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My Take
PUBLISHED : Tuesday, 03 September, 2013, 12:00am
UPDATED : Tuesday, 03 September, 2013, 3:37am

Counting public housing as a subsidy

Should public housing be counted as a subsidy? This is no idle question. If it is, the number of poor in Hong Kong could almost halve -from 1.29 million to 690,000.

The government, of course, has an incentive to have fewer poor people. Anti-poverty advocates would insist on the higher numbers. The Society for Community Organisation and Oxfam Hong Kong have expressed concerns about the inclusion of public housing in such calculations. The fact is that experts and advocates can legitimately fight over how to calculate public housing as a subsidy, but its inclusion is only fair and reasonable. Indeed, honesty and accuracy demand it.

For the first time, the government is to set two official poverty lines by using the median household income as reference. Now, the cost of housing plays a big part, if not the biggest, in determining disposable income. That applies to the calculations of both poverty lines. If two families have the same household income but only one gets a housing subsidy in the form of public housing, obviously it would have more money to spend. This, in turn, has a direct impact on the quality of life of its members. Its children, for example, may enjoy more extra-curricular activities. To count both households as equally poor would be absurd.

Overseas studies have found improved employment and earnings attributable to welfare provisions overwhelmingly concentrate in families or individuals who have subsidised housing than those who don't.

Still there is much room for debate over how to calculate housing subsidy as a part of household income. Variants are used in welfare agencies across the European Union and many states in the US.

A new report presented to the Commission on Poverty translates public housing into government subsidies by estimating the market worth of public flats and subtracting the rent paid by tenants. If a family pays a public rent of HK$1,000 while its private rental equivalent is HK$5,000, the subsidy is counted as HK$4,000.

This may be too simplistic but the basic idea is right. It's a matter of getting fair and accurate rental equivalents. But given the city's ever changing property market, it will be a constant battle.

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keresearch
wot else are you going to call it other than a subsidy ?
Giwaffe
It seems apparent that poverty is both a state of mind and a state of being. The fact that an individual is a beneficiary of public subsidies intrinsically binds that individual to poverty. This is a state of mind, and a very powerful one at that.

As for state of being, median income is not very useful as a measure of poverty. Persons earning the median income may still be unable to afford a reasonable basket of goods and services. This basket can be defined based on objective measures, such as daily nutritional requirements, nutritional quality and variety, living space requirements per person, building safety (fire, water, electrical, structural) and suitability of living space for habitation (lighting, ventilation, sanitation, and hygiene), personal hygiene requirements, etc.

The poverty line would be the cost to purchase/acquire this reasonable basket of goods and services plus a reasonable buffer amount. This would be a more fair representation of how many people live in poverty in Hong Kong, and it is certainly not only 1.29 million.
fsk999
UK Child Poverty Action Group: Each year, the Government publishes a survey of income poverty in the UK called Households Below Average income (HBAI).
This survey sets the poverty line in the UK at 60 per cent of the median UK household income. In other words, if a household’s income is less than 60 per cent of this average, HBAI considers them to be living in poverty.
Income includes subsidies of all types....
anson
This reminds me of the 'Great' British unemployment recalculation of the 90s. Over a million slashed from the numbers of unemployed overnight.
impala
What would also be fair, reasonable, honest and accurate then, would be to raise the Hong Kong poverty line from the current HKD 3,600 per month of income to something on which you can actually life a dignified life in this city, INCLUDING rent. You want to add subsidy to income, then let's also add a reasonable rent expense estimate to the minimum income threshold.

These people also don't live in public housing by choice. It is not disposable income. It is either that, or a carton box under the flyover.

Would Mr Lo like to pay for his (after-subsidy) rent, his food, his clothing, his water, his electricity, his gas bill, his transport costs and everything else on less than HKD 120 a day?

I dare him to try living on HKD 3,600 for a month, and then report back to us. That'll be a lot more interesting than statistical arguments on how precisely to count the poor.

And if he likes this, then the next month, he can try living on HKD 4,000 a month theoretical income, but half of it will actually consist of housing subsidy. That will leave 2,000 HKD, or 66.70 per day to live on. He will quickly discover that you can't eat your housing subsidy.

Oh, and by the way, even IF we all went along in this shameless accounting trick, then what? Isn't it an even worse disgrace that 10% of our population, some 700,000 people are living on less than HKD 3,600 a month even AFTER including housing subsidies?

Why don't I hear Mr Lo argue about doing something about that?
@madams
By in large I agree with you but am less certain where the blame lies. Public housing whether in HK, or elsewhere is a failed policy, though effective for getting votes. In HK votes aren't the issue, appeasing developers and tycoons -- the only votes that counts in HK -- so we continue the public housing charade. One question I have is that in a city that has gotten progressively wealthier why do we need to build so much new public housing? The poor and middle class vastly outnumber the rich, so why don't prices adjust to reflect affordability? Here are some possible answers:
1. Once a family moves into public housing they never leave. Flats are handed down to future generations, even tho that generation is wealthier. Gov must have a means test to stay in public housing.
2. Budding property tycoons -- we have too many hoarders (investors) in property. It's not illegal but it distorts the price setting equilibrium. Gov must make it more expensive to own and hold property.
3. Incomes are flat. How can that be when the economy is growing and per capita income has grown? Simply put, the tycoons hoard the economic rents. They do not pass along wealth in the form of pay increases, instead they pocket the vast amount of total earnings -- which is oft recycled into property. These tycoons then ask for subsidies for MTR and buses and of course housing.
I hate to say it's the usual suspects...
XYZ
A little re-jigging with a calculator and 600,000 poor people simply disappear! Poof! Why didn't I think of that?
fsk999
I am surprised that the SCMP censorship computer allowed you to say poof!

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