CY Leung policy address 2014

Welfare to support working families is affordable, declares Carrie Lam

Carrie Lam rejects criticism of government welfare policy, pointing out new allowance depends upon an assets test and supports families in work

PUBLISHED : Friday, 17 January, 2014, 4:14am
UPDATED : Friday, 17 January, 2014, 2:28pm

Chief Secretary Carrie Lam Cheng Yuet-ngor has brushed off concerns over the city's rising welfare expenditure, offering strong support for the headline poverty alleviation measure announced in the policy address.

The HK$3 billion-per-year Low-Income Working Family Allowance would pull 38,300 poor working-class families above the poverty line and would not break the bank, Lam said yesterday.

"The allowance is unlikely to generate a large fiscal burden on the government," she said. "Unlike the Old Age Living Allowance - where spending will grow due to Hong Kong's fast-greying population - the Low-Income Working Family Allowance hinges on families with working members and children. In fact, spending may actually decrease.

"After the allowance has run for a while, feel free to see if it has the poverty alleviation impact as expected," Lam, who was speaking at a media briefing, added.

The initiative - the first to target working poor families not on welfare - will be managed by the Efficiency Unit in a bid to avoid the stigma which can come with receiving support. The unit would need extra manpower as well as offices for managing distribution of the allowance, Lam said.

The Efficiency Unit, which reports directly to the chief secretary, will study the feasibility of setting up a "one-stop" unified application system for the assortment of welfare subsidies and programmes available, said Lam.

The allowance was announced as the leading poverty alleviation initiative in Leung Chun-ying's policy address on Wednesday.

To be eligible, families need to comprise at least two people, one of whom works at least 144 hours a month. Depending on the hours they work, families whose income falls below the poverty line - drawn at 50 per cent of median household income (HK$22,500) - will receive either HK$600 or HK$1,000 a month, plus HK$400 or HK$800 a month for each dependent child. New immigrants are eligible.

Single-parent families will have to work a lower number of hours in order to qualify - 36 hours per month to get HK$600 and 72 hours per month to get a HK$1,000 basic allowance.

Apart from an income limit, there will be an assets test similar to that required to qualify for public housing, said Lam.

The proposed limit for a two-person household would be HK$286,000, while for a four-person one it would be HK$436,000. Only household transport subsidies and the Old Age Living Allowance will be counted as part of a family's income.

"The government is quite adamant on the assets test. It is the government's bottom line," she said. "And if lawmakers insist on abolishing it, we may get into some difficulties getting it past the the Legislative Council's Finance Committee."

Lam said there were still many details to the allowance which need to be hammered out, hopefully in the next two months.

The initiative is expected to begin next year. A one-off living subsidy has been mooted for this year, though no details have been confirmed, aside for the fact that it will be distributed through the Community Care Fund.