To really help the poor, Hong Kong needs to target the advantages enjoyed by the rich
Peg Yoc Hui Valdez says pro-poor schemes won’t narrow the wealth gap in society without efforts to also tackle the systematic exploitation of our free-wheeling free market that impoverishes people in the first place
During a Legislative Council meeting last month, activist Kwan Wing-yi put into sharp, feisty words the anti-government sentiment brewing among many Hongkongers, in a speech that quickly went viral after being uploaded to YouTube.
“There is so much government-business collusion and inflation these days that we can’t even buy a catty of contaminated vegetables for HK$30,” Kwan said.
After talking about democracy, freedom of expression, unaffordable housing and elderly poverty – Kwan’s speech touched on a point that citizens have been less vocal about lately: the government’s siding with private corporate interests.
The clearest manifestation of this is the lax regulatory framework that has allowed many of Hong Kong’s markets – utilities, electronics, groceries, real estate – to be dominated by duopolies or monopolies. Since many of Hong Kong’s largest conglomerates are family controlled – Chow Tai Fook Enterprises by the Cheng family, Sun Hung Kai Properties by the Kwok family, and CK Hutchison Holdings by Li Ka-shing, for instance – these business empires have further concentrated wealth and power in the hands of a precious few. The richest 10 per cent of Hong Kong people own 77.5 per cent of its wealth, according to a Credit Suisse study cited in a 2015 Oxfam report.
Hong Kong’s vast and growing wealth gap is widely acknowledged and discussed, but politicians and civil society tend to focus only on one half of the issue: helping those at the bottom. The systematic advantages of the corporations and families at the top are sidelined. They must be brought to the foreground of the inequality debate.
This year’s budget speech by Financial Secretary John Tsang Chun-wah, for instance, focused on poverty alleviation and help for low-income groups. He announced a 75 per cent reduction in the salaries tax, subject to a ceiling of HK$20,000, and the allocation of HK$2.9 billion per year to an assistance scheme for low-income families.
Some lawmakers who felt the measures did not go far enough said Tsang should also have waived public housing rent. But even such a subsidy would only provide short-term relief for poor households. Instead of worrying about how to give HK$30 to a family so they can afford a “catty of contaminated vegetables”, what politicians and the public should be discussing is how to eliminate Hong Kong’s supermarket duopoly, the reason basic daily needs are so overpriced in the first place.
We need stronger competition laws. It wasn’t until June 2012 that Hong Kong passed its first competition law, which came into full effect in December last year. One expected outcome had been for the duopoly of Wellcome (owned by Jardines) and ParknShop (owned by CK Hutchison) to be weakened, to make way for other competitors that could widen choices and drive prices down. But no move has been seen in this direction. Creating pressure for fairer competition is key to making daily life more affordable in Hong Kong – the world’s second most expensive city in 2015 for expatriates, according to Mercer’s Cost of Living Survey.
New ways of tackling state and private-sector corruption are also urgent. Anti-graft measures are already in place under the Independent Commission Against Corruption, but the 2014 bribery case involving former chief secretary Rafael Hui Si-yan and property tycoon Thomas Kwok Ping-kwong showed that certain dirty dealings do escape its sight.
The 18 per cent surge in corruption complaints reported last year shows that even if Hong Kong’s graft-busting body has its eye on political and private-sector misconduct, it is not quite deterring it. Hongkongers should pressure the government to pass a Free Access to Information Act that would allow corruption to be monitored more democratically.
Reintroducing an estate tax, which was abolished in 2006, is another measure that should be considered. The tax was abolished to attract investment and turn Hong Kong into an asset management centre, in a typical Hong Kong move that prioritises market freedom over fairness. Between 2006 and 2011, Hong Kong’s inequality index worsened. Returning to Hong Kong’s pre-2006 level of a 15 per cent estate duty on inherited assets exceeding HK$10.5 million – a relatively low rate compared to the 55 per cent estate tax in Japan, 50 per cent in South Korea, and 40 per cent in Britain and the US, for example – would be a first step towards reprioritising equality of opportunities in Hong Kong.
All of these moves would require, as a starting point, the recognition that Hong Kong’s model of development based on being an ultra-free market has not worked. The government needs to step back into the game as an arbiter whose job is to ensure a level playing field.
Peg Yoc Hui Valdez is a sociologist and journalist based in Hong Kong