Speech on Motion on Universal Retirement Protection(2012.10.24)

Mr President

Today’s Motion is on universal retirement protection but it embraces “topic of recent days” – Old Age Living Allowance. Although the proposal is yet to be considered by the Finance Committee on this Friday, it would be the focus of this debate. At the outset, I would like to declare my support to OALA. I also support to commence study on financing a retirement protection plan for the HK citizens. May I stress that I just support commencing the study to determine how to implement such plan.

It is my wish that OALA would be passed for the benefit of some 400,000 eligible people. Means test is indispensable because OALA aims at helping the poor. Only distribution is paid irrespective of need, and OALA is not. If social security payment were turned into distribution, it would become “candy wrapped with toxin”. If candies are offered indiscriminately, Hong Kong would suffer from diabetes.

People of Hong Kong are supportive of helping the poor, provided it is reasonable and affordable. Distributions should be treated with care. One-off allowances, like exemption of rates and public housing rental at economic downturns, are not objectionable. However, recurrent and persistent distributions are different matters. We should pause and think whether they are affordable and necessary for the recipients. Let’s ask ourselves: “Should we do this? Would the general public support this?”

Actually, our population is aging. It is estimated that old age people would rise from 13 percent today to 28 percent by 2039. It would mean 2.49 million. If old age payment were indiscriminative, it would be an unaffordable burden. In turn, public finance would be damaged and the economy would suffer. Many European countries, like Greece, are illustrative. Those welfare states are at the verge of bankruptcy.

One of my amendments is to delete dispensation of means test from the original Motion and replace it by adoption of a more lenient test. The scheme should aim at the needy and have sustainability. I would rather adopt a more lenient test to admit more marginal cases than to dispense of the means test. Hopefully this would rally more support within this Council and mitigate the confronting atmosphere so that the scheme can be passed early. I also support passing the scheme as tabled, followed by review of particulars with a view to optimizing with more lenient requirements.

That said OALA and universal retirement protection are two basically different schemes. It does not serve any meaningful purpose to bundle them together and delay commencement of OALA that would benefit the poor aged.

Another amendment is to delete paragraphs on “bad-kid form” from the original Motion. I have spent efforts looking into the so-called “bad-kid form”. According to the authorities, there is no such thing as “No-support-to-parents-certificate” for children to sign when their parents are applying for Comprehensive Social Security Assistance. There is, however, a declaration from children of the applicant on financial support provided, if any, as part of income assessment.

It is not my intent to debate whether the said declaration is “bad-kid form” or declaration from children for income assessment in practice. I fully understand its origin and why it is known as “bad-kid form”. However, I do not agree that those children should be labeled “bad kids”. I believe most people do wish to support their parents but not everybody is financially capable. Those do have real difficulties should not be blamed and labeled. I ask the Government to improve the application process and step up promotion and public education so that the negative image of such declaration may be eliminated. Applicants for CSSA should never be discriminated or snubbed.

That said I must stress that public resources are limited. Welfare is meant for those in need, and means test is indispensable. We should never ignore consequences for applause. Don’t forget that “our generosity is repayable by the next generation.”

We have spoken a lot on OALA today. However, focus of the Motion should be universal retirement protection. It is my wish that Hong Kong would run a viable retirement system in addition to MPF in light of an aging population. As a major step ahead, it is essential for the Government to commission study on the financing of a retirement protection plan for the HK citizens.

Again, let us take Greece as an example. Old age insurance plan is utmost important in social security of the country. It is recurrent in funding but the population is ageing gravely. The corporate plan with the widest coverage is insolvent and underwritten by the Government. In 2010, the Plan received contributions of €13.5 billion but paid out €14 billion. The shortfall of €500 million was covered by the Government. Conceptually, the Plan is at the verge of bankruptcy and dependent on public funding. In recent years, the Greek Government has attempted to reform the old age insurance system, like lifting payment age and cutting payment amount, but they are met with strong opposition.

Actually, old age dependency is rising in Hong Kong. This is the ratio of people aged 65 and above to those between 15 and 64. According to official forecast, it would rise from 177 per 1,000 today (2012) to 454 in 2039. It would mean that every two person in the working age would then have to support one old age person. If there were similar retirement scheme that operate on recurrent funding in Hong Kong, it would most probably be insolvent and unsustainable as well. If payment were then cut, as in the case of Greece, in the most unfortunately circumstances, would fellow Members who are arguing for dispensation of means test today regret in hindsight then?

To sum up, Hong Kong needs a more comprehensive retirement protection to complement MPF for an aging population. However, its financing and sustainability are equally challenging for the same reason. Thus, the Government has a duty to study the subject in depth, covering crucial factor of financing, and to persuade all parties to support, particularly the business sector that would pay for it.

With these remarks, I move my Amendments.

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