City will pay high price if it ignores problem of poverty

PUBLISHED : Saturday, 31 August, 2013, 12:00am
UPDATED : Saturday, 31 August, 2013, 3:45am

A widening wealth gap in Hong Kong is nothing new. But the problem has become so entrenched in recent years that the community risks becoming insensitive to the dangers that arise. Not only does it put pressure on the welfare and health care system, it also fuels social discontent and undermines stability. The challenge is not to be ignored.

Credit goes to the Council for Social Service for its relentless efforts in tracking the poverty trend in the city. Referring to the 2012 census statistics, the group warned that the number of people in poverty grew by 100,000 year on year, to 1.61 million. Elderly people were the hardest hit, with 32.6 per cent, or 298,000, classified as poor, up 10,000 from 2011. Worse, they are not just the poorest in the city, but also among the poorest in the developed world. The figures are a timely reminder that income equality is worsening.

Admittedly, the definition of poverty is open to debate. The council, and the Organisation for Economic Co-operation and Development, use a level of half, or less than half, of the median household income as the benchmark. That translates into less than HK$11,750 a month for a family of three. The European standard is more liberal, with anyone earning below 60 per cent of the median income considered as "at risk of poverty". Whatever the standard, that nearly two in seven people in the city live in poverty should be a matter of grave concern.

Previous governments were wrong to assume the benefits of economic growth would eventually trickle down to the grass roots. But the lack of an officially recognised poverty line makes it difficult to determine whether the needy have fallen through the safety net. Thankfully, Chief Executive Leung Chun-ying recognises the need for a poverty line, details of which will be announced when a poverty summit is held in September.

Where to draw the line is understandably an issue of public debate, as it formally divides the haves from the have-nots. Equally contenious is the question of how best to help the poor. The council has renewed calls for a universal retirement protection scheme, along with HK$4.8 billion in cash subsidies to lift 190,000 people out of poverty. Given the city's strong fiscal reserves at present, a few billion dollars a year does not appear to be a huge burden. However, with the population ageing fast in the coming decades, it would be wise to study the financial implications carefully and come up with a coherent strategy to tackle the problem.