Tenants should pay fair share for public housing

PUBLISHED : Tuesday, 08 July, 2014, 4:32am
UPDATED : Tuesday, 08 July, 2014, 9:43am

Public housing is made for low income earners. That it is heavily subsidised by public funds means it should be managed with fiscal prudence. When tenants face difficulties, concessions are provided to ease their burden. When their incomes increase, it makes sense to charge more. Under a revised formula in 2008, rent will be adjusted according to changes in tenants' income every two years, with increases capped at 10 per cent to ease the impact. The statutory mechanism has served Hong Kong well and deserves public support.

With the adjustment tied to household income, a rent increase becomes inevitable as the economy continues to grow. A Housing Authority survey found that household income had increased 19 per cent over the past two years. In line with the law, a 10 per cent rise is to be imposed starting in September. The previous rise in 2012 also hit 10 per cent, after incomes rose by 16.24 per cent.

It has been argued that the authority should be more accommodating. After all, a second consecutive 10 per cent rise for low income earners is not light. But the figure looks less steep when put against the cumulative rise in incomes of 35 per cent during the period. The actual adjustments range from an extra HK$28 to HK$387 a month. Public housing tenants are indeed much better off than many in the private market, who are often hit by steep rent hikes when renewing contracts.

Unlike the two previous adjustments which came with a one-month rent waiver for all tenants, the authority is not inclined to do the same this time. This has angered the tenants, who somehow assume the cash-rich authority will raise rent on one hand but ease the impact with concessions on the other. The expectation was nurtured by numerous government handouts and sweeteners over the years. As explained by the authority, the economic background of the previous waivers was different from today's. If concessions are to be provided across the board every time, the adjustment mechanism would become meaningless. A better option is to refine the current concession scheme for those with genuine needs.

The government aims to build an annual 20,000 public housing flats in the next decade. With the per-unit cost hitting HK$1 million, the authority's HK$20 billion surplus is enough for just one year's construction. The system would become unsustainable if tenants only take advantage of subsidies without paying their fair share under the standing mechanism.