Restricting tenants to assigned units impractical and costly

A key inefficiency of the public housing programme is that, in effect, it ties tenants to their assigned units.

Even if an applicant family lives in Wan Chai, say, and the children are enrolled in a local school, with the breadwinner working in Central, the family must move to their allocated subsidised unit, even if it's in the New Territories.

Once families accept their units, there are strict rules against unit swapping, severely curtailing the flexibility to move where jobs and other considerations may take them.

These rules can't be relaxed for fear it would give rise to corruption if officials were given discretion to sanction transfers. Nor are tenants allowed to swap units, because this might encourage a black market.

The time and cost of commuting and other limitations borne by public housing tenants are referred to as inefficiencies by economists. Working with past figures, University of Hong Kong economics Professor Richard Wong Yue-chim and his colleagues estimated that the programme's annual inefficiency loss was about 0.5 per cent of gross domestic product in 1981, and 1 per cent in 1991. They said it would be better to give eligible families cash vouchers to help them with the costs of renting private accommodation where they wanted it.

This would cost less to administer, provide quicker relief to the needy, allow them to live where they want and make it easier to terminate the subsidy when they were in better financial positions.