that they could hold the government accountable through
public action and outcry. Since then, more Hong Kong citizens, especially the middle class,
have been motivated to take part in the political sphere75 . Without a doubt, this new
'political climate' and mentality have been determinative in securing greater
accountability in the WKCD development. The intensive and continuous public outcry and
the active participation of the Legislative Council 76 and its subcommittee have
significantly facilitated the accountability secured.

73 In the 1995 Legislative Council election, the directly elected seats from geographical constituencies
increased from 18 to 20 and 9 additional functional constituency-seats were established to enlarge the bases
of representation, as well as the expanded size of eligible voters (Lam, 2000), political awareness and
participation was thus enhanced.
74 After the protest of half a million people on July 1, 2003 and the subsequent resignation of the chairman
of the Liberal Party from the Executive Council, the government fIrst postponed the resumption of a second
reading of the National Security (Legislative Provisions) Bill and withdraw it fInally in September 2003
(Cheung, 2005).
75 The newly establishment of the Civic Party whose core members are Hong Kong-born middle class, for
instance, Audrey Eu, Ronny Tong and Alan Leong, have shown that Hong Kong people are becoming more
willing to take part in the political sphere through participating in the elections and political parties.
76 To a certain extent, it can be argued that the political climate has led to the united and active participation
of the Legislative Council on the project. This is because since the July 1 demonstration and subsequent
District Council elections, pro-government political parties 'realize' that on some controversial issues, they
would not simply support the government because they are pro-government in nature.

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 As discussed in Chapter 6, the government did not consult the key stakeholders,
including the arts and cultural groups and the local community's representatives - the
District Council, on the development of the WKCD in the pre-IFP period. However, since
the launch of the IFP, the public outcry in the community and the opposition by some
members of the Legislative Council led to much more active scrutiny of the project. Hence,
the government felt obliged to conduct an 'extra' round of public consultation so as to
demonstrate its willingness to uphold public accountability. Put differently, if the political
awareness of the public had not been aroused, the degree to which the public views needed
to be heeded in the decision-making process would have been limited ever further. In tum,
the public accountability secured under Tung's leadership would have been even further
restricted.
To a large extent, the revised proposal and the February 2006 decision were
formulated so as to meet public aspirations. These decisions can thus be regarded as the
'fruits' or achievements of the heated debate in the community and of the active
participation of the Legislative Council in holding the government accountable.

9.3.2 Factors That Undermined the Accountability Secured

In examining accountability in the establishment of the WKCD, it is found that
accountability secured has been undermined by inconsistencies in the HKSARG's policies,
by its non-conformance with best practices elsewhere, together with the low-trust
environment that exists between the HKSARG and its people, have undermined the
accountability secured.
As stated in Chapter 6, the government's approach in developing the WKCD has not
conformed to best practices elsewhere. The adoption of PPP as a means to develop the
WKCD was greatly challenged by different parties, in particular, the Legislative Council.
This was partly because the government had not carried out a proper business case and
feasibility study. In particular, the failure to construct the PSC in advance, which is
regarded as an essential best practice elsewhere, created considerate misgivings and
suspicions as to the appropriateness of the approach. Without such studies as a reference,
whether value for money would be delivered in this PPP project was questionable. Further,
the cultural needs of Hong Kong and how the WKCD answers these were not examined
properly either. Although the government claimed that the decision to construct the
WKCD was based on the cultural needs identified by several studies, the fact remains that
most of these studies were mostly published after the decision was made. Without clearly

210
establishing what the cultural needs in Hong Kong are, it is very difficult for the
government to meet the expectations and needs of the key stakeholders, and in particular,
those of the arts and cultural groups. As a result, of such failures, communal accountability
could not be well secured. Moreover, it is evident that no clear and specific policy
objectives were established for the WKCD. Hence, this also undermined the extent to
which either public or contractual accountability could be achieved. Without doubt, these
deficiencies generated from the non-conformance with best practices elsewhere have
undermined the extent to which accountability, in general, could be secured in establishing
theWKCD.
Policy inconsistencies by the HKSARG likewise undermined accountability too.
Particularly detrimental were the inconsistencies found in the government's handling of
several previous PPP projects, including the Cyberport, the Disneyland and the
Asia-World Expo. In developing these projects, different approaches were adopted. For
instance, neither an Expression of Interest Exercise nor a Request for Proposal was held
for either the Cyberport or Disneyland. Hence, there is a public perception that procedures
in developing a PPP project could be tailored in accordance with the will of the
government and without referring to normal purchasing procedures and requirements.
More importantly, as analyzed in Chapter 5, accountability and transparency were not well
secured in the Cyberport and Disneyland. Additionally, the development of the former has
long been suspected both of being based on government's collusion with the businesses
involved and of transferring benefits. Thus, in many of the public's and legislator's minds,
policy inconsistencies and collusion between the government and favoured businesses,
and the transfer of benefits have become associated with PPP projects. With such skeptical
mindsets, and the fact that the Legislative Council does not have an institutional role to
play in approving the WKCD, the public no longer felt able to trust the government and
this, in tum, undermined the extent to which accountability would be secured. This is
because, as Wolf (2000) suggests, 'trust in government is what makes democratic
government effective. Without trust no living democracy and no real citizenship, without
trust no compliance with rules and regulations and no willingness to pay taxes, without
trust no civil service of high standards and without accountability no trust in government'.
Last, but not least, the generally low-trust environment that exists between the
HKSARG and its people and particularly during the Tung administration, has undermined
the accountability secured. As discussed in Chapter 7 and 8, however, although there were
many deficiencies in accountability, nonetheless the government and the screened-in

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proponents had at times attempted to secure public and communal accountability more
effectively. For instance, interviewed proponents had consulted with various arts and
cultural groups before formulating their proposals and the government had also reassured
the public that financial information arguably kept secret so as not to harm the bargaining
power of the government, would be disclosed once the tender is awarded. Furthermore, to
a certain extent, the revised proposal might have diminished the 'potential' collusion with
the business involved or the likelihood of a transfer of benefits as the potential for
generating profits was cut to the margin. However, owing to the low-trust environment,
policy inconsistencies, previous bad experiences on holding the government accountable
on other PSI projects, these efforts in securing public and communal accountability were
neither highly appreciated nor well-received in the community.

9.3.3 Theoretical Lessons on the Conceptual Framework

In light of the experience gained from the application of the conceptual framework to
the WKCD case, several theoretical lessons can be drawn. First, in addition to ensuring
clear objectives and outputs or performance criteria are incorporated in the contracts,
various means are needed for helping government in 'preserving' the 'contractual
relationship' and contractual accountability with the screened-in proponents before the
tender is awarded in the set up stage. For example, the IFP is regarded as the preliminary
contract or means for establishing contractual accountability relationships as it outlines the
respective roles, responsibilities and liabilities of the parties involved.
Moreover, it should be noted that in the model a loose form of public accountability,
instead of political accountability, was adopted so as to better fit Hong Kong's context.
This is because as discussed in Chapter 4, the legislature in Hong Kong lacks the rights
and powers normally found in other democratic countries. Indeed, it often appears as if the
government has tried to avoid its public accountability in the project. For example, as the
WKCD is classified as 'facilities to be used by the public' instead of public works, the
government argued that no prior approval from the Legislative Council was required.
Hence, the institutional role played by the Legislative Council has diminished.
Furthermore, it is clear that the Legislative Council, institutionally, lacks any real ability to
hold the officials accountable politically, both before and after the implementation of Mr.
Tung's Accountability System in 2002 (see Chapter 4 for details). Although the Legislative
Council is given the power to summon government officials and to set up investigation
committees to study serious scandals it can also move no-confidence motions against

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officials. However, any such no-confidence motions passed have no binding force on the
government. For example, before the implementation of the Accountability System for
Principal Officials, even though no-confidence motions had been moved against three
senior officials, including the Secretary of Justice Elsie Leung on 10 March 2000, the
Housing Authority Chair Rosanna Wong and the Director of Housing Tony Miller on 26
June 2000 (Ma, 2002), none of them were forced to step down so as to uphold their
political accountability. It seems, therefore, that although the Accountability System for
Principal Officials has been in place since July 2002, the principal officials are
fundamentally accountable both managerially and politically to the Chief Executive, but
not to the public (South China Morning Post, Jul 8, 2004). Thus, whether public
accountability or political accountability should be adopted in studying the accountability
achieved in PPPs is mainly dependent on the local context.
Last, but not least, within the WKCD case, it seems that market accountability
became increasingly important as a factor leading to the February 2006 decision. As stated
by the Rafael Hui (Feb 21, 2006a), 'although the development parameters for the WKCD
have been modified to meet public aspirations, the current situation is that the additional
parameters and conditions could not secure a positive response from the market. We have
to accept that there is a significant gap between public demands and market reality (Hui,
Feb 21, 2006a)'. Therefore, in studying accountability in a PPP project, market
accountability may be more important than was recognized by the original model. As a
consequence, market accountability should be also regarded as one of the dominant forms
of accountability at the set up stage of a PPP project.

9.4 Recommendations
In examining the accountability secured in the WKCD, several deficiencies of the
government's approach are identified. First, the government had not carried out a proper
business case, feasibility study and public sector comparator. Therefore, the decision to
adopt a PPP - a relatively new approach in Hong Kong - as a means to develop the
WKCD is without any firm foundation. As the government has reiterated that a PPP
structure is still the preferred development mode of the WKCD, it is strongly
recommended that proper business case and feasibility study should be carried out once
the Consultation Committee has established the cultural needs of Hong Kong.
Second, the very vague objectives of the WKCD and the lack of an established
business case are inherent threats to the degree to which contractual and public

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accountability could be secured. This is because without a clear mindset on what have to
be achieved in the WKCD, it is difficult to ensure that the objectives could be sufficiently
incorporated in contracts and hence contractual accountability is undermined. Further, the
government may not be able to justify its action when being held accountable to the public.
Therefore, other than conducting a proper business case, developing a set of clear
objectives is recommended.
Given that accountability and transparency had not been well secured in previous
PPP or PSI projects, the public feared there might be a transfer of benefits or government
collusion with the business involved. As the project will now start over again, it is of
particular importance to enhance the role played by the Executive and Legislative
Councils. Clearly, the fact that the Legislative Council does not have an institutional role
to play in approving the WKCD has disappointed and angered the legislators and the
public on one hand, and undermined the degree of public and communal accountability on
the other. As a consequence, prior consultation with the Councils should be conducted.
Additionally, their greater involvement in the decision-making process is strongly
recommended. Although the previous mistakes may not be easily forgotten by the public,
the adoption of a more accountable and transparent decision-making process of the
WKCD would help in generate greater trust in the PPP arrangement.

9.5 Conclusion and Suggestions for Further Studies

Based on the research findings, it is clear that no form of accountability was well
secured in the establishment of the WKCD until early 2006. Both public and managerial
accountability may be better secured by the decision to start the project over again.
Although it could seem that the revised proposal and subsequent decision to 'delay' the
project have, in general, met the public aspirations77 , these decisions may have been aimed
less at meeting public aspirations and public accountability and more at ultimately
securing enhanced contractual accountability and managerial accountability to the Chief
Executive. Overall, contractual and managerial accountability to the Chief Executive do
seem to have dominated the accountabilities given prominence in the establishment of the
WKCD. It is also concluded that policy inconsistencies by the HKSARG, as well as both
its non-conformance with best practices elsewhere, and the low-trust environment that

77 The revised proposal is claimed to be formulated so as to meet the public aspirations, even though it fails
to gain public support. The decision to 'delay' the project, in general, is in line with the public aspirations
and is well-received in the community.

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exists between the HKSARG and its people, have undennined the contractual
accountability secured.
As the WKCD is now starting over again, accountability is expected to be better
secured in the 'redevelopment' of the project. In order to achieve this, it is recommended
that a set of clear objectives should be developed, a proper business case, feasibility study
and public sector comparator should be carried out so as to enhance the degree to which
accountability can be secured. Greater involvement of the Executive and Legislative
Council in the decision-making process is also suggested.
Given that PPPs have been increasingly implemented in different countries and
accountability is an important public ethos that should not be sacrificed in exchange for
lower cost and better perfonnance, studying how accountability can be secured effectively
in a PPP is vital. This study has generated practical insights into accountability issues at
the early stages of a PPP development and the findings are valuable for policy learning
and development for governments, in particular, the HKSARG. However, as this
dissertation focuses mainly on the initial and set-up stage of a PPP project, further study
will be necessary by examining accountability at other stages.

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