MR CHAN KIN-POR (in Cantonese): President, the Policy Address this year has responded to a lot of social concerns and made a number of concrete proposals. I am going to express all my views in one go.
First of all, I would like to discuss an issue that the insurance sector and I are concerned about. As stated in the Policy Address, after the core fund, the next objective of the Mandatory Provident Fund Schemes Authority (“MPFA”) is to put in place an eMPF, a centralized electronic platform, to facilitate the standardization, streamlining and automation of the MPF scheme administration, thereby further reducing costs and paving the way for “full portability”. I have always advocated simplifying the MPF administrative process because one of the reasons attributing to high MPF charges is the excessively high administrative fees; the costs are really high because huge expenses on manpower and paper are involved.
I would like to give an example for illustration. As the core fund is about to be launched, many employees have received a briefing document; some have even received several copies of the same document, with dozens of pages for each copy. All trustees in Hong Kong have sent out more than 4 million copies with similar contents. As it is required by law that such a document must be sent, the expenses cannot be saved, and the amounts incurred are included in the administrative costs. Just the postage alone incurs some $10 million, excluding the expenses on manpower, paper and printing. This is only one example. Since the administrative processes required by law have to be handled manually, such as handling a large number of documents each month, the high compliance cost has directly pushed up the administrative costs. Therefore, the industry has been advocating the simplification of administrative process in the past few years. We welcome that the Government has finally determined to implement a centralized electronic platform, and hope that it can be implemented expeditiously so as to reduce the administrative costs. In order to gain all administrative operators’ support for the centralized electronic platform to achieve the best operating efficiency, the Government should consider the operation of the electronic platform by the industry in the future.
On MPF fees, the average MPF fees is now 1.57%, but some industry players have reflected to me that the actual fees are lower, may be only 1.4% because the figures released by MPFA have not taken into account MPF rebates or discounts. Simply put, most schemes have currently offered discounts or rebates, but the current rates released by MPFA are only the rates on the book but not the actual rates. I do not understand why MPFA has all along failed to provide the discounted rates. I hope that MPFA will release the actual charging rates as early as possible, so as to increase transparency and reflect the actual situation.
Another focus of the insurance sector is the Voluntary Health Insurance Scheme (“VHIS”). As stated in the Policy Address, the Government will implement the specific arrangements for VHIS and examine the details of providing tax deduction for the purchase of health insurance products. The discussion on VHIS has straddled over two terms of government and a consensus has basically been forged. I hope the Government will implement the proposed scheme as soon as possible to benefit the middle class. If they use private hospitals more often, more public resources will be released for the needy
As for a high-risk pool, I hope the Government will continue to study and figure out the long-term commitment of the Government, so that high-risk individuals can take out insurance and the requirement of guaranteed acceptance can genuinely be implemented.
Regarding the tax deduction offered for health care insurance, I hope that the Budget to be announced next week will make public the specific tax deduction arrangements. I also hope that this is only a start, and a tax deduction mechanism will in future gradually extend to other insurance items related to people’s livelihood, such as annuities and insurance related to health and retirement. I always believe that encouraging members of the public with the means to take out insurance for their future life is tantamount to the Government paying for soya sauce while the public paying for the chicken. By providing a little incentive to encourage the public to assume responsibility for their future, the Government can in turn reduce the long-term public expenditure. This is really a smart move.
With regard to the current reform of turning voluntary health insurance into medical insurance, the Government has said very little on the hospital and medical charges, which take up a large proportion of the premium. The Government has the responsibility to rectify the inadequacies of the medical profession and cap the increase in medical expenses at the inflation level. At present, the medical inflation is much higher than the general inflation; if the medical inflation cannot be capped, the premiums will be on the increase. Therefore, the Government has the responsibility to keep making efforts to reform our private medical system.
The Policy Address also mentions that the Hong Kong Trade Development Council and the Hong Kong Financial Development Council will join hands with industry representatives to strengthen the promotion of our financial services industry outside Hong Kong. I believe they will promote insurance services to tie in with the development of the Belt and Road Initiative. Regarding the newly established Independent Insurance Authority (“IIA”), the industry is waiting for IIA to start its work, hoping that IIA will be able to implement and enforce the powers conferred by law. In the process of enacting legislation, the Government has made many verbal promises, but some problems are yet to be unresolved and require clarification and follow up. For example, on provisions concerning the best interests of the agents and details of the appeal mechanism, the Government should follow up expeditiously and alleviate the worries of the insurance industry, so as to ensure that in duly protecting all insurance practitioners, consumers are also given due protection.
The Policy Address proposes to progressively abolish the “offsetting” of severance payments or long service payments with MPF contributions. The proposal contains three key elements, including the abolition will have no retrospective effect and employers’ MPF contributions before the implementation date of the proposal will be “grandfathered”. I also agree that the Government should share the additional expenses of the employers to ensure the smooth transition of the mechanism and prevent a large number of small and medium enterprises (“SMEs”) from closing down. I believe the proposal adopts a middle-of-the-road and pragmatic approach, and can balance the interests of the business and labour sectors. I hope both parties will understand that if they all stand firm, it will be detrimental to the community and employees. It is my hope that various parties will adopt an attitude of mutual understanding and mutual accommodation in order to work out a proposal that is acceptable to all; if necessary, the Government may have to offer greater assistance to SMEs.
In respect of social security, the Government proposes to enhance the Old Age Living Allowance by adding a higher tier of assistance and relaxing the asset limits for the existing allowance, so as to increase substantially the number of elderly persons to be benefited. I welcome the Government’s proposal and agree that the existing means-tested social security system should continue. Together with Comprehensive Social Security Assistance and “fruit grant”, 74% of elderly persons will be benefited and the coverage is really extensive. The Government should continuously review whether the amount of allowance is sufficient. In my view, the Government should exempt the MPF contributions of the elderly when calculating their assets. As such contributions are the savings of the elderly over the years, or their “funeral money” which they live on in their lifetime, such amount should be exempted.
The Policy Address also discusses land development and conservation issues. While it proposes to incorporate more land with high ecological value into country parks, it also considers allocating a small proportion of land on the periphery of country parks with relatively low ecological and public enjoyment value for public housing and non-profit-making purposes. I agree with this sort of land exchange concept of the Government, and disagree that no changes should be made to land in the countryside, at least we can discuss whether it is worth doing so. I have always supported land reclamation outside the Victoria Harbour. The Policy Address mentions that technical studies on reclamations in Siu Ho Wan, Lung Kwu Tan and Ma Liu Shui will be completed this year, and reclamation in Sunny Bay, Lantau Island is under planning. I think this is a right direction and the Government should implement the proposed projects boldly.
Finally, I would like to talk about sports. The Government has decided to increase a large number of sports facilities; in the next five years, a total of some $20 billion will be spent to launch 26 projects to develop new or improve existing sports and recreational facilities. I have always advocated a healthy life and in my view, if members of the public are sound in body and mind, the whole society will develop in a healthy way, and people in the community will be happier. Unfortunately, in Hong Kong, people experience great stress in work and life, most of them do not have the opportunity to exercise and they do not engage in recreational activities from which they can draw emotional support, hence they are sick in body and mind. Many young people prefer indulging in the online world to going out and make friends. A substantial increase in a large number of recreational and sports facilities can promote the atmosphere of physical activities, help the community find emotional support and through sports, increase the sphere of social life of young people. Therefore, I earnestly support the Government’s decision. It is absolutely worthwhile to invest $20 billion but I think the Government should make greater efforts in terms of work-life balance. Although the Government has this awareness and concept, it has actually done very little.
Let me reiterate, the Government should instruct various departments to consider how their employees can maintain a work-life balance. As such, parents of each family can spend time with their children, and each family in Hong Kong can lead a happier life. The whole community can in turn be happy. Regardless of who will become the Chief Executive, as long as the Government fails to attach importance to this, I believe Hong Kong people will not be happy. Now that we have ample fiscal reserves, I believe the Government can absolutely make greater efforts so that we can spend more time with our family members or really go on vacation. The Government must pay attention to that. I so submit.