HK$10 billion welfare package signals a seismic shift in Hong Kong government’s priority

The long tradition of putting fiscal responsibility above all else and keeping Hong Kong business-friendly at all costs is changing as the government shows a greater willingness to redistribute wealth, look after those in need and give everyone a fairer deal

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Hong Kong Chief Executive Carrie Lam tackles questions on the HK$10 billion welfare package alongside Secretary for Labour and Welfare Law Chi-kwong (left) and Secretary for Transport and Housing Frank Chan Fan on Tuesday. Photo: Felix Wong

Bernard Chan

Bernard Chan, born in 1965, is a Hong Kong businessman.

Published: 6:30am, 17 Jan 2020Updated: 7:47am, 17 Jan 2020

On Tuesday, the Hong Kong government announced a package of 10 initiatives aimed at helping the elderly and less well-off. The measure that has perhaps attracted the most attention is the cut in the age at which people become eligible for the HK$2 (about 25 US cents) concessionary fare for public transport. This will benefit some 600,000 people, and hopefully help many continue to work or simply keep in touch with friends and family.

Other initiatives include a relaxation of old age living allowance rules, Mandatory Provident Fund contributions for the lowly paid, a gradual increase in statutory holidays, and several measures to address housing problems. In total, the package will help around one million people and cost around HK$10 billion a year.

Not surprisingly, there is criticism from some quarters, and accusations that the government is simply reacting to the social unrest of the past seven months.

But, to many of us, these measures represent significant breakthroughs. Several political and welfare groups have been calling for such initiatives for years. The Hong Kong Council for Social Service – of which I am chairman – is one of them, and we are very pleased indeed.

Let me explain what I mean by breakthroughs. In the past, officials have resisted relaxing old age living allowance rules on the grounds of cost. Under the new rules, the two allowance rates will be standardised at the higher level, and the asset cap will be raised.

For example, a retiree with HK$1 million in assets can convert half of that into a public annuity yielding HK$2,650-HK$2,900 a month, and still be eligible for the HK$3,585 allowance. So someone who still has HK$500,000 in assets (the new eligibility cap) can enjoy a pension income of over HK$6,000. This will benefit quite a few elderly people, and be especially attractive for someone who spends time on the mainland.