My Take

Don’t want another Occupy? Then let’s spend money to better people’s lives

Hong Kong is a rich city, but has so many poor people. It’s time the government’s huge cash surplus was put to proper use

PUBLISHED : Monday, 17 April, 2017, 2:34am
UPDATED : Monday, 17 April, 2017, 10:03am

If we are so rich, why do we have so many poor people? It’s because on top of the inevitable poverty, some of the poor are created by misguided government policy.

That, at least, is the provocative thesis advanced by economist and former head of the government’s Central Policy Unit, Leo Goodstadt, in his 2013 book Poverty in the Midst of Affluence: How Hong Kong Mismanaged Its Prosperity.

A new study of 20 years of government budget by the non-partisan research arm of the Legislative Council seems to give ample support to Goodstadt’s argument. I commented in my last column on the study’s conclusion that increases in government spending on infrastructure – as a share of total public spending – far outstripped that on livelihoods, that is, medical care, education, social welfare and public housing.

Another inevitable conclusion is that the gaps in such service provisions are ever widening. This is despite the government attaining a fiscal surplus in 15 out of the last 20 years, as our reserves are quickly reaching HK$1 trillion.

Waiting times for public housing, health care and elderly services such as residential care have all lengthened, sometimes with catastrophic results. More than half of secondary school graduates (52 per cent) who qualify for university are rejected.

Hong Kong government underspent on education and housing for past 20 years, study says

You have heard all this before. What you may not know is that the government – for reasons never fully explained – regularly underspends what has been budgeted. Over 20 years, this averages out at HK$17 billion a year – translating into 16 per cent in education, 14 per cent in welfare and another 14 per cent in housing.

By one calculation, Hong Kong has 1.34 million people living below the poverty line.

But if you factor in welfare payments, the total drops to 971,000. If you throw in public housing, you eliminate another 300,000 plus. It’s a numbers game.

But however you cut it, from the really poor to those on middle incomes, people get less and less government support, while the public coffers swell – hence Goodstadt’s thesis.

Leung Chun-ying was on the right track with his focus on such livelihood issues.

The next government needs to do much more. If you can’t buy off the opposition with full democracy, you will have to pay off the people with excellent social care and services.

Make the people happier, and you may avoid the next Occupy Central or Mong Kok riot. Let those surpluses be damned!