Jake's View

Welfarism of corporate kind is the real problem

Despite alarmist talk, it's creepy how handouts to poor are falling as charity for tycoons rises

PUBLISHED : Thursday, 06 February, 2014, 4:24am
UPDATED : Thursday, 06 February, 2014, 1:22pm

Professor Lau Siu-kai, former head of the Central Policy Unit, a key official think tank, said the billions of dollars promised to the poor in the policy address had sparked concerns about "creeping welfarism" and the sustainability of public finances among middle-class Hongkongers, who shoulder the lion's share of the city's tax burden.

SCMP, February 5

You would think something called the Central Policy Unit could make use of the statistics that our government turns out in such abundance but I rarely found it so under Professor Lau's tenure as head of the CPU.

And he has not changed his ways. The two charts put matters here into the proper perspective. The first one shows you that social welfare as a proportion of total government spending peaked at 13.8 per cent six years ago and has declined since then. It is creeping indeed, in relative terms creeping down.

Infrastructure spending, however, is already larger than our social welfare bill and still rising fast. As the second chart shows, public expenditure on building and construction has risen threefold over the past six years to a current annual level of more than HK$78 billion.

This figure, by the way, takes into account only infrastructure spending in money terms, entirely ignoring the value of the land grants that fund much of the work. Whenever convenient, our government operates on the odd notion that its greatest treasure, public land, has no value at all.

Bear in mind also that we are not talking here of public housing, which has a separate budget, or of the MTR, which is funded by land grants.

We are talking of big concrete-pouring schemes such as the bridge to Macau and the high-speed rail link to the border, both of them pointless vanity projects.

One reason we are afflicted with them is that rotten boroughs, a form of electoral constituency abandoned by Britain at home in 1830s, were recreated by Britain in Hong Kong in the 1990s as functional constituencies. They are custom made for tycoons who wish to raid the public purse for their private benefit, usually in the form of big public construction contracts.

Welfarism has thus indeed become established in Hong Kong - corporate welfarism. It costs us much more than helping indigent people stay alive.

There is still another angle to consider here. Pension payments to retired civil servants this fiscal year are budgeted at HK$25.5 billion, more than half of what our government will pay out in social welfare.

This is actually still on the low side of the real cost. It comprises pension payments only and takes no account of medical and dental care for the retirees or other retirement perks from which they benefit. Methinks we have another candidate here on which to pin a charge of welfarism.

All in all, Professor Lau, I think this middle class, for which you profess such loving concern, is less troubled by social welfare than by government using the bogeyman of an ageing population to threaten tax increases at time when its coffers are bulging.

And could you tell us, Sir, how much you benefit in your own retirement from this fat civil service pension scheme?