When the Public Assistance (now CSSA) Scheme was introduced in 1971, the basic (now standard) rates covered food costs only. Over the years, apart from inflation adjustments, many improved measures have been introduced. These included real increases in payment rates, provision of disregarded earnings, and introduction of special supplements and a wide range of special grants to take account of changes in social expectations and to meet special needs of different categories of recipients. The scheme has evolved from a scheme providing for basic subsistence to a comprehensive safety net meeting not only the basic but also individual needs of its recipients.
Strength of the scheme:
The CSSA is advantageous in providing a safety net for those proven to be in need of financial assistance. The needy can get cash help immediately and thus improving the quality of life of low income families to a certain extent. The poor are also provided with a sense of security in the scheme.
Besides, the system is quite comprehensive containing many schemes and supplements to suit different needs of people. In addition to providing a safety net for the financially vulnerable, the government would also try to ensure that the social security system act as a springboard to the future. Another aim is giving the recipient an opportunity to become self-reliant. So the recipients have to do community services in the scheme rather than just getting the money which would build up a sense of responsibility and help to prevent abuse of system.
As the government only provide assistance at subsistence level to the needy, making the CSSA recipients still have incentive to work to improve living standards. This will help solving the problem of abusing the public funds.
Weakness of the scheme:
However, CSSA is not a perfect scheme which needs to be improved. Though the amount of the assistance is calculated by the median of the general public income, however, the rate of social assistance is far too low, especially for small families consisted of children and single parent only. Such small amount of money is not enough for them to have a comfortable living which restricts their social activity.
In addition, the mean-test system of CSSA leads to an increase in the administrative cost of Government. People always have a negative impression towards CSSA recipients or even look down on them. The needy may then be reluctant to get the allowance because of the negative self image. They are afraid to be classified as the poor group. It leads to social division in the society.
In fact, there is a rapidly rise trend in the CSSA caseload which rose by 146% from 88,600 in September 1993 to 218,400 in September 1998. The number of ‘unemployment’ CSSA cases increased over six times from 1993 to 1998, representing 12% of the total CSSA caseload. During the same period, the ‘single parent’ CSSA cases increased by 268% from 5,700 to 20,900, representing 10% of the total CSSA caseload. That means government needs to spend more and more money on the services of the social security system. The expenditure on CSSA had been increased by nearly three times from $2.4 billion in 1993/94 to $9.4 billion in 1997/98. A high number of applications will pose a heavy financial burden on the government and the expenses will increase rapidly. The fund of this assistance is come from the government tax income only. So over the past two years, there has been growing public resentment against people who are perceived to get CSSA unfairly.
Moreover, some people are abusing the system. The average monthly CSSA payments for households of four or more persons are now considerably higher than low-end wages. The real situation is that not only the poor apply CSSA, some have good living standard also receive assistance from the government. This may force people not to find job actively and the number of unemployed may increase. In the year of 1999/2000, the Social Welfare Department had confirmed 201 fraud cases of CSSA, involving an overpayment of more than $11 million. Meanwhile, some cases were referred to the Police for follow-up investigation.
Own point of view:
We must admit that there is no way of knowing how much cheating actually occurs and even there is much more fraud than is ever detected. Nevertheless, to ensure prudent and defensible use of public funds, weaknesses should be minimized in the existing system and stepping up measures to reduce fraud as far as possible though it cannot be completely eliminated.
The following are the recommendations to strengthen the control to safeguard public expenditure against fraud and abuse:
(a) To resume home visits for all CSSA new cases;
(b) To reinforce the gate-keeping mechanism whereby we will strictly require all CSSA applicants to apply on a household basis if they are living with other income-earning family members;
(c) To pay more home visits to targeted CSSA cases which are more likely to experience fluctuations in their financial situation during their receipt of assistance; and
(d) To strengthen the Special Investigation Team of Social Welfare Department to tackle suspected fraud cases.
(e) To liaise the Social Welfare Department with other government departments, such as Immigration Department, Civil Service Bureau, Lands Registry, to verify the applications in a bid to detect suspected fraud cases more effectively.
B. Support for Self-reliance (SFS) Scheme
The aim of SFS Scheme is encouraging and assisting unemployed CSSA recipients towards paid employment and self-reliance.
Strength of the scheme:
The Active Employment Assistance program could encourage and help the unemployed recipients to work through the provision of personalized service. In addition, the unemployed CSSA recipients need to do unpaid community work in the Community Work program. This could help them to build up self-esteem and work habit. So they could also be well prepared to rejoin the workforce in the future. The program also encourages the incentive to work for the recipients by disregarding part of their income.
Weakness of the scheme:
We cannot ensure the unemployed recipients will participant the SFS program actively. Otherwise, it will only waste the resources of the government.
Own opinion:
I suggest that Social Welfare Department should strictly enforce the policy to terminate CSSA payment if an unemployed CSSA recipient who, without acceptable reasons, does not actively seek work, or declines a job interview or job offer, or refuses to undertake community work.
C. Portable Comprehensive Social Security Assistance (PCSSA) Scheme
The objective of PCSSA is to enable elderly CSSA recipients to continue to get cash assistance if they decide to retire permanently in Guangdong under the CSSA Scheme.
Strength of the scheme:
The safety net could still protect the elderly even they don’t choose to live in Hong Kong.
Weakness of the scheme:
As there is a huge income difference between Hong Kong and Guangdong, the cash assistance that they got which may seems very large. They would be very well off in Guangdong. It leads to an atmosphere of choosing to retire in China instead of Hong Kong among elderly.
D. Mandatory Provident Fund (MPF)
Hong Kong population is getting older. Nearly 1/3 of the employees do not have a retirement scheme to protect themselves from the uncertainties after retirement. The government notices that there should be a compulsory retirement protection scheme to protect the workers when they retire in the future and therefore on July 1995, Legislative Council has passed the Mandatory Provident Fund bill. MPF is then carried out on 1 Dec 2000.
Workers aged between 18 and 65 should join MPF. Both the employers and full-time employees should contribute 5% of workers’ salary individually. However, there are some exceptional cases. For instant, the domestic help, such as Philippine maids, self-employed hawker, employees who terminate the employment within the first 60 days and overseas employees who will leave Hong Kong within 180 days. The minimum income level of the employees is $4000 per month. For those earn less than $4000, they can choose whether to contribute or not but their employers are still required to contribute in all circumstances. The maximum income level of the employees is $20000. For those who earn more than $20000 per month, the contribution will be still based on $20000.
In addition, the funding is transferable. That means employees can get back their savings at age 65 even changing jobs. If the employees leave Hong Kong permanently, permanent disability and death, full benefits would be payable immediately. Though MPF system is operated by private company, it is monitored by the government by setting up MPF Office.
Strength of the scheme:
First, MPF is quite equitable. The amount of accrued benefits depends on the contributions made. This serves as a positive incentive for scheme members to make additional voluntary contributions so as to accrue more benefits for their retirement. It is also quite fair because both employees and employers share the responsibility. The aging population problem is then solved.
Second, MPF scheme is privately managed under a free competition environment. More options are provided for consumers to choose. Competition leads to increased efficiency and reduced the costs, which will benefit scheme members ultimately. The quality will also be increased due to competition.
Third, this scheme is suitable for Hong Kong’s needs. Hong Kong has a well-established and financial services sector. A privately managed retirement system under prudential regulation and supervision is the most effective and secure way to offer retirement protection to the workforce. As a result, the employees can get a lump sum of money for their remaining life and less involved by the government. It reduces the expenditure of government on social welfare in long-term which means the financial burden of government is relieved.
MPF scheme is transferable from one job to one job. Otherwise, the workers will have no desire to change job because of the savings in C.P.F.
Flexibility is increased as the employees can choose the investment plan to meet personal needs.
Weakness of the scheme:
First, not all workers are covered in MPF. Certain groups of people are left unprotected, such as housewives, the low income groups whose monthly salaries are less than $4000 and self-employed etc. The scheme is not universal.
The employees need to face certain risk in private operation themselves. The amount of money they can get back only depends on the investment. There is no provision for any losses arised from unwise investment decisions by fund managers.
More importantly, some employers minimize MPF obligations by reducing workers’ wages by converting a portion of them into other benefits, such as housing allowances, travel warrants and travel allowances etc., which are not included in the calculation of employers’ MPF obligations. The employers are even cutting down the employees’ wages to balance their MPF expenditure.
Finally, people who will retire in soon and the low income groups will get not much benefit in this scheme because they only save a little amount of money and there is no protection for them when they retire.
Own opinion:
The minimum income level of workers needed to contribute their salaries should be examined again. Low income group will face difficulty in maintaining their livings if contributions are further taken from their salaries. The government could set the minimum income level around $6000.
The government should also find ways to protect the workers not covered by the MPF Scheme. For instance, encouraging them to buy the social insurance or setting up another scheme to protect them.
E. Social Security Allowance (SSA) Scheme
--Amount payable and target groups:
1). Normal Old Age Allowance:
--for aged 65-69
--mean-test: monthly income limits (less than $5910 for a single)
(less than $9740 for a married group)
--$625 per month received.
2). Higher Old Age Allowance:
--for aged 70 or above
--non mean-test
--$705 per month received.
3). Normal Disability Allowance:
--for severely disabled
--non mean-test
--$1260 per mouth received.
4). Higher Disability Allowance:
--for one who require constant attendance from others in daily life but not receiving care in institution under Hospital Authority.
--non mean-test
--$2510 per mouth received.
Strength of the scheme:
This scheme helps to improve the quality of life, especially for those elderly who are not eligible to receive CSSA. The elderly having low personal savings and not taken care by family can get the assistance money to take care themselves.
Weakness of the scheme:
The government will terminate the application of old age allowance when the elderly leaves Hong Kong for more than 180 days. This may restrict the activities of the elderly.
The scheme may not suit the present needs. As the age of retirement seems to be younger during these years, the government should adjust the age of receiving old age allowance in order to suit the elderly needs nowadays.
Besides the above three assistance schemes, there are other three minor assistance schemes, they are:
F. Criminal and Law Enforcement Injuries Compensation Scheme
This scheme provides cash assistance to victims of crimes of violence and law enforcement acts on a non-mean tested basis.
G. Traffic Accident Victims Assistance Scheme
It provides speedy cash assistance to traffic accident victims on non-means tests basis. Payments cover only personal injury and death but not damage to property.
H. Emergency Relief
It is a welfare provided for helping victims of natural and other disasters by means of material aid and by means of grants from the emergency relief fund.
The above three schemes are too specific and only few of people will apply these schemes. As a result, they cannot help to increase the social security in Hong Kong.
Overall Comments and conclusion
Social security in Hong Kong is not good and comprehensive enough which needs to be improved. As the assistance fund is based on the income from tax, the assistance level is quite low due to the low-tax system in Hong Kong which only meets the basic needs. CSSA recipients of small families may face difficulty in maintaining the livings. On the contrary, the cash assistance got by CSSA recipients from large families is much higher than median lower-end wages in Hong Kong. It really needs to find a balance between the reasonable assistance provided to the needy.
Lots of social security schemes in Hong Kong are non-contributory which may cause heavy financial burden on the government. More importantly, there is no protection for young unemployed workers. So social insurance is a good system to uproot the problem. The government is suggested to strengthen the publicity on the importance and the need of buying social insurance. But first of all, we should change the mind of citizens and let them realize the benefits of contributory scheme.
References
(1).Gertrude Williams (1966). Report on the Feasibility of a Survey into Social Welfare Provision and Allied Topics in Hong Kong. Government printer, Hong Kong, Section VI.
(2). Website:
