Grappling with grey power
With the government trying to tackle the financial crisis, the last thing Donald Tsang needed was a damaging row over 'fruit money', writes Daniel Sin
It was the financial crisis that did it. Faced with the effects of a global economic meltdown that has sent markets crashing, Chief Executive Donald Tsang Yam-kuen decided the last thing his government needed was an exploding controversy over the old age allowance.
Last Friday, Mr Tsang reversed course and announced that the old age allowance - commonly known as 'fruit money' - would be raised to HK$1,000 for those aged 65 or older, and the proposed means test would be shelved.
Strong public sentiment dictated Mr Tsang's change of heart. As a senior government source admitted, the administration had previously overlooked two important issues - economic circumstances were not conducive to a rational discussion of the matter, and the interests of the elderly population - always a delicate issue - were involved.
The source said that the financial crisis was the worst Hong Kong had experienced in recent times, with more than HK$2 trillion having disappeared from the stock market in a short period and the property market slumping. It would take a long time for Hong Kong to recover, and a lot had to be done. It was essential that the government mended relations with political parties and key sectors of society for the sake of harmony.
'If we insisted on our position [on means testing], nothing could be achieved,' the source said, adding that the government would tackle the issue at a suitable time after the financial crisis was over.
But while the argument over fruit money may have subsided for the time being, the quest for better protection for elderly people on low incomes is far from over.
Hong Kong has 870,000 people aged 65 or over, of whom 475,000 are receiving an old age allowance at a total cost this year of HK$3.9 billion. A single person aged between 65 and 69 who is not already receiving a social security payment is entitled to HK$625 per month, provided that he or she is earning less than HK$5,910, or has less than HK$169,000 in assets. The income and asset limits for a married couple are HK$9,740 and HK$254,000, respectively.
There have been calls from the community to raise the allowance to HK$1,000, and the Democratic Party and the Democratic Alliance for the Betterment and Progress of Hong Kong campaigned on the issue in the Legislative Council election. But the government was reluctant to budge, arguing that the increase would become a heavy financial burden in 25 years' time.
Financial Secretary John Tsang Chun-wah said in his budget speech this year that the number of elderly people would increase 2? times to 2.17 million by 2033. Even at the current rate, funding the allowance for that many recipients would cost HK$9.7 billion annually.
'If the old age allowance were increased to HK$1,000 for each eligible person, by 2033 expenditure would surge to HK$14 billion,' he said, adding that it was a heavy financial burden.
In his policy address, the chief executive pointed out that the allowance was not intended to meet the basic needs of the elderly, although many who faced financial hardship - but were not yet poor enough to qualify for the Comprehensive Social Security Assistance scheme (CSSA) - had relied on this income as a maintenance subsidy.
That being the reality, he said, it was reasonable to pitch the payment level at HK$1,000, but it should be paid to those in genuine need, as he put it, 'to ensure the sustainable development of our existing non-contributory social security and welfare system'.
The way to determine who was in 'genuine need' and who wasn't was by use of a means test. He said details would be decided in a review to be completed this year.
However, as the government source suggested, Mr Tsang had failed to take into account the symbolism of the gesture.
Many elderly people consider fruit money to be a token of appreciation for their lifelong contribution to the community, and any plan to means test it would be considered offensive.
'We would rather the government not increase the old age allowance if it has difficulties under the current poor economic environment. But to impose a means test is insulting,' said Tam Shuk-kit, 72, a member of St James' Settlement's elderly services centre, a Wan Chai-based social welfare organisation.
'[The old age allowance] is too meagre to be a living allowance; its main function must be one which shows respect for the elderly, so there should not be a means test,' added Fung Miu-ha, 68, a member of St James' Settlement Retired Persons' Association.
Hong Kong University social work professor Nelson Chow Wing-sun said the old age allowance was not designed as some honorary gesture but to promote care in the community. Professor Chow referred to a 1973 report issued by a Social Welfare Department working party in which it was pointed out that 'if the elderly had an independent income of their own ... they would be better accepted in the family, and in some case better treated'.
He said that the allowance had been non-means-tested until 1987, when the government relaxed the age limit from 70 to 65 in exchange for some political factions dropping their bid for a retirement protection scheme. 'But, over the years, people gradually accepted it as a gesture of respect for the elderly.'
Professor Chow said the cost of raising the allowance should not be as great as the government contended.
'The chief executive said that, by 2033, with about 25 per cent of the population being elderly people, every HK$1,000 paid to one elderly person would have to be shared by two working members of the community. I disagree with this,' he said. 'Many of our elderly were born before the war and went through the most difficult times in Hong Kong during their youth.
'But, for those who reach 70 by 2033, they are among the bulk of the current working population who are much better off financially; most have long planned for their future retirement. The economic circumstances of the elderly in 50 years' time would not be that bad.
'Moreover, statistics have shown that the amount of recipients of social security has levelled off over the past five to six years, which indicated that suggestions future taxpayers would bear a huge burden caring for the elderly population were quite overstated,' Professor Chow added.
Over the past fortnight, public opinion on the issue has been pretty much all one way - against the government.
Apart from criticism from pundits and political parties, community organisations were about to organise mass action and mobilise affected elderly people to vent their anger.
In order to free himself to tackle other pressing issues, not least the worst global economic crisis since the Great Depression, Mr Tsang announced the means test review would be shelved for the time being.
The government source suggested that the way forward would be to implement the least contentious solution of raising the allowance to HK$1,000 for all eligible recipients, while retaining the means test for those aged between 65 and 69. The source said that the government had examined other options, but did not want to generate further arguments on the issue.
The fruit money issue may be off the radar for the time being but the welfare sector and retirement protection advocates have other concerns.
'The government should review the planning of services for the elderly, including long-term care, retirement protection and housing support,' said David Fung Kai-man, a veteran social worker.
One group pushing for a more comprehensive retirement protection scheme is the Joint Alliance for Universal Retirement Protection, an advocacy group made up of more than 70 organisations and individuals.
'The policy address forecasts that there will be many old people 25 years from now, but it does not mention any policy to deal with the needs of the growing ageing population,' group organiser Au Yeung Kwun-tung said, adding that the existing schemes for elderly people were fragmented.
'Resources should be better integrated into a retirement protection scheme to provide immediate relief to the elderly who have meagre savings but do not qualify for social security, and cannot benefit from the Mandatory Provident Fund.'
He said this would remove the labelling effect of the CSSA.
Professor Chow suggested that the parts of the social security system that supported elderly people should be taken out to form a separate scheme that addressed their various needs.
'Many old people do not have a lot of savings. They should be given help. For example, the government can consider providing an income supplement, or provide rental relief. These would be a great help to elderly people facing financial pressure,' said Professor Chow.
He said it was also worthwhile considering providing more work opportunities for elderly people, many of whom were still fit for employment if only on a part-time basis. 'It would be beneficial to engage them in employment, in terms of promoting good health and reducing the chance of dementia. But the government must support it through suitable policies,' he said.