We are back in Hong Kong now and are reading up on recent news, including the old age allowance discussion.
Hong Kong is one of the richest cities but also one with a very high income inequality. The city’s Gini coefficient, an income inequality measure, gained to 0.537 in 2011, from 0.525 in 2001 (the Gini coefficient index ranges from zero to one, with a reading of zero meaning income equality, and one indicating complete inequality). The gap is wider than in Canada, the UK, the US, Australia and Singapore.
To counter the widening gap the previous Chief Executive Donald Tsang had offered rebates on tax, rents and utilities, as well as handed out cash to citizens. Now, with CY Leung in place, the discussion centres around the “fruit money”, which is an old age allowance paid monthly to senior citizens aged 65-69 with low incomes and all elderly citizens aged 70 and over. It is only HK$1,090 and just enough to buy some fruit, hence the name.
The new administration proposed to introduce a new means-tested subsidy called the “Old Age Living Allowance”, which provides HK$2,200 per month for the needy only. The government says the new allowance must be means-tested for all recipients aged 65 and over to avoid its cost ballooning as the elderly population grows. Old people with income of not more than HK$6,660 a month and assets of no more than HK$186,000 would be eligible.
Lawmakers have vowed to prevent its approval unless the means test is eased or scrapped. Their argument is that there is enough money in the budget to allow a small pension for every senior citizen, regardless of his/her income.
What a crazy and bizarre thing to say – just because there is a surplus of money it should be spent that easily? I don’t agree – I think the allowance should be based on how much income a senior person has and for those with hardly anything it should be doubled if not tripled! But why should the government fund the lifestyle of some rich tycoons that don’t need the “fruit money” at all? Also, I feel that some people confuse the old age allowance with an universal pension fund – that’s not what it is supposed to be, that’s why the Mandatory Pension Fund (MPF) exists (and yes, we can argue about its usefulness separately).
An interesting fact that I was not aware of: Had the allowance been passed when an attempt to reach a vote on it was first made two months ago, payments would have been backdated to October. It is government practice to backdate payments to the first day of the month in which lawmakers approve them.