We need to pay up if we want benefits of welfare

Ronald Ling, University of Hong Kong

Would Norway's high-tax, high-reward system work in HK?

Ronald Ling, University of Hong Kong |

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A shopping street in Oslo, Norway. The country is well known for its welfare system.

After the drama surrounding the chief executive election, Hong Kong has started to accept the result and the expectations for positive change are high.

Obviously, one of the most prominent social problems is the disparity between the rich and the poor.

The new government has to address this problem if it hopes to build a more harmonious society. One way might be to adopt a more comprehensive welfare system.

I am on an exchange visit to Norway, which is well known for its welfare system, and I can see the pros and cons of this system.

Norwegians enjoy free public healthcare, 46 weeks of paid parental leave, five weeks of paid annual leave, free education and a universal pension system. These benefits allow people to balance a successful career with a happy family life.

Young people seem to be able to study without too much pressure. They can try different subjects without the heavy burden of career development. A guaranteed pension allows them to take some risks with their personal development.

It is common to see Norwegians with at least two bachelor degrees and a master's degree. But the welfare system does not hamper the country's economic development. All the major economic indices - per-capita gross domestic product, UNDP Human Development Index and the Gini coefficient - indicate that Norway is probably one of the richest countries in the world.

This may sound like a blissful life, but we must consider the criteria behind a successful welfare state.

Firstly, the government must have sufficient revenue. In Norway, the cost of living is high due to sales and value added taxes. Also, Norwegians pay high personal taxes, starting at 28 per cent and reaching nearly 50 per cent. Moreover, revenues generated from natural resources such as oil make up a huge proportion of the public pension fund.

Secondly, the government owns or controls many public enterprises. This helps to generate income, and keep the prices of public utilities down.

Thirdly, free education encourages more people to work towards supporting the welfare system.

I doubt people in Hong Kong would welcome higher taxes, while our lack of natural resources further limits government income.

In addition, our government advocates a free economy and does not interfere in the market. Such as government will never have sufficient funding to implement welfare policies.

Hongkongers worry about owning their own homes. We need a public pension system to relieve the social inequality caused by the high property costs, and this means we must be ready to pay higher taxes.

Personally I would pay higher taxes in exchange for a guaranteed pension rather than spend more than half my pay on a tiny flat.