Old age allowance

Help for elderly must not end at stopgap measures

PUBLISHED : Friday, 27 July, 2012, 12:00am
UPDATED : Friday, 27 July, 2012, 12:00am


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The week before last, Chief Executive Leung Chun-ying announced an interim package of welfare measures. Perhaps inevitably, some critics claimed it was just an attempt to divert attention from the allegations flying around the new administration.

But I think many other people - after being uncertain during the administration's rocky start - were glad to see Leung following through on his election pledges to have a more people-first government.

I believe people should see this package for what it is: proof that the new government means business.

It is essential to remember that these are interim measures. If they give the administration a boost in the opinion polls, that's fine - but that is not their purpose. The intention is to find a reasonably quick way to alleviate some specific problems. The most serious of these problems, and the main focus of the package, is the hardship faced by a needy group of some 400,000 elderly people.

That measure doubles the amount these people receive in an old-age allowance, to HK$2,200 a month. This is not a 'sweetener' in the sense of a one-off handout. It requires a permanent increase in recurrent expenditure to pay for it.

Hong Kong can afford that, and the recipients deserve it from a community that is grateful to them for their past work in creating our modern city. To underline the need for better provision for these citizens, the benefit has been renamed the old-age living allowance.

This is a temporary fix for a pressing problem. Looking ahead, we need long-term reforms to ensure that future generations of Hong Kong people can spend their retirement years in dignity and comfort. This needs to be done in a way that does not expose younger generations to unsustainable liabilities. Indeed, it is essential that the young support such reforms as both economically viable and socially fair.

Currently, we have a range of means-tested benefits applicable to the elderly, including the old-age allowance, comprehensive social security assistance, two levels of disability allowance and subsidised care services. Salaries tax payers get allowances for elderly dependents. The existence of poverty among the aged and the length of waiting lists for care homes prove that this system is not working.

Meanwhile, the working population is accumulating mandatory provident fund retirement savings. In the background is the phenomenon of lengthening life expectancy.

All of these components need to be examined as a whole. Currently, the system leaves some gaps in the form of needs that are not addressed. At the same time, some of the cash-payment systems can overlap. Different forms of cash assistance require different levels of means-testing. Some of the means-testing has implications for broader households as well as elderly individuals. This all needs to be rationalised.

The same goes for residential care for elders. There is a serious undersupply in the subsidised sector, often with two- or three-year waiting lists. Some old people do not live long enough to move in. Yet non-subsidised facilities have space. There is obviously potential for the government to buy in more capacity, but there are quality-control problems to solve. Further ahead, we need to plan land and manpower needs.

We need to establish not only better structures, but some basic principles. There are calls for a universal pension, which in theory can be simple to administer, fair and affordable.

However, there are fears that in practice the 'affordable' part of the equation will come under pressure as future politicians promise higher pensions - a trend that has damaged many Western governments. Yet means-testing has some real drawbacks of its own.

There are many questions and some of them do not have just one correct answer. Reform of old-age provisions is a process that will take years, not months, and it will be essential that the whole community takes part in the coming debate.

Meanwhile, poverty among the elderly continues. In a society as prosperous as Hong Kong, that is unacceptable and the recent package should help to alleviate it.

Bernard Chan is a member of the Executive Council