Leung Chun-ying

CY should stand firm on means test for old-age allowance

PUBLISHED : Friday, 05 October, 2012, 12:00am
UPDATED : Friday, 05 October, 2012, 1:46am


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Means testing of elderly entitlements is a sensitive issue involving respect for age and social equity. Five years ago, former Chief Executive Donald Tsang Yam-kuen gave in to intense public pressure and scrapped a plan to means-test the old-age allowance for people over 70 when he raised it to HK$1,000. But as we report today, successor Leung Chun-ying has vowed to stand firm on his intention to apply income and asset limits for a new special allowance of HK$2,200 a month for eligible people over 65. He, too, faces a backlash from the public and from across the political spectrum to the application of such a test to over-70s. We trust he will not back down.

There's no question a government sitting on huge reserves can afford to waive the means test, even if that raises the cost of the increased allowance by HK$4 billion to HK$10 billion, or more than 20 per cent of the current annual total budget for elderly welfare. But a government source says this could double over 10 years because of an ageing population, not to mention a trend of declining support from smaller families than in past generations. It is simple arithmetic that this kind of indiscriminate public subsidy is unsustainable in the long run, and should be retargeted at those who really need help. But many regard the allowance as an entitlement.

Five years ago officials underestimated this sentiment and found themselves accused of disrespect. We argued then it was regrettable they caved in so quickly after opening a much-needed public debate. We still need one. It is now more than 20 years since the last white paper on social welfare policy. Abounding poverty has been replaced by a widening and socially divisive rich-poor gap in an affluent society.

Meanwhile, it is politics, not policy, that increasingly run the agenda. There may be room for debate about the asset and income limits, but Leung is right to say a means test is an issue of responsible financial management. He must resist populism from political parties who don't have to pick up the tab.