Peeling away the 'fruit money'
LET'S SET THE RECORD straight: the Government has never defined the old-age allowance as a reward for the contribution the recipients have made to society. The so-called 'fruit money' - considered so little it is only enough to buy fruit with - is instead classified as a hand-out, a form of social security.
At present, everyone over 70 is eligible to receive $705 a month, regardless of their financial situation. People aged between 65 and 69 can receive $625 a month if their income is less than $5,910 a month and their assets below $169,000.
A total of 444,138 people are covered by the scheme, with 311,029 of them aged over 70. This cash payment, which cost $3.46 billion in the last budget, is one of the remaining welfare payments which does not require a means test.
So it is hardly surprising that Tung Chee-hwa announced in his Policy Address last week that the Government would review the scheme in a bid to make better use of public resources.
The reason for the review is simple. Officials have long complained that while there is a significant group of poor elderly people who rely on the cash payments, there are also many wealthy senior citizens taking advantage of the benefit.
As the SAR's population continues to age, with the number of elderly - classed as people over 60 - projected to increase by one million every 20 years, some control of welfare spending in this area is necessary. The Government has been aware of the problem for years. It planned to introduce a means test for the Old Age Allowance as early as 1996, but every time the idea was floated in the press, it was heavily criticised. As a result, officials opted to put the proposal on the back burner.
Now, the authorities have finally come up with an amended proposal. As with other reforms, such as education, the Government seeks to ensure the proposal will have some guaranteed supporters. This time it focuses on the poor elderly, who desperately need more cash to meet basic everyday needs.
Yeoh Eng-kiong, the Secretary of Health and Welfare, has stressed that the aim is to provide more cash for poor elderly people, while ensuring that all existing recipients will not be affected. He said the Government might increase the payments from $705 to about $1,000 a month, but there would probably be a need to introduce a means test.
Welfare officials say the idea is only in its preliminary stages. They have not spelled out whether all new applicants would be asked to disclose their income and assets. A source close to the Government said one option was to require all newcomers to the benefit to undergo a means test. However, if this plan was introduced, it would cost millions of dollars more in the first few years, as the increase of about 40 per cent in cash payments would not be balanced by a reduction in new applicants due to the means test.
Law Chi-kwong, the Democratic Party legislator representing the social-welfare sector, said only a small minority of newcomers would be excluded from the payments each year. But the benefit to the public purse in the long run could be considerable. For example, if there are 5,000 people each year who do not qualify for the payments, the total number of recipients would be cut by 50,000 in a decade. This translates to an annual saving of about $600 million.
A senior official said the key problem was that the increase in the number of elderly people in the next decade would be drastic. 'The situation will become worse as the baby-boomers reach their retirement age in the next 15 years.'
He also noted that many in this group were more financially self-sufficient and did not need official assistance. But the Government may again have underestimated the negative response. Many senior citizens, even those with little money, are loath to reveal financial details.
Leung Wai-chun, of the Elderly Rights Association, has been busy trying to explain the proposed reforms to the 120 single elderly people living in her neighbourhood in Tsz Wan Shan. 'Many of them are just panicking. They need and want to get their Old Age Allowance by the age of 70 but are worried even more about the means test,' she said.
Ms Leung added that most elderly people had quietly put away savings for use in emergencies. These funds are usually nicknamed 'coffin money' - a provision for funeral arrangements - which they do not want anyone to know about.
'There is not a lot of money there, but they just do not want to let their children know about it,' she said. 'Does the Government know their feelings?'
She said most elderly people would rather go without the 'fruit money' than suffer intrusion into their private lives.
Ms Leung, who turned 65 last week, said the Government had already hurt the feelings of the elderly simply by raising the issue of reform, even if present recipients would not be affected. 'How about those aged 68 or 69? Some of my neighbours said they were planning to hide their money, or to spend more in order to fit the means test,' she said.
Ng Wai-tung, a spokesman for the Society for Community Organisation, stressed that the allowance should be seen as a form of respect to the elderly for their service to society, despite its official classification as social security. 'They have been working and contributing to the community for decades. This is something they are entitled to.'
But the proposed review of the Old Age Allowance is likely to be the first step in long-term reforms to rationalise the use of welfare resources. Two other welfare schemes (the disability allowance and residential care for the elderly), which are not mean-tested, could also be subject to change.
The handicapped are entitled to between $1,260 or $2,520 a month, depending on their disability. The Government is also providing more than 20,000 residential places for the elderly, each costing between $4,000 and $6,000 a month.
Carrie Lam Cheng Yuet-ngor, the Director of Social Welfare, was frank about how such public funds should be used. In March, when she was still the Deputy Secretary for Treasury, she said both schemes should be subject to reform.
'If your family is all right, then you should pay for the care provided to your elderly relatives. You should not rely on general taxpayers to foot the bill.'
'Some subvented homes are not very vigilant in . . . means-testing before admitting the elderly. So we have this absurd situation where the middle-income or more-affluent elderly are staying in some very high-quality, subsidised homes, whereas the poorest elderly are accommodated in the poorest-quality private homes.'
Means-testing is not a straightforward exercise. Many elderly people in Hong Kong are not rich, but their children are. Where would the testing stop? Would it include an elderly person's children, or even in-laws? These are the key questions the Government will need to consider before tampering with fruit money.
'They need their allowance . . . but are worried about the means test'
Quinton Chan (firstname.lastname@example.org) is a staff writer for the Post's Editorial Pages