Establishing a low-income subsidy system （2013/12/6）

MR YIU SI-WING (in Cantonese): DeputyPresident, the setting of a poverty line has been called for over the years and ithas already been announced to provide some indicative figures for the work onpoverty alleviation. The poverty line is set at 50% of the medianmonthly domestic household income in Hong Kong and according to the definition,there were 540 000 households in poverty in Hong Kong in 2012, involving a populationof 1.3 million. The poverty population still numbers at approximately 1.03 million evenafter transfer of cash-based benefits. Under such circumstances, a huge amount offinancial resources will be required for making comprehensive and thoroughefforts in poverty alleviation work.

In subsidizing the low-income earners, Ithink the eligibility criteria should still be set at a level below the poverty lineso as to concentrate our resources on assisting those groups of people who are mostin need. As for the suggestion put forward by some Members to grant subsidy tofamilies with incomes over the poverty line, I think the idea could be put onhold for the time being and given further consideration after a period of timewhen a conclusion has been drawn on the experience gained. According to thedefinition drawn by the Government, the poverty line for a singleperson is $3,600, and $7,700 and $11,500 for a two-person and a three-personfamily respectively. With this calculation, one-person and two-personfamilies in employment will generally have a monthly household incomeabove the poverty line under the protection of the statutory minimum wage.The problem of in-work poverty mainly exists in families with a heavier burdenof supporting their dependant children or elderly members.

The CoP held its eighth meeting last monthand agreed at the meeting that the granting of low-income subsidy should bebased on the principle of encouraging employment and facilitating theupward mobility of children from families trapped in in-work poverty. It isreasonable to adopt the principle since priority should begiven to taking care of families with more children and elderly memberswhen granting the low-income subsidy instead of indiscriminately subsidizingall families with a household income below the minimum level. Otherwise,it will be tantamount to subsidizing all low-income earners with taxpayers'money, thus driving the financial situation of Hong Kong into an uncontrollablestate. Regarding the implementation details for granting subsidy, I thinkattention should be given to the following factors.

First of all, the system of grantingsubsidy to working families should not overlap with the existing Comprehensive SocialSecurity Assistance (CSSA) system. CSSA seeks to provide assistance to theunemployed and families with no employed member so as to address their basicneeds, while the objective of the low-income family subsidy system is toencourage members of recipient families to seek employment so that they willhave the opportunity to rid themselves of poverty.

Currently, there are in fact a lot offamilies with members working on a full-time basis and not eligible to apply forCSSA given their household income. However, in order to avoid the labellingeffect, they will choose not to apply for CSSA even thoughthey meet the eligibility criteria and will try to achieve self-reliance.The low-income subsidy system should be dedicated to assisting suchworking families to encourage them to stay in employment and break away frompoverty as soon as possible.

Secondly, there should be a consolidationof low-income subsidy and all other forms of subsidy currently in force toavoid duplicate commitment of resources. At present, cash assistance providedby the Government tolow-income families includes School TextbookAssistance, Transport Subsidy, Food Allowance, Disability Allowance andone-off subsidy granted under the Community Care Fund, and so on. Variousdepartments including the Social Welfare Department, Student FinancialAssistance Agency and Labor Department, and so on, are involved in theadministration of such subsidy schemes and the types of subsidy granted arenumerous and complicated. If the poverty line were adopted as the eligibilitycriteria in future, there should be a consolidation of various forms of subsidy inforce for the provision of "one-stop" support service, soas to minimize hurdles posed by the executive authorities and streamlinethe vetting and approval procedures.

Thirdly, to exercise prudent financialmanagement, the granting of subsidy should be implemented in a gradual and orderlymanner. Though we have had stable financial income in recent years and theGovernment has a huge surplus, given the uncertain prospects of the localeconomic situation, it is still unknown whether our fiscalposition will be adequate to cope with the demand arising from ourageing population in the future. I hope the Government will refrain from introducinghastily any policy that is unrealistic with an aim to winning some transientapplause.

We have to bear in mind that social welfaremeasures, once introduced, will be easy to implement but difficult towithdraw. Judging from our present conditions, poverty cannot be eliminatedcompletely and our welfare policy cannot please everybody. Therefore, the Governmentshould exercise prudence in financial management, endeavour to keepexpenditure within the limits of revenues and introduce various realisticmeasures in phases so that the work of minimizing poverty would be sustainable. Onlythrough this would thelong-term interest of Hong Kong be assured.

In order to make poverty alleviation awell-planned project, I agree that targets should be formulated by the Governmentfor minimization of poverty. Projections should be made on the annualrecurrent expenditures required in this regard, andperiodic reviews should be conducted of and timely adjustments made tovarious poverty alleviation measures.

Fourthly, there is a need for an asset testsystem. All applications for welfare assistance in Hong Kong, publichousing, Home Ownership Scheme units, CSSA and all kinds of subsidy alike, aresubject to an asset test and the same should also be applicable to thelow-income family subsidy system. The setting of the poverty line is based on theconcept of relative poverty, with household income adopted as the determinant.This approach will classify some "asset-rich, income-poor" people aspoor. If a system with no asset test is established, theactual poverty situation will be distorted and our resources cannot becommitted to helping people with urgent needs.

Deputy President, the setting of a povertyline is just the beginning and in the long run, the strategy for povertyalleviation should be minimizing poverty, encouragingemployment and providing assistance to the next generation with a view topreventing inter-generational poverty. This is the responsibility of both theGovernment and Members of this Council.

Deputy President, I so submit.