Does HK need a universal retirement protection scheme?
Updated: 2013-01-12 07:26
By Nellie Fong Wong Kut-man(HK Edition)
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Editor's note: On Jan 4 issue's page H3, the author of the story "Does HK need a universal retirement protection scheme?" should have been Mrs Nellie Fong Wong Kut-man, , instead of Mr Fong Yun-wah. We sincerely apoligize to both Mrs Fong Wong Kut-man and Mr Fong Yun-wah for the mistake and republish the story today.
There was a series of world turbulent events beginning in 1997, starting with the Asian financial turmoil in 1997-98, the IT bubble burst in 2001, the SARS epidemic in 2003 and the global financial crisis triggered by the collapse of Lehman Brothers in 2008.
Despite all that, Hong Kong's economy had maintained positive growth in the past 10 years and this was very much due to having a "Closer Economic Partnership Arrangement" (CEPA) with the Chinese mainland. Tourism, consumer services and the real estate market did particularly well.
With its dollar "pegged" to the US dollar, Hong Kong has to keep interest rates low in line with the US dollar, while the US continued its quantitative easing policy and maintains extremely low interest rates. As a result, most local Hong Kong residents' incomes have not kept up with inflation, particularly the elderly and unskilled workers. They are struggling. Hong Kong is a highly-developed city that should be able to take care of its elderly and needy.
The offer by the HKSAR government of a monthly HK$2,000 Old Age Living Allowance (OALA) in addition to the existing Old Age Welfare Allowance, commonly known as "Fruit Money", is no doubt a move in the right direction. In order to ensure that only needy elderly citizens receive this OALA, an "assets declaration" was introduced. If it were not, how can anyone know if an elderly person really needs OALA?
I see no reason to demand the removal of the "assets declaration" just because some are claiming "it is disrespectful to the elderly." The basic principle is that those who need OALA will get it and those who don't will not get it. In my opinion, for those in need, HK$2,000 a month is not enough, and the next step is to increase the OALA further.
As to whether Hong Kong needs a Universal Retirement Protection (URP) scheme, that is an entirely different matter. OALA and URP are two different issues and should not be confused with each other. I believe Hong Kong should provide retirement protection to those in need. "Universal means universal to those in need and hence a "means test" mechanism has to be in place if a URP system is to be introduced. Retirement protection should not be universal for all, but universal to those in need. URP is not a universal cash handout nor a blind expansion of social welfare. Social welfare comes from taxation. We are obligated to assist the underprivileged, the low income elderly and those in need.
The explosive rise of property prices in the past 10 years has made it increasingly difficult for the younger generation and low-income households to own a home of their own. It is therefore inevitable that many citizens are increasingly disgruntled. The government must step up its efforts to build affordable residential housing, either for rental or for ownership, for low-income households and the needy elderly.
As a highly developed city, it is very difficult for Hong Kong to close its wealth gap, because skill-sets will raise the income bar higher and higher. If the wealth gap continues to grow, the disgruntlement and conflict between the haves and the have-nots will build up to a dangerous level.
In my opinion, those who have benefited from CEPA offered by the central government in the last decade should consider helping the less fortunate Hong Kong residents. If the haves truly lend a hand to the have-nots, the conflict may lessen and only at that time Hong Kong will truly progress.
The author is a HK member of the CPPCC and a chartered accountant.
(HK Edition 01/12/2013 page3)