Jake's View

Retire these amateurish efforts at pension reform

Means testing is exactly the means by which money would go to those who truly need it

PUBLISHED : Monday, 01 September, 2014, 2:33pm
UPDATED : Monday, 01 September, 2014, 11:37pm

"I've done all I can. This is it. I have put my heart and mind into writing this report. Of course I hope the government will take the suggestions made within, but I have no control over whether they will or not."

Professor Nelson Chow Wing-sun
City, September 1

"Given that retirement protection is a highly complex subject ... and have far-reaching impact on the fiscal sustainability and socio-economic developments in Hong Kong, members [of the commission on poverty] agreed that it has to be taken forward prudently and that more time is needed to examine the report and discuss relevant issues in depth."

Government press release
August 20


Professor Chow is a very hopeful man indeed. He still hopes that the government will heed his report when on the very day he submitted it two weeks ago he was effectively told, "Thank you, professor. Don't call us. We'll call you."

The rejection in the government's press release of the good professor's thoughts is as definitive as anything in the dialect of bureaucratese ever comes. Even he must have heard that loud "thunk" of his report hitting the bottom of the bin.

It thus surprises me to see any further mention in the news of this proposal for a universal flat-rate pension payment of HK$3,000 a month to anyone over the age of 65 with no means testing. Drop it, my dear colleagues. It's a dead one.

This is not to say that we could not afford it. At present it would cost the public purse about HK$42 billion a year, rising in 25 years to HK$92 billion. But with a few tweaks of fiscal accounting - an unwinding of the pointless capital works reserve fund for instance - we could have all the money in hand.

If this were a bridge, or a new highway, construction would start tomorrow. Proper respect and care for the aged, however, is far less important than pouring concrete. The commission on poverty obviously recognised this indubitable truth and balked at the cost.

It is just as well that it did so. The scheme was poorly thought out. Take just the matter of making it a universal plan with no means testing. Every senior government bureaucrat would get that HK$3,000 a month at age 65 as well as every billionaire tycoon.

The obvious question here is why we should not direct the money to those who really need it in proportion to their need, excluding those who don't need it. What is so bad about means testing?

Proper respect and care for the aged, however, is far less important than pouring concrete

Professor Chow's answer in his report is that "Means test may create labelling (sic) effect and administrative confusion and may hinder some elderlies (sic) in need from getting the support they should have."

Oh, the horror of the labelling effect. How can we bear it? But what administration confusion would there be? Bureaucrats shuffle paper. This is paper shuffling. And how are the needy deprived by screening to ensure that the money goes to the needy?

In answer to these questions, Professor Chow only makes the large assertions that doing without means testing "would not affect the overall financial burden" and that universal entitlement may promote "social harmony and inclusion".

Come again, Sir? No difference to the financial burden? How did you magic up that one? And how is social harmony promoted by a heavy payroll tax to fund it all? Do tell us.

But that's it, that's everything, just several bald statements unsupported by research or data.

It was the same for the choice of HK$3,000 a month, the age qualification and the funding proposals, just numbers and options picked out of thin air.

If there was any discretionary analysis, it amounted to little more than a heavy reliance on balancing the demands of the fringe political parties of the Legislative Council and some self-appointed concern groups, all of whom seemed to think they had been given free access to the candy store.

It is too bad really as this sort of amateurish effort just wastes time and sets back the cause of pension reform when poverty among the aged and the deficiencies of the Mandatory Provident Fund sorely need to be addressed.