Government Transport Land-use Planning and Development by Implicit Contract for Franchised Buses and Ferries in Hong Kong, 1933–1972

Abstract

As a contribution to policy research on monopolies in planning for public utilities and the role of the state in ordering the coordination of land use and transport in a market economy, this paper evaluates a couple of hypotheses informed by the Coasian economic concept of an implicit contract. There have been public subsidies to franchised bus and ferry companies in Colonial Hong Kong in the form of concessions in kind with spatial land-use transport implications. The hypotheses were evaluated by a comprehensive archive survey and documentary analysis of the clauses in relevant franchise documents, Crown Leases, government memoranda, and expert writings on buses and ferries. The findings revealed that there was no real land price subsidy provided for within or outside the franchise or lease documents, but there were substantial indirect subsidies during the study period. These were provided not only in terms of the free provision of bus terminals and piers, but also their planned combination on government land, as well as the strategic positioning of bus terminals in newly-developed government housing estates and new towns. The land-use public transport planning strategy shaped the urban structure of Hong Kong prior to the takeover of the companies by developers. The critical role of the government vis-à-vis developers as a super landlord is discussed.

Acknowledgements

The authors are most grateful to the following experts for their advice on the research for this paper: Dr Dorothy Chan, former Deputy Commissioner for Transport and now Deputy Director (Administration and Resources) of HKU SPACE, University of Hong Kong; Mr Mike Davies, author of a number of books on buses in Singapore, Hong Kong, Macau, Guangzhou (Canton) and Shanghai; and Mr Lyndon Rees, formerly with the Transport Department, CMB, City Bus, and New World First Bus.

Notes

1. The story of the famous Aldenham Overhaul Work of London Transport, opened in 1956, is a case in point.

2. The term ‘implicit contract’ is not used to refer to specific benefits to avoid entangling the analysis, which is qualitative, with high mathematical expositions in the literature for implicit contracts. A contract must have ‘consideration,’ but not vice versa.

3. A well-known example of an implicit benefit granted to franchisees is that in practice (i.e. by way of informal convention) traffic police will not prosecute bus drivers when they carry too many passengers, do not park their buses quite within the authorized bus parking zones by bus stops, or when their buses emit too much smoke, which is a favour that has never been granted to taxis or non-franchised red maxicabs.

4. Organized by Dorabjee Nowrojee, which started in 1880 with 4 vessels named Morning Star, Evening Star, Rising Star and Guiding Star.

5. It would be reasonable to suppose that it would have been sometime in the 1860s, possibly as a sideshow to the implementation of the British Merchant Shipping Act. There is also the matter of the licensing of the drivers (in ferries, coxswains). We read in Johnson (1998, p. 33) that, following an accident in 1891, the coxswain of the Morning Star ‘lost his certificate for six months’.

6. It is not clear whether this apparently irrational decision was indeed forced upon the government by the dictates of defence strategy that cumulated in the 1936 Hong Kong Defence Scheme or indeed was simply the result of successful anti-bridging lobbying of the ferry operators.

7. Jubilee Street after the Second World War (HYF ferries to Kowloon [Mongkok] from 18 November 1964 at the new harbour routes pier; Silvermine Bay-Ping Chau, Cheung Chau and Tai O at the new outlying islands pier from 27 August 1966), Wanchai (HYF ferries upon reprovisioning of the new waterfront, ferries to Jordan Road and Hung Hom commencing 10 March 1968) and North Point (HYF ferries to Hung Hom and Kowloon City commencing 1 September 1963, later also to Kwun Tong)—and, outside the study period, later to Sai Wan Ho on the Hong Kong Island side—Tsuen Wan (HYF ferries commencing on 3 July 1958), Tai Kok Tsui (replacing Mongkok pier, HYF ferries to Central commencing 23 April 1972), Hung Hom (HYF ferries to old Wanchai pier commencing 12 November 1963 and, outside our study period, ‘Star’ ferries from 1986 from the new pier), Kowloon City (HYF ferries to Tonnochy Road, Wanchai waterfront, commencing July 1956), Kwun Tong (new pier for HYF ferries to North Point commencing 12 February 1972, to Jubilee Street 1 May 1972, to Sai Wan Ho 11 May 1972)—and Sam Ka Tsuen (HYF ferries) to Sai Wan Ho commencing 11 May 1972—on the Kowloon side. See Hong Kong Government (various years 1947, 1950, 1951/52, 1953–1960, 1961–1973); Wah Kiu Yat Po (various years 1948–1973); Ho (2004, pp. 172–173, Table 3.5).

8. Chan (1999), Wah Kiu Yat Po (various years 1948–1972), Zheng (2000a, 2000b), and 1:600 Ordnance Survey Maps (inspected at Surveying and Mapping Office, Lands Department, Hong Kong).

9. This estate was built on a former Standard Oil depot, the ‘Caltex’ Oil Depot, before the Second World War.

10. Commencing 27 January 1965, double-decked on 5 October 1970.

11. Information confirmed in an Interview with Dr Dorothy Chan and other government planning officials (p. 28) In paragraph 2 of memo BL 5/3096/58 from Colonial Secretariat to District Commissioner. New Territories, dated 12 April 1958, the Colonial Secretariat stated: ‘Terminus areas are retained as Crown land and not leased to Companies using them. Government is responsible for the maintenance of such terminal areas, as regards road surfacing etc.’

12. Bus riders who wanted to catch a bus between terminals had to wait a long time. If they were lucky, they might be able to squeeze onto one and get only a standing place until getting off.

13. The authors are grateful for the advice of Mr Lyndon Rees on this point.

14. Information obtained from an Interview with Mr Lyndon Rees.

15. Which owned the Hong Kong Shipyard, incorporated in 1948.

16. In 1950 the government paid HYF a sum of HK$1.637 million as indemnity for loss of vessels requisitioned during the Battle of Hong Kong (Hongkong & Yau Ma Ti Ferry Co., Ltd, 1973, p. 21).

17. It is an interesting question whether this ‘windfall’ increase in asset value enabled the companies to finance ferry/bus expansion and/or replacement on more favourable terms than might have been available had they no such assets with which to back the financing required.

18. The critical point being that to be safe in typhoons the ferries had to be in such shelters (there are photographs of what happened to ferries in the 1920s that used the ferry piers for typhoon berths). Their freeboard was too low and windage too high to have survived on a mooring in the harbour proper.

19. In addition, at the end of 1975 CMB completed a multi-storey depot at Chai Wan capable of accommodating 450 large-capacity double-decker buses.

20. This was a major cost-saving move by eliminating conductors, who issued tickets, and so forth.

21. This happened in 1971 CMB, once it obtained a government relaxation of bus height limits for hilly routes, started to add an extra deck to each of its relatively new and over-powered 106 (25 feet 1 inch) Guy Arab Mark V single-decker buses; reducing the length of its 40 single-decker ‘Long Dragon’ (also of Guy Arab Mark V stock) from 36 feet to 30 feet before adding an extra deck. From an Interview with Mr Lyndon Rees, we learnt that the cutting work was done in CMB's Chai Wan deport and the re-bodying work at North Point's Java Road workshop.

22. During the communist riots in the 1950s and 1960s, some buses not kept inside depots were burned out by sabotage and more than 20 Daimler ‘Jumbo’ aluminium-body buses of CMB were burned down by arson in the 1970s.

23. Davis (1994, pp. 5–7 and 225–236; 1995, pp. 18, 290–295 and 298–301).

24. See Hong Kong and Yau Ma Ti Ferry Co. Ltd. (1973), Johnson (1998), Hong Kong Annual Reports (Hong Kong Government, 1934–1940) and Hong Kong Government (various years 1947, 1950, 1951/52, 1953–60, various years 1961–1972).

25. It was most unfortunate that the period immediately after the opening of the harbour tunnel coincided with the Bus Grant and union activism and ‘three-day-weeks' in the UK (Davis, 1994, p. 138), which taxed her bus production capacity, so that both CMB and KMB had to rely on second-hand buses, such as the Guy Arab IV double-deckers and the Leyland Titan PD3/4, which were often older than the stock on hand.

26. Mr Mike Davis informed the authors that overnight parking of CMB buses at Aldrich Bay Street bus station, which could allow kerbside parking, was discontinued by the Transport Department.

27. The detail involved the surrender of 2 pieces of adjoining individual marine lots (Kowloon Marine Lot Numbers 42 and 77) acquired by HYF and HKS at Tai Kok Tsui. For this the companies were regranted a much larger consolidated industrial site together with three other marine lots (Lot Numbers 78, 79 and 80), including an additional 11, 700 square feet of land extended seawards. These 5 lots remained governed by 5 separate Crown Leases instead of one Crown Lease. This favourable practice permitted piecemeal resale or redevelopment no longer possible today.

28. A special condition laid down was that if any company operating a bus service so desired, the successful tenderers might be required by the Governor in Council to purchase at such time as the Governor in Council may direct, under some method of valuation to be determined by the government, all or any suitable vehicles, repair plant and machinery, lands and buildings and materials used by the company for the purpose of undertaking prior to the 10 June 1933 (Passage entitled ‘Omnibus Services: Confirmation of Local Monopolies for Fifteen Years’, of unknown source, as quoted in Davis, 1994, p. 10).

29. CMB made the first successful move to a one-man operation as, unlike KMB which retained the rear doors of their preferred Daimler models, the Guy buses had doors close to the drivers' cabins.

30. HYF replaced coal-fired with diesel-powered ferries and began to build a fast, partly air-conditioned three-storey fleet in the late 1960s. It was also a pioneer in the use of hovercraft when services were extended to Tsuen Wan and speed of service became essential to remain competitive after the opening up of the Harbour Tunnel. Equally, with such things as double-ended vessels, with which SF was an early pioneer, double-decks, diesel-electric drive (as early as 1933), and various ways to improve docking, including guiding spring piles, and experiments with berthing parallel to the shore vis-à-vis alongside jetties at right angles to the shore. The Star Ferry Company also constantly innovated to keep pace with steadily increasing traffic.

31. Trial models, however, were fully assembled in the UK and often imported in complete units. In the 1978 trial of Metro Cammell Weymann ‘Metrobus’ 9.7MDR buses, UK engineers came to Hong Kong to make evaluations for CMB.

32. Memo BL 5/3096/58 from Colonial Secretariat to District Commissioner. New Territories, dated 12 April 1958. See note 11 above.

33. Figures 1–3 supplement the land-use classification models used by such experts in geography as Drakakis-Smith (1979, p. 33) by adding in an element of transportation. In terms of bus networking, the KMB system was circuitous and can be conceptualised as two triangles with their common apex the Jordan Road Ferry bus terminus. The base angles of the urban triangle were Tsuen Wan in the west and Kwun Tong in the east. The other triangle had their base angles in rural towns of Yuen Long and Sheung Shui. The CMB network did not have a complete circuit round the island and consisted of a east–west coastal urban axis from Shaukiwan to Kennedy Town, punctuated by four major ferry termini (Macau-Ferry, Central, Wanchai and North Point) which sub-urban routes to the hilly areas on the north and the coastal spots on the south of the Island. Compare this to the a-historical networks proposed in Wang and Po (2001, p.267).