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PUBLISHED : Friday, 12 October, 2012, 12:00am
UPDATED : Sunday, 14 October, 2012, 11:26am

Means-testing stance shows officials want to curb welfare in Hong Kong

Albert Cheng says the government can afford the higher payout, and believes it is really aiming to cut back on HK's welfare provisions

BIO

Ir. Albert Cheng is the founder of Digital Broadcasting Corporation Hong Kong Limited, a current affairs commentator and columnist. He was formerly a direct elected Hong Kong SAR Legislative Councillor. Mr Cheng was voted by Time Magazine in 1997 as one of "the 25 most influential people in new Hong Kong" and selected by Business Week in 1998 as one of "the 50 stars of Asia".  
 

Chief Executive Leung Chun-ying has failed to deliver what he promised during his election campaign. He has implemented no effective policy since taking office more than 100 days ago.

On July 16, he announced what he called a "favourable" policy that would benefit the grass roots, especially the elderly - a revamp of the so-called "fruit money" or old-age allowance for those aged 65 and above. Under the new plan, elderly people can choose to apply for a higher allowance - from the current HK$1,090 to HK$2,200 - subject to financial vetting.

Currently, those aged between 65 and 69 are subject to a means test while those aged 70 and above are spared. That's why both the Federation of Trade Unions and the pan-democrats have suggested that the vetting be scrapped to bring the two in line. The objective is to provide basic protection to the elderly, especially to soften the inflationary impact they face and to make up for the inadequacy of the Mandatory Provident Fund.

However, even before the allowance proposal was tabled for discussion in the Legislative Council, the government has taken a firm stance on not waiving the means test. Both Chief Secretary Carrie Lam Cheng Yuet-ngor and Secretary for Labour and Welfare Matthew Cheung Kin-chung previously said the government wanted those aged 70 and above, who were not vetted now, to be screened under the new plan.

Without a means test for those aged 65 and above, the government will have to pay an extra HK$13.6billion to finance the old-age living allowance. With means testing, it said, the cost would come down to HK$6.2billion.

It also argues that with Hong Kong's rapidly ageing population, the financial burden on the government would increase substantially over time. Therefore, it said, a proper framework needs to be put in place to ensure that available resources are properly utilised.

Democratic Party member Law Chi-kwong, who is also a member of the Preparatory Task Force on the Commission on Poverty, supports the means test. He even attacked some political parties for giving in to the pressures of populism without carefully considering the consequences. He said that without checks and balances to make sure the recipients are qualified, the extra financial cost would affect the government's other poverty-alleviation measures.

Law has distanced himself from his own party to show his discontent with its stance on the issue. Now surely he can speak more freely on this issue.

It's baffling to see such a senior Democratic Party member go so far to defend Leung's policy and claim that those who do not support the government's plan are siding with populism.

Simply put, these three politicians are not genuinely concerned about the financial burden on the government. Their motive is to eliminate the welfare policy. If they get what they want, the result would be devastating and could eventually destroy the very foundation of the city. Their conservative stance is utterly outdated.

Leung often talks about seeking change while maintaining stability. But he doesn't practise what he preaches.

The additional financial burden, if means testing is waived, is over-exaggerated by the government, because it's an open secret that most of the elderly who qualify for the "fruit money" do not claim it. Even if they did all claim this allowance, our financial position is sufficiently cushioned to afford the payout, given our substantial reserves.

A higher old-age allowance would not just help the elderly; it would also go some way to easing the financial burden on lower- and middle-income families who have to support their elderly parents. This is effectively a form of an indirect tax reduction that will benefit a cross-section of the local population, which will eventually stimulate the overall economy by boosting consumption.

If the government wants to lessen its financial burden, it could at the same time reduce the tax benefits for those who support their elderly parents. The amount could be set at the same level as the elderly allowance; one payment in and the same amount out; it makes total economic sense.

This way, the government could balance its budget, lessen the extra financial burden and at the same time help those who most need it. It would also raise moral standards and promote unity and harmony in our community, which we desperately need at the moment.

Law's argument that scrapping the vetting mechanism is equivalent to giving in to populism shows that he has his priorities wrong. The poverty commission's goal is to alleviate poverty and help the needy; how can he be so short-sighted and not be able to see the immediate benefits of this scheme?

He talked about the planned introduction of the universal retirement protection scheme, but that plan will take at least one to two decades to realise and implement. It's not realistic or practical to wait so long, especially when we have something readily available.

Leung and his government would do well to be reminded of a Chinese saying, "You cannot fight a fire with water from far away", and wake up.

Albert Cheng King-hon is a political commentator. taipan@albertcheng.hk

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Gra
What planet are you on AC? The universal benefits you advocate just perpetuates the sense of "entitlement" that is so prevalent across Hong Kong society today. Sure the Government today is flush with cash. You assume this will continue into the distant horizon.
What if the world economy goes through a period of sustained downturn over the next few years and as demand from the US and Europe consumers ebb away with knock-on effects to China and Hong Kong businesses, therefore Government tax revenues will tail off?
Have you considered the number of able-bodied workers to elderly ratio will diminish over the next few decades as the Hong Kong birthrate is at record lows? Where will future tax revenues come from to support a growing elderly populace? Even living off the interest of our vast reserves would not warrant much merit.
If the middle class, with today's low birth rate environment, cannot find HK$2,000 to support an elderly parent, then Houston we have a problem. That's 4 meals @ $500 each dining out a month to consider giving up. So much for filial love.
Get real... I've seen enough German motor cars in public housing estates across Kowloon and the New Territories (from well-to-do kids?) plus Sunday yum-cha at their proximal restaurants with family and elders to indicate to me means testing is not without merit. Prudent targeting to help those really needy elders and not blanket coverage makes sense.

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