My Take

Counting public housing as a subsidy

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

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.