Welfare benefits may be trimmed in April

The government might announce cuts in welfare payments in April, the Secretary for Health, Welfare and Food said yesterday.

But expanding on Chief Executive Tung Chee-hwa's policy address, Yeoh Eng-kiong insisted that any adjustment to Comprehensive Social Security Assistance (CSSA) payments would be linked to the deflation rate.

'In July, we told the Legislative Council we would freeze CSSA payments until we came up with a decision [whether to adjust the payment] next financial year. So it [the decision] will be made in April at the earliest,' Dr Yeoh said.

The welfare chief warned that Hong Kong could no longer rely on existing tax revenue to sustain increasingly hefty spending on CSSA payments.

'There has been a huge increase in the number of CSSA cases over the past five years so it is impossible to make a very generous payment out of the existing low tax rates and narrow tax base,' he said.

'Our CSSA scheme provides only a basic safety net for the needy instead of giving out a generous amount.

'Any adjustments to the payment, whether according to inflation or deflation, would be aimed at maintaining the same [subsidy] level instead of making a raise.'

The number of CSSA cases has increased by about 48 per cent since September 1997 - from 179,000 to more than 260,000.

The budget for the payouts also jumped from $7 billion in 1996-97 to $16 billion this financial year and $18 billion next year.

'Both Mr Tung Chee-hwa and [Financial Secretary] Mr Antony Leung Kam-chung have mentioned that Hong Kong is following a simple tax system, therefore, Hong Kong cannot offer the same amount of welfare provided by Western countries [which have a higher tax rate],' Dr Yeoh said.

'However, my understanding is that the majority of people do not want to see a drastic change to our tax system.'

Meanwhile, Director of Social Welfare Carrie Lam Cheng Yuet-ngor said the department would require an extra $250 million from the government to prepare for a possible increase in CSSA cases this financial year.

But the director of the Society for Community Organisation, Ho Hei-wah, said it would be hypocritical for the government to cut welfare payments.

'In his policy address, Mr Tung claimed the government aimed to build a caring and just society. Also, cuts to CSSA would not help improve the government budget deficit, but it could seriously undermine the quality of living among the needy,' Mr Ho said.

Despite the potential cuts, Mr Tung yesterday said on RTHK that the government would try to take care of the underprivileged.

'Whenever I think of the people [affected by economic restructuring], I feel worried and upset. But society is moving forwards. Of course the government will try its best to take care of those who need it,' he said.

'We will try to avoid a decline in the quality of services and retain necessary services, especially those for the underprivileged.'