• Thu
  • Jul 31, 2014
  • Updated: 11:12pm
Jake's View
PUBLISHED : Thursday, 06 February, 2014, 4:24am
UPDATED : Thursday, 06 February, 2014, 1:22pm

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


Jake van der Kamp is a native of the Netherlands, a Canadian citizen, and a longtime Hong Kong resident. He started as a South China Morning Post business reporter in 1978, soon made a career change to investment analyst and returned to the newspaper in 1998 as a financial columnist.

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?



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John Adams
Once again you nailed it on the head
If you were our CE (or at least if CY listened to you just a little bit) HK would be a much happier and better- managed place for the "average person" to live in
"Average" = middle- class people like you and me, not to mention the vast majority several layers lower down the social scale who survive - in many cases - on re-cycling spent copies of the SCMP ( not to mention all the free rag mags) rather than actually reading them
Social welfare and corporate welfarism are loaded terms
JvdK may wish to elaborate on their significance in the HK context
HK has too many MB /BM owning welfare recipients
vacationing in resorts all over SE Asia
taking advantage of mis projected sympathy
for financially independent octogenarians
who help recyle used carton as a pastime
City governments everywhere offer incentives to local / foreign investments
Let’s follow the money of social and corporate welfare
and compare how they benefit / undermine HK’s long term development
To psl...
'City governments everywhere offer incentives to local / foreign investments
Let’s follow the money of social and corporate welfare
and compare how they benefit / undermine HK’s long term development '
I really like this idea to see where the money and benefits go. But it is a very tall order for any local individual or think tank able to achieve.
I would suggest to commission The Brookings Institution -- a US think tank which was reported to have earned the highest ranking (read today's Lai See) in the world to do the investigation.
I suspect Gini co-efficient is the term you are searching rather cluelessly for
What’s often neglected about Gini index is that
it also measures the superficiality of sloganeering demagogues
For some practical understanding
it may be appreciated against G Clark’s “The Son Also Rises”
My proposal, revised to improve clarity, is
“Let’s follow the (monies paid for) social and (for) corporate welfare
and compare how they (undermine / benefit) HK’s long term development

To psl...
Let's not forget that much of what constitutes welfare for individuals (subsidized housing, transport, healthcare) is actually a benefit to employers so they can continue to pay less than subsistence wages.
Earlier comment on Lau's same article:
It is indisputable that Leung’s workfare is a daring act that would invite political disagreement. Surprisingly not much from the people but mainly more from government itself by the questionable in ability and loyalty of the Financial Secretary,
In my view, for Hong Kong government to assist effectively the middle class is to help out in their mortgage payment so that one income instead two can be a choice. Life quality would immediately be improved for them.
CY Leung should think outside of the box again by using the trillions of reserve to reimburse the flat owners whose various property taxes had contributed to the government’s reserve which is sitting idling.
Professor's comment may be creating a wrong impression in our current affair.
How often to landlords pass on rate rebates to their tenants?
Never- so what's the point ?
To ker....


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