Opinion | First, let's provide for the elderly poor in Hong Kong
Philip Bowring says before we tackle a future pension fund, it's vital to address the problem of old age poverty, the result of forces that have created such an unequal society
The report on pension scheme options is very welcome, if only because it may result in debate and even action on a topic which the bureaucracy would rather not have to address. Whichever way one looks at it, it involves spending public money on items other than costly infrastructure projects with scant economic return.
There are two issues to be addressed. They are linked but have very different time scales. One is elderly poverty. The other is a scheme to provide for the future that meshes with the MPF.
The most urgent is to address the very real poverty endured by a large percentage of old people, the poverty which sees 80-year-old women bent double pushing carts of rubbish in an effort to make a living. This problem will probably become worse as the numbers of those over 65 continue to increase while welfare remains minimal and family support systems are undermined by issues ranging from migration to housing costs.
The first principle must be to recognise the processes by which Hong Kong has become such an unequal society and one where the old are the worst hit. The past 40 years have seen capital values - in effect real estate and shares in public companies - rise much faster than either salaries or gross domestic product. The beneficiaries have been threefold.
Firstly the government, through its control of land supply which feeds through to capital revenue, rents and profits tax.
Secondly, the developers. One must recall that, prior to 1998, Hong Kong GDP figures had a separate item - "real estate developers' margin". This was so high as to be embarrassing, so it disappeared. But the margin is still there. The next beneficiaries were those fortunate enough to acquire more than one property. Owning your own home, as the majority now do, is of scant relevance to disposable income, as people need somewhere to live. But those with two or more properties have mostly enjoyed a free ride to relative riches.
Finally, there are those who have invested in the stock market over a sustained period. Contrary to media imagination, individual stock ownership is not especially high in Hong Kong - though there have been speculative spikes which usually led to small investors being ripped off. Indirect share ownership through the Mandatory Provident Fund and life insurance has been growing but is mostly too recent to have much impact on the net worth or income of the majority, and almost none on those now over 60.