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01 FEB 2012

Oxfam: The Hong Kong Budget lacks a Comprehensive Policy against Poverty

1 FEBRUARY 2012 HONG KONG In the Budget Speech today, Financial Secretary John Tsang announced that the financial reserves of the Hong Kong SAR Government reach HK$66.7 billion, yet the proposed measures are one-off, and will not sufficiently address poverty in Hong Kong and will not sufficiently assist poor people. The Government does not adequately address public housing, retirement pensions and employment poverty – the three most significant issues facing poor people.

Increase the Supply of Public Housing Units to 30,000
For poor people paying high rent in private housing, a public housing unit is usually their goal. Yet the supply of public rental housing does not meet the demand. According to the Brief Review on Public Housing, the waiting list is 42 per cent longer than it was seven years ago, from 90,240 applications in 2003 to 155,600  in 2010 (of which 66,600 are from non-elderly singletons). Despite these enormous needs, the Government has not increased the annual allotment of 15,000 units of public housing nor the number of public housing flats 2011-16. This means that 44,000 applicants may need to wait for more than three years for their new home, and during this time, they are paying rents that they cannot afford: the rental index of private housing flats below 40m2 has risen year-on-year, by 18.4 per cent in the Third Quarter of 2011 . In fact, 56.8% of CSSA recipients in private housing find their payments insufficient to cover their (rising) rent. The median of the difference between the actual rent and the maximum level of rent allowance is from 13 to 27 per cent. Although the Government has increased the maximum rent allowance under CSSA by 5.7 per cent, it still cannot cover their (rising) rent. For people who are poor but who choose not to apply for CSSA, there is no measure to assist them with their rental burden.

Oxfam calls on the Government to provide a short-term rental allowance for people on the waiting list for public housing, and to increase the maximum level of rent allowance under the CSSA scheme. Those are two important short-term measures. In the long term, the Government should increase the production of public rental housing flats from 15,000 to 30,000 flats per year to ensure that applicants do not have to wait more than three years for their unit.

Support for Low-income Workers and their Families
There are currently 177,500 families, or 614,400 people, living in poverty , and the employment poverty rate stands at 10.5 per cent. We cannot see any measures in the 2012/13 Budget to assist these families out of the poverty trap.

While the income of workers has increased with the implementation of the minimum wage, the high inflation rate has largely eroded their salary growth. According to the Third Quarter Economic Report of 2011, the salaries of the lowest decile employee group rose year-on-year by 13.1 per cent; yet due to inflation, the rate of salary growth decreased to only 5.0 per cent. Food and housing costs, which account for 60 per cent of household expenditure, have increased at a faster rate than income. In other words, low-income workers and their families are struggling to cope and are needing to skimp on food and other basic expenses.

The Work Incentive Transport Subsidy Scheme (WITS) can assist low-income workers and their families, yet the eligibility criteria are too stringent. The application rate is far lower than expected. According to the Labour and Welfare Bureau, there were only 24,800 applicants filing for WITS as of 16 January 2012. About 13,700 applicants have received the allowance, only 6 per cent of the estimated total.

Oxfam urges the Government to review the level of minimum wage as soon as possible. The income and assets limits for WITS should also be reset, by considering the similar application criteria for public rental housing. The needs of low-income families with children must also be addressed. In the long term, the Government should study the feasibility of a tax credit scheme or low income subsidies which have been employed for many years in other countries.

A Pension Seed Fund for the Ageing Population
The Financial Secretary acknowledged the needs of an ageing population and promised to ensure adequate financial reserves to address the challenges. However, the Budget does not include an arrangement of a retirement pension or any pension for elderly people. Since the Mandatory Provident Fund (MPF) scheme requires forty years to mature, it cannot provide enough protection for people who have already retired. Unemployed people and housewives/househusbands also do not benefit from MPF. Considering that the poverty rate among elderly people has reached 40 per cent, Oxfam Hong Kong urges the Government to set aside part of the financial reserves to set up a seed fund for an inclusive pension for elderly people.

-Ends-

About Oxfam
Oxfam is dedicated to fighting poverty and inequity worldwide. The international and independent development and humanitarian organisation tackles poverty in four main ways: sustainable development in poor communities, disaster relief, local and global advocacy, and education with Hong Kong youth. Established in Hong Kong in1976, Oxfam Hong Kong is a founding member of Oxfam, an international confederation that has assisted poor people in 92 countries. Oxfam Hong Kong alone has supported poor people in over 70 countries/regions.