A safety net ripped apart

PUBLISHED : Tuesday, 21 February, 2012, 12:00am
UPDATED : Tuesday, 21 February, 2012, 12:00am


The issues

Getting the budget wrong

The government has been wrong about its budget forecast - twice. When it thinks it has a budget deficit, there is instead a surplus. Critics say the underestimation is troubling.

'How does the government frequently get its forecasts wrong?' activist Christine Loh Kung-wai wrote in an opinion article for the South China Morning Post.

Financial Secretary John Tsang Chun-wah was way off the mark in his budget in February 2010; a forecasted deficit of HK$25.2 billion turned out to be a surplus of HK$75.1 billion. It was the same thing the next year: an estimated deficit of HK$8.5 billion became a surplus of HK$66.7 billion.

'The government has an embarrassment of riches,' wrote Loh, chief executive of policy think tank Civic Exchange. 'The issue is how the financial secretary chooses to give it back to the people. His preference is not to use more recurrent spending ... so that Hong Kong can do more in education; in welfare and services provision for the elderly and those with long-term illnesses; in cleaning up the environment which would benefit everyone; in improving primary and medical health services.'

Legislator Regina Ip Lau Shuk-yee, chairwoman of the New People's Party, also criticised the government for its gross underestimation.

In the Post, she wrote: 'The persistent, gross underestimation is worrisome. It not only casts doubt on the financial secretary's ability to have a good grasp of what is going on in the economy, but also means the government is very likely to have under-invested in our economy.'

Ip pointed out that the government doesn't put the money towards long-term programmes to boost education and help the poor. Instead, the government dishes out one-off cash handouts that don't solve deep social issues.

Neglecting the needy

Some critics believe the government has not identified who needs help - which is the first step in narrowing the poverty gap.

It would rather try to please everyone with a short-term measure, such as the HK$6,000 handout last year. The handout was part of last year's budget; every Hong Kong citizen over 18 was eligible to take it, including those who had immigrated overseas and people who probably do not need the money as urgently as the poor.

The handout caused a controversy last year, and this year's budget ditched the idea altogether. Still, the government seems to have turned a blind eye on the poorest, or the so-called N-nothing class.

People in this class are not entitled to tax rebates or bonus welfare payments because their wages are too low to fall into the tax net. But they have barely enough to survive. They are also not eligible for rent waivers on public housing because they are still waiting for a flat and live in a subdivided cubicle. Neither will they benefit from the electricity subsidy because it goes directly to the landlord.

'They are the very people found in our subdivided flats, caged beds, who are mostly new immigrants from the mainland, single elderly people who prefer to work rather than rely on social security or single parents,' wrote Ip.

Take the case of Hu Guizhen, 33, newly emigrated from Guangdong.

'We have been left out again,' said Hu, who lives with her husband, a 14-year-old son and five-year-old daughter in an 80 sq ft partitioned flat in Sham Shui Po.

'In the eyes of the government, we simply don't exist, and all people are tycoons and the middle class,' she said. Hu's husband, a driver earning HK$12,000 a month, is the only one with a job. His salary is barely enough for the monthly rent of HK$1,500, HK$800 in utility bills and HK$7,000 for food and education.

News of the government spending HK$1.9 billion to pay two months' rent for about 700,000 public housing tenants is irrelevant to her family, who have been waiting for a public flat for more than five years.

The family isn't eligible for social security payments, or old age and disability allowances. 'We simply get nothing,' she said.

The government's response? 'Whatever [relief] measures are rolled out, some people will inevitably be left out ... The Community Care Fund can help [these people].'

What the government should do

'The financial secretary owes us, at the very least, some answers on the estimated number of people in the underclass,' Ip wrote.

'No effort is seen to be made to find out who they are and where they are located.'

The Society for Community Organisation (SoCo) has called for comprehensive solutions to reduce poverty. It says the government lacks long-term commitment to helping underprivileged children.

The group estimates that about 300,000 children live below the poverty line.

'We demand long-term policies aimed at reducing poverty,' said SoCo organiser Sze Lai-shan.

The news

The government's financial budget for 2012-13 has been criticised by many. These critics say it leaves out the poor and needy.

The budget was delivered in a speech on February 1 by Financial Secretary John Tsang Chun-wah.

He announced a surplus of HK$66.7 billion, which will be spent on tax rebates and measures to lower the cost of electricity and public housing, among others.

Critics said none of the initiatives will benefit the city's poorest nor those who fall outside the safety net. The government offers services to help people who fall within a certain income level, but those just outside the requirements are left out, critics say.

Most Hongkongers think the government favours the rich and that wealth is divided unfairly in society, according to a survey by Chinese University.

The survey

An overwhelming majority of survey respondents (about 75 per cent) ranked the wealth gap as either very serious or serious. Of those, half expected the government to adopt policies to reduce the income gap, according to a poll of 1,000 adults in March and September.

Almost 60 per cent said the government favoured the rich. About 40 per cent said people were poor because of unfair treatment, and the same percentage believed that working hard did not lead to a better future.

Chinese University professor Wong Chack-kie, an associate director of the Institute of Asia-Pacific Studies that co-commissioned the survey, said the government was doing too little to address the poverty issue. The institute worked with the Professionals and Senior Executives Association.

In mid-2010, 1.26 million of the city's seven million people lived in poverty, according to a government advisory group.

A member of the association, Patrick Lau Lai-chiu, a former director of the Lands Department, said he found that statistic alarming.

Voices: What people are saying

'The middle and upper classes benefit from [the budget measures], not us - those who struggle the most at the bottom.'

Ivy Yeung, a mother of two whose family lives in a partitioned flat

'While this city has cash galore to pay for physical hardware, officials don't want to spend on the people's needs ... What Hong Kong people really need is to understand why the government is so rich and so many are so poor.'

Christine Loh Kung-wai, chief executive of Civic Exchange

'The same gross underestimation of the fiscal surplus; the same types of 'handouts' to the same group of people - public housing tenants, recipients of comprehensive social security assistance, taxpayers and rates payers ...

'There is no review of the city's macroeconomic policy, and no rethink of the role of government, while administrations in other cities in the region are focusing state resources to chase high-end industries and high-paid jobs.'

Regina Ip Lau Suk-yee, legislator and chairwoman of the New People's Party

These are edited versions of stories published in the South China Morning Post on December 2, 2010, and January 2, February 2, 10 and 12