Poverty alleviation delivering results

Updated: 2014-12-01 06:37

By Carrie Lam Cheng Yuet-Ngor(HK Edition)

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The Commission on Poverty (CoP) set the first official poverty line last year and pledged to monitor the poverty situation in Hong Kong through annual updates of the poverty line analysis.

Originally we planned to release the analysis of the 2013 poverty situation at the second CoP Summit in early October. The Summit however had to be postponed due to the "Occupy Central" movement. The 2013 poverty situation report was released after the 15th meeting of the CoP held last Saturday. The Chief Executive (CE) attended the meeting and listened to the analysis. We will endeavor to arrange the Summit for an appropriate time.

The poverty situation in 2013 improved noticeably compared to that of 2012. After taking the recurrent cash policy intervention into account, the poor population dropped from 1.02 million in 2012 to 970,000 in 2013, and the corresponding poverty rate dropped from 15.2 percent to 14.5 percent. Both figures mark a five-year low.

Under the concept of "relative poverty", the 2013 poverty line moved upwards as the economy and household incomes improved. Before government policy intervention, both the poor population and the 2013 poverty rate increased slightly because of the aging population. However, the government's poverty alleviation measures provided timely relief. Analyzed by age group, the improvement in the poverty situation was most pronounced for the elderly over age 65. In 2013, the elderly poverty rate dived from 44.9 percent before policy intervention to 30.5 percent after policy intervention, representing a significantly bigger decline of 14.4 percentage points when compared with that after the policy intervention in 2012 (10.2 percentage points). This is obviously the result of full implementation in April 2013 of the Old Age Living Allowance (OALA), which benefits 420,000 elderly people.

Poverty alleviation delivering results

That said, the statistics show there were still 285,500 elderly people living below the poverty line, over 80 percent of which were already receiving different forms of assistance under the social security system, including the Comprehensive Social Security Assistance (CSSA), OALA and Disability Allowance. While the government will continue to examine the needs of the elderly, caution should be exercised as poverty line analysis takes income as the sole indicator, no consideration is given to assets. Most elderly people are retirees with relatively low incomes and despite some of them possessing assets, they are classified as poor in a poverty line analysis. As such, the elderly poverty rate could be overstated. Based on a previous survey, 56 percent of elderly non-CSSA recipients below the poverty line said that they were not in financial need. More than 40 percent were living in self-owned unencumbered private property.

On the other hand, almost half of the 300,000 non-CSSA poor households (about 140,000) are working households. This represents only a slight reduction of 2,800 households (1.9 percent) when compared with 2012, a much smaller drop than the 4.5 percent decline in the total number of poor households. This suggests that working poor households cannot take full advantage of existing recurrent cash benefits. The characteristic of these households has not changed much in the past year. Over 80 percent of them are three or more-person households and the average number of employed persons per household is 1.2. Nearly 30 percent of household members are children and students.

The Low-income Working Family Allowance announced by the CE in the 2014 Policy Address is a new assistance scheme aptly targeted towards these households. Intending to give early assistance to those in need, the government submitted a funding application to the Legislative Council (LegCo) in July this year. Unfortunately, it was not possible to pass the proposal on time because of filibustering at LegCo Finance Committee meetings by a small number of lawmakers. We now estimate the implementation of the scheme will be delayed until at least early 2016. I call on LegCo members to process the application in an expeditious manner, so low-income working families can benefit from the scheme as soon as possible.

We have all along emphasized that the "poverty line" should not be taken as the "poverty alleviation line" and that resources should not and would not go only to people below the poverty line. Instead, to alleviate and prevent poverty, a flexible approach should be adopted to setting income and asset limits for different assistance schemes according to policy objectives and claimant circumstances.

Data for the poverty line analysis shows that the more targeted assistance measures produce more marked poverty alleviation. For the poverty rate to go down by one percentage point, we would need about HK$4.8 billion for CSSA payments, HK$6.3 billion for the OALA, and HK$9.6 billion for the non-means-tested OAA. Clearly administering means tests on an appropriate scale can ensure limited public resources reach those elderly in need and achieve better result in poverty alleviation. This important observation should be kept in mind when the CoP examines other issues (such as retirement protection) in future.

Latest statistics have again proved the effectiveness of public housing in reducing poverty. After factoring in non-cash benefits, of which public rental housing forms a major part, the overall poverty rate further decreased from 14.5 percent to 9.8 percent, and the poor population from 970,000 to 660,000. The message is crystal clear: provision of public rental housing not only resolves grassroots' housing problems, but also reduces poverty. The low rents allow grassroots families more resources to improve their quality of life and invest in the next generation, thus facilitating the upward mobility of these families. This term of the HKSAR government has made every effort to boost the supply of public rental housing. We need the support of different sectors in making available sufficient land to achieve the housing target.

The 2013 poverty line analysis shows the effectiveness of the poverty alleviation measures introduced by the government thus far. As we proceed to implement the poverty alleviation blueprint outlined by the CE in his 2014 Policy Address, we believe Hong Kong's poverty situation will be further improved. That said, under the "relative poverty" concept and as population aging continues, room for a continuous decrease in the poverty rate might be limited.

Following two years' hard work from the CoP and other departments involved, it is rewarding to see the success of these early results. With the help and advice of the poverty line and the CoP, the government will continue to monitor Hong Kong's poverty situation and implement appropriate measures to support those in need.

The author is Chief Secretary for Administration and Chairperson of the Commission on Poverty.

(HK Edition 12/01/2014 page9)