Whatever the true numbers, poverty is a blight on Hong Kong

Our government has seriously mismanaged its wealth. Welfare chief Law Chi-kwong and his colleagues must face up to that

PUBLISHED : Monday, 01 October, 2018, 5:36pm
UPDATED : Monday, 01 October, 2018, 10:18pm

The debate about poverty is mostly a game about numbers. Statistics can tell you something is higher or lower than something else, but they can’t decide for you whether something, say, poverty in our society, is intrinsically high, low or acceptable. That’s a moral conclusion.

How many poor people are there in Hong Kong?

An often reported figure is 1.35 million. That’s staggering, considering our population is 7.4 million. But the headline figure drops to 995,000 if you factor in regular welfare payments that most of them receive. It falls further to below 700,000 if you add in public rental housing, which caters to more than 2 million people.

Where do you draw the line?

There is a war of words – or rather, one of numbers – between the government’s welfare chief, Law Chi-kwong, and the welfare NGO Oxfam, over Hong Kong’s actual Gini coefficient. An index for wealth gap from 0 to 1, the higher the Gini coefficient gets, the worse it is for inequality.

Law is right in that Oxfam has bungled its comparison of the city’s Gini number with those of other developed economies. But it is also besides the point.

Our headline Gini coefficient is 0.539, the highest in 45 years. That would put us in league with some third-world dysfunctional economies. But, as Law pointed out, it would drop to 0.473 if we factor in tax and social welfare transfers.

Hong Kong’s wealth gap greatest in 45 years. What can be done?

Oxfam apparently compared Hong Kong’s Gini coefficient without tax and welfare transfers to those of Britain, the United States, Australia and Singapore which factored in those transfers.

Yes, but so what? While rising inequality is a global phenomenon spanning four decades, Hong Kong has its own special ingredients.

Government policies have tended to favour those with assets over those without. You are taxed on your salary but not capital gains and dividends. Half the population own their own homes in a crazy property market that is greatly driven by the government’s pro-cyclical land policy.

(Almost) universal education, public health care and social welfare, which once helped mitigate poverty and promote social mobility, are showing diminishing returns, despite their enormous recurrent headline spending.

Meanwhile, the government is sitting on assets and reserves worth trillions. There is an inverse relationship between the wealth of the government and the poverty of large swathes of the population.

Our government has seriously mismanaged its wealth. Law and his colleagues must face up to that.