Hong Kong Budget 2018-2019

Hong Kong cash handout scheme will cost government HK$330 million to administer

Administration fees to eat up 2.9 per cent of HK$11 billion scheme that gives up to HK$4,000 to eligible people

PUBLISHED : Saturday, 21 April, 2018, 8:00am
UPDATED : Saturday, 21 April, 2018, 1:24pm

The government on Friday revealed it would spend HK$330 million to administer a cash handout scheme to give up to HK$4,000 each to eligible Hongkongers.

This means administrative costs will amount to 2.9 per cent of the HK$11 billion scheme, much higher than in 2011, when costs were only 0.5 per cent of a HK$37 billion giveaway.

In a paper submitted to the Legislative Council, the government explained that the bulk of the costs would go towards hiring 706 temporary staff and renting an office for a year, with the rest spent on IT, publicity and other operating expenses.

2.8 million Hongkongers to get cash handout of up to HK$4,000 each

It estimated that 3 million people would benefit from the handouts. They would need to apply to the Social Welfare ­Department’s Working Family ­Allowance Office, and applications would be open for a three-month period from ­February 1 to April 30 next year.

Financial Secretary Paul Chan Mo-po announced the handouts last month for an estimated 2.8 million Hongkongers. 

It was a remedial measure, after his budget announcement in February was panned for not ­doing enough for the needy. In the budget, he had dished out a combination of salary and profits tax rebates and increased old age and disability allowances for at least two million people.

Budget philosophy offers very little change

On March 23, Chan said Hong Kong residents aged 18 or above as of December 31 this year who did not own property, did not receive government allowances and would not pay income tax for the 2017-18 financial year would get the full HK$4,000.

Those who met the first two criteria, but still paid income tax and were eligible for the tax breaks announced in the budget, could claim the difference between HK$4,000 and the concessionary amount, he said.

He also offered help to the “small number of people” who paid no tax but lived in properties they owned. If they received less than HK$4,000 in rates waivers under the budget, they would get the ­difference between the amount waived and the handout.

But those who owned non-residential properties or more than one property would be excluded, the Legco paper said. It said for couples who submitted joint tax returns, one could claim HK$4,000, while the other could claim the difference, if any, after concessions.

‘Complicated’ cash handout scheme criticised by lawmakers

While lawmakers cheered Chan’s bid to share the city’s HK$138 billion surplus more broadly, they had criticised the scheme as being too complex and worried administrative costs would balloon.

Vincent Cheng Wing-shun, from the Democratic Alliance for the Betterment and Progress of Hong Kong, urged the government to “look for more efficient ways to drive down the cost”.

Wong Kwok-kin, an adviser to Chief Executive Carrie Lam Cheng Yuet-ngor, said the government was “only paying the price” for not giving handouts to more Hongkongers in the original budget announcement.

Paul Chan’s ‘brave’ cash handout plan still fails to win some hearts

Democratic Party lawmaker James To Kun-sun said the government would definitely have to spend more if everyone got handouts. But he said that in practice, the total cost of the handouts could turn out to be lower, as those who were only getting a few hundred dollars might not even bother to apply.

The Legco paper also explained that HK$160 million would be spent on contract staff salaries, followed by HK$46 million on office rental and the rest on IT, publicity and other operating expenses. 

Some HK$19 million would also be spent to upgrade the automation and computer systems of the Working Family Allowance Office.