Panel on Welfare Services (Minutes) 24 Mar 98

Provisional Legislative Council

PLC Paper No. CB(2) 1476
(These minutes have been seen
by the Administration

Ref : CB2/PL/WS

Panel on Welfare Services

Minutes of Special Meeting held on Tuesday, 24 March 1998 at 3:30 pm in the Chamber of the Legislative Council Building

Members present :

Hon WONG Siu-yee (Chairman)
Hon Eric LI Ka-cheung, JP
Hon LEE Kai-ming
Hon Mrs Elsie TU, GBM
Hon Mrs Peggy LAM, JP
Hon Mrs Sophie LEUNG LAU Yau-fun, JP
Hon HUI Yin-fat, JP
Hon CHAN Yuen-han
Hon LAU Kong-wah
Hon LO Suk-ching
Hon CHOY So-yuk

Members absent :

Hon CHAN Choi-hi (Deputy Chairman)
Hon David CHU Yu-lin
Hon HO Sai-chu, JP
Dr Hon LEONG Che-hung, JP
Hon MOK Ying-fan
Hon Frederick FUNG Kin-kee
Hon Howard YOUNG, JP
Hon YEUNG Yiu-chung
Hon CHOY Kan-pui, JP
Hon TAM Yiu-chung, JP

Public officers attending :

Item I
Mr K Y TANG: Government Economist for Financial Services
Mrs R M CARTLAND: Assistant Director of Social Welfare (Social Security)
Mr Dominic LEUNG: Assistant Commissioner of Census and Statistics
Mrs Elizabeth SO: Senior Statistician
Item II
Mr HO Wing-him: Deputy Secretary for Health and Welfare (2)
Ms Miranda CHIU: Principal Assistant Secretary for Health and Welfare (Welfare) (1)
Mr Andrew K P LEUNG: Director of Social Welfare
Mrs Louise S Y WONG: Deputy Director of Social Welfare (Administration)
Mrs R M CARTLAND: Assistant Director of Social Welfare (Social Security)
Miss Lilian FUNG: Senior Statistician
Item III
Mr HO Wing-him: Deputy Secretary for Health and Welfare (2)
Ms Miranda CHIU: Principal Assistant Secretary for Health and Welfare (Welfare) (1)
Mr K Y TANG: Government Economist for Financial Services
Mrs Louise S Y WONG: Deputy Director of Social Welfare (Administration)
Mrs R M CARTLAND: Assistant Director of Social Welfare (Social Security)
Miss Lilian FUNG: Senior Statistician
Mr Dominic LEUNG: Assistant Commissioner of Census and Statistics

Clerk in attendance :

Ms Doris CHAN: Chief Assistant Secretary (2) 4

Staff in attendance :

Mr LAW Kam-sang: Deputy Secretary General
Mr Jackie WU: Research Officer 1
Ms Joanne MAK: Senior Assistant Secretary (2) 4

I. The Measurement of Poverty - Research report RP 07/PLC
(PLC Paper No. CB(2)1196)

The Deputy Secretary General (DSG) briefed members on the captioned research report and pointed out that the following four approaches had been used by some international organizations and overseas communities for defining poverty -

Absolute poverty approach,
Relativist poverty approach,
Budget standards method, and
Income proxy method.

DSG explained the concepts and general principles of the four approaches, and pointed out that there was no one agreed approach to constructing a poverty line as all the approaches had drawbacks. The budget standards method, however, was more commonly used and had been adopted by the World Bank, the International Labour Organization and the Inter-American Development Bank.

2. DSG said that studies had been made on five countries and Taiwan in this research. Among them, only the United States had adopted an official poverty line using the income proxy method. The rest had either no poverty line or adopted a quasi-poverty line only.

3. DSG said that although the Hong Kong Government did not construct an official poverty line for reasons already explained at the Panel meeting held on 3 October 1997, academics in Hong Kong had pointed out that the number of recipients of the Comprehensive Social Security Assistance (CSSA) could reflect the extent of poverty here since the CSSA rates were calculated on the basis of the budget standards method. DSG also referred to a research jointly conducted by the Hong Kong Council of Social Service (HKCSS) and Oxfam Hong Kong in December 1996 which found that about 640,000 Hong Kong people were living in abject poverty, representing 11% of the population. Another research was conducted by the Hong Kong Social Security Society (HKSSS) in September 1997 which found that about 850,000 Hong Kong people were living in abject poverty, representing 13% of the population.

4. The Government Economist (GE) commented that it was a good research report with balanced views presented. Regarding the methods for drawing the poverty line, he said that there were divided views on the subject and he agreed that each of the four approaches as introduced had its own drawbacks. The Administration therefore did not want to adopt hastily any one of them for Hong Kong. He considered that due regard must be given to the circumstances of Hong Kong and on this basis, the Administration had adopted the expenditure survey approach to arrive at the CSSA rates.

5. The Chairman left the meeting at this point owing to other urgent commitments. Mr LEE Kai-ming was elected to chair the meeting temporarily.

6. Mr HUI Yin-fat said that a poverty line of US$14.4 per person a day (equivalent to some HK$3,500 per person a month) was set for the United States. In contrast, the standard monthly payment of CSSA per person was only some $2,000. He expressed doubt as to the basis of calculating CSSA rates. He also queried whether the reason for the Administration not adopting a poverty line was that it feared that it would have to increase CSSA rates as a result. 7. In response, the Assistant Director of Social Welfare (Social Security) (AD(SS)) said that the needs of a CSSA applicant were assessed according to his particular situation and he would be eligible for the appropriate standard rate and/or special grants according to his needs. The average payment was around HK$3,000 per person a month which was quite good by international standard. She said that the real reason of the Administration not to define a poverty line was that there was no foolproof method and that every single method of setting a poverty line had proved to have drawbacks and doubts about it.

8. AD(SS) said that the existing method of setting the basis for the CSSA payment was a very respectable one by international standard. It was closely comparable to the budget standards or the basic needs approach. The Administration had been using the basic needs approach and the Household Expenditure Survey approach since 1996 as a reference point when setting the new standard rates and other special grants. In sum, the Household Expenditure Survey provided the reference point of how lower income people in Hong Kong spent their money; and the Basic Needs Budget was constructed to reflect the Administration's considered view of the needs of the CSSA recipients. AD(SS) also considered that the average CSSA payment was reasonable with special grants including rent subsidies being taken into account. She considered that if one compared the average CSSA payment with the American figure of US$14.4 per person a day, the two figures were actually pretty close to each other. In addition, an adjustment had been recently made to the standard monthly payment for elderly CSSA recipients who would receive an additional amount of $380 with effect from 1 April 1998. She said that whether with or without the poverty line, the Administration had been very sensitive towards the needs of the CSSA recipients and the views of the community on the appropriate level of payment.

9. GE took the view that it was a crude comparison between the case of Hong Kong and the American figure as the prices of commodities and standard of living in the two places should also be taken into account. He considered that if the two said factors were considered, the level of CSSA payment was not lower than the standard of the United States.

10. Miss CHAN Yuen-han referred to the researches done by HKCSS and HKSSS which found that there were some 600,000 to some 800,000 non-CSSA recipients living in abject poverty, and enquired what assistance the Administration would render to them. In reply, AD(SS) said that there were some defects in the methodology of the quoted researches, but she agreed that there were a number of people who ought to be on CSSA but were not. She considered that the reason had nothing to do with the absence of a poverty line but rather it was due to people's reluctance to come forward to apply for CSSA, especially elderly people who were not used to the concept of living on CSSA. She said that this had been a concern to the Administration and non-governmental organizations, and they had publicized the availability of the scheme as much as possible. However, the fact that the CSSA caseload in the last one or two years had been rising by 2% each month reflected that some people who were eligible for CSSA but had not previously applied for it had now changed their mind and applied.

11. Miss CHAN Yuen-han requested the Administration to draw a poverty line to address the problem of abject poverty being faced by people who were not on CSSA. She recalled that another research project done by the Research and Library Services (R&LS) Division in 1996 had found that the poor non-CSSA recipients had even less to spend than those on CSSA.

12. In response, AD(SS) said she believed that the way that the CSSA system worked should mean that all those who were financially vulnerable could be helped. However, some people in need of CSSA did not apply for it either because they considered it a shame to do so or they simply did not know the existence of CSSA. Others might have been prevented to apply by their savings which exceeded the asset limit set by the Administration. AD(SS) took the view that the asset limit which was $35,000 per person was quite generous by international standard. Moreover, she considered that the studies cited by Miss CHAN had errors in their methodology and thus the figures and definition of abject poverty within Hong Kong were not realistic. She said that the Administration should not adopt a policy of relative poverty line in view of the deficiencies of the concept. As regards the poverty lines estimated by the World Bank and quoted in the research report, AD(SS) said that it was difficult to make valid international comparisons.

13. GE opined that the existing policy of CSSA was more preferable than constructing a poverty line. He said that should a poverty line be really drawn, those who were above the line would be rigidly excluded from the social security system even though in some cases they had a justified need for the allowance. He said that under the existing policy, those who met the criteria of the CSSA scheme could apply and this was a more flexible system for helping those in genuine need. Relaxation of the relevant criteria could lead to a large increase in CSSA recipients by bringing in a lot of marginal cases, and the available financial resources would then be spread more thinly for those who really needed the assistance.

14. Mr HUI Yin-fat considered that the Administration should step up publicity of CSSA if it considered that many people were unaware of the scheme. In response, AD(SS) considered that the CSSA system was quite well-known to people now, and it was very accessible with 33 field units in convenient locations throughout the territory. 15. Mr HUI Yin-fat and Miss CHAN Yuen-han both considered that the Administration should address the problem of abject poverty as revealed in the two quoted surveys. Miss CHAN considered that if the Administration disagreed that there were as many as 700,000 or 800,000 people living in abject poverty as suggested by the surveys, it should devise its own approach to define the size of this group of people and provide assistance to them. In this connection, she considered that the research report under discussion and the one previously done by the R&LS Division were useful references. She recommended that the future Welfare Services Panel of the first LegCo should pursue the subject.

16. AD(SS) said that the Administration had been responsive to members?concerns. For instance, it had decided to increase the monthly standard payment of CSSA by $380 for the elderly recipients starting from 1 April 1998. However, the Administration remained of the view that it was not appropriate to adopt the poverty line concept.

17. Mrs Elsie TU enquired if there were many cases of people suffering from financial difficulties because they had to support relatives in the Mainland. In response, AD(SS) said that Social Welfare Department (SWD) had not kept such figures on the number of people who were supporting other people in China. However, she stressed that the existing policy of the social security system was only to support people in Hong Kong and it could not make a commitment to help them support people outside Hong Kong.

18. In response to the Chairman's question as to whether the asset limit could be relaxed, AD(SS) said that in view of the traditional propensity to having savings and elderly people's preference for keeping their savings to meet funeral expenses, the asset limit of $35,000 per person would be examined again in the coming review.

19. Mrs Elsie TU considered that the Administration should make more use of compassionate housing to improve the conditions of the poor people. She believed many people could just manage if they could get public housing. In response, AD(SS) said that SWD had been co-operating with Housing Department (HD) by providing justifications for cases in need of compassionate housing. She said that there was a category called "low earning CSSA households" which included those who were in workforce but received very low income. Mrs Elsie TU considered that it was not CSSA that people complained about but housing. Mrs TU also considered that the conditions for granting compassionate housing were far too strict. She considered that the poverty problem was caused by high rent for housing rather than anything else. The Chairman commented that the granting of compassionate housing was authorized by HD but it depended on the recommendations of SWD. He considered that SWD should pay particular attention to new arrival families and avoid overcrowdedness of these households.

Adm

II. Review on CSSA

20. The Director of Social Welfare (DSW) said that the Administration was conducting a review on CSSA with a view to exploring means to help the unemployed CSSA recipients to re-enter the labour market and arousing their initiatives to work. The relevant proposals would be ready in June 1998. DSW briefed members on the following three categories of the CSSA recipients -

76% were the vulnerable groups including the elderly, the disabled and the sick who had no working ability;
8% to 9% were the single parent families; and
9.5% ( i.e. 18,000-odd cases representing over 20% of the unemployed people of Hong Kong) were the unemployed and this category had registered a rapidly rising trend over the past 5 years.

21. DSW said that the Administration had recently conducted a random study for some 250 CSSA cases under the category of the unemployed (including single person and family cases). The survey also covered some single-parent families.

22. DSW said that the study sought to explore the problems faced by the unemployed CSSA recipients in finding jobs in order to provide appropriate services to them. During the study, the Administration had provided counselling service to some 250 participants once every two weeks. In addition, SWD had co-operated closely with the Labour Department and Employees Retraining Board and actively contacted employers to identify suitable employment opportunities for the CSSA participants. Single parents who wished to work were referred to Family Services Centre for child care service. DSW pointed out that after about three months of implementing this programme, 55 of the interviewees had found jobs. They included 12 from the single unemployment cases, 19 persons from single-parent families and 24 from other households. Their salaries ranged from $900 to $10,500 per month.

23. DSW said that among the 55 persons, 42 had looked for jobs on their own initiative and the rest were assisted by the Labour Department. He considered that the results of this programme reflected that the unemployed CSSA recipients could get jobs in the labour market if they obtained more assistance from the Government. Therefore, the Administration was considering to expand this programme to help more unemployed CSSA recipients to re-enter the labour market.

24. Mr HUI Yin-fat commented that the programme was constructive. However, he requested the Administration to go one step beyond and relax the amount of the disregarded income for CSSA recipients who had just started to work again. He also urged the Administration to review the basis of calculating the CSSA rates.

25. In response, DSW explained that while the aspect of disregarded earnings would be considered in the current review, there was a CSSA category called "low earnings" designed to supplement the income of low earners. As regards the adequacy of CSSA payments, DSW said that the Administration had decided to increase the monthly standard payment for the elderly CSSA recipients by $380 with effect from 1 April 1998.

26. Miss CHAN Yuen-han urged the Administration to consider providing an additional unemployment allowance to the unemployed people on CSSA at least for a certain period of time before they could find jobs again. In response, DSW explained that the nature of unemployment allowance was different from that of CSSA as the latter was not a contributory scheme. He said that the issue of unemployment allowance needed to be carefully considered by the Administration and it was outside the scope of the current CSSA review.

27. Miss CHAN Yuen-han was concerned about the needs of the unemployed people on CSSA for the provision of various kinds of public assistance. In response, DSW said that assistance was available for school related expenses for students in CSSA families. Reimbursement of traveling cost incurred by the CSSA recipients due to attendance of recruitment interviews would be considered on a case by case basis. Miss CHAN Yuen-han considered that the Administration should also provide subsidies for haircutting, clothing, paging service and newspapers. In response, DSW said that there might be divided views on the need to provide these kinds of subsidies. He took the view that it was more important for the Administration to explore ways to arouse the motivation of these unemployed persons on CSSA to work and give them the confidence to re-enter the job market. DSW also took this opportunity to clarify that there was no proposal to terminate CSSA if an unemployed person failed to find employment over a certain period.

28. Mr WONG Siu-yee returned and resumed chairing the meeting.

In response to the Chairman's enquiry, DSW said that the option of conducting public consultation on the Administration's proposal when it was available in June 1998 was being considered. He welcomed members to put forward any suggestion on CSSA.

III. CSSA/Social Security Allowance (SSA) inflationary adjustment
(PLC Paper No. CB(2)1299(01))

29. The Deputy Secretary for Health and Welfare 2 (DS(HW)2) briefed members that the Administration proposed -

to increase by $380 the monthly standard CSSA payments for the elderly CSSA recipients;
to increase by 4.8% the standard payments under the CSSA (including (a) above) and SSA schemes to take account of inflation; and
to increase by 8.8% the maximum rent allowance under the CSSA scheme.

0 The above increases were proposed to take effect from 1 April 1998.

30. DS(HW)2 pointed out that as the inflation rate in 1997-98 had been over-estimated by 1.5%, the Administration proposed that, while the standard CSSA/SSA payments should be increased by 4.8% with effect from 1 April 1998 in accordance with the forecast increase of the Social Security Assistance Index of Prices (SSAIP) for 1998-99, this inflation adjustment would cover the period until the end of July 1999. The Administration would next review and adjust as appropriate the standard payments for inflation with effect from 1 August 1999. He said that the extension would offset the over-estimated inflation forecast for 1997-98. DS(HW)2 also pointed out that it was an established principle that if the forecast increase proved to be different from the actual increase, the Administration should take the difference into account in calculating the adjustment for the following year. However, the Administration did not propose to deduct last year's over-estimate of 1.5% from the forecast increase of 4.8% for this year to give the CSSA/SSA recipients the benefit of a full 4.8% increase with effect from 1 April 1998.

31. DS(HW)2 said that the Administration also proposed that Members delegate to the Secretary for the Treasury (ST) the authority to approve future annual revisions to the levels of maximum rent allowance under the CSSA scheme in accordance with the movement of the rent index for private housing of the Consumer Price Index (A), as in the case of other annual revisions to certain financial limits and special grants under the CSSA scheme which were also approved by the ST under delegated authority.

32. Mr HUI Yin-fat considered that as the standard rates of the CSSA scheme were already very low, he did not support the Administration's proposal which recommended an adjustment rate too low for the CSSA recipients. He considered that based on the SSAIP, the inflationary adjustment for the CSSA/SSA rates for 1998-99 should be 6% instead of 4.8%. He said that although this would incur an additional cost of about $100 million, the amount was affordable by the Hong Kong Government and was worth spending as it could improve the financial support to the vulnerable group of people in the society.

33. In response, DS(HW)2 clarified that the SSAIP forecast for 1998-99 was only 4.8%; and the inflation rates for 1996-97 and 1995-96 were also over-estimated by 3.6% and 2.3% respectively. He said that it was only reasonable if increases made to the standard rates of CSSA/SSA schemes were based on objective discussions and reviews of the actual conditions but not on projection discrepancies.

34. Miss CHAN Yuen-han considered that the Administration's proposal was unacceptable and requested the Administration to maintain that no adjustment would be made in the new fiscal year to offset any inaccuracy in the inflation forecast in the previous year. In reply, DS(HW)2 appealed to members to take note of the financial implications of such a policy and the fact that expenditure on CSSA had reached about $10 billion now. He considered that the standard CSSA/SSA payments should be revised annually in accordance with forecast increase in SSAIP as stipulated in the relevant policy.

35. The Chairman took the view that the proposed extension might not save Government cost if the inflation in 1998-99 turned out to be less than 4.8%. In response, DS(HW)2 said that the Administration would then take account of the projection discrepancy by adjusting the inflationary increase for CSSA/SSA rates for 1999-2000. In reply to the Chairman's enquiry, DS(HW)2 estimated the adjustment would result in a reduction of $200 million in social security expenditure. However, the Chairman expressed doubt about the basis of this estimation as the real inflation rate for next year was not yet known.

36. Miss CHAN Yuen-han considered that the Administration's proposal would deprive the CSSA/SSA recipients of the annual adjustment from 1 April 1999 to 31 July 1999. She believed that the proposed extension was put up with a view to making up for the increased government expenditure incurred by granting an additional monthly payment of $380 to the elderly CSSA recipients with effect from 1 April 1998. She also took the view that the Administration should take into consideration the consensus reached by the LegCo Members and PLC Members earlier for increases in CSSA rates.

37. GE said that since it was the established principle that the standard payments of the CSSA/SSA schemes should be adjusted annually in accordance with the inflation rate of the prevailing year, the Administration's proposal was justifiable as it aimed to take into account last year's over-estimate of 1.5% in calculating the adjustment for the CSSA/SSA rates for next year. The Deputy Director of Social Welfare (Administration) DD(A) said that the Administration's proposal did not mean to take back the payments already issued to the CSSA recipients. Instead, the Administration would increase the CSSA/SSA standard payments by 4.8% with effect from 1 April 1998 until the next adjustment although discrepancies had been found between the projected and actual inflation rates last year.

38. At Miss CHOY So-yuk's enquiry, DS(HW)2 said that the standard rates of CSSA/SSA in future would be adjusted with effect from 1 August each year. Miss CHOY criticized that by this arrangement, the CSSA/SSA recipients would be deprived of the annual inflationary adjustment from 1 April to 31 July each year. DS(HW)2 clarified that it was not the case and future adjustment would base on the actual inflation rate from August of the current year to end of July of the following year.

The Panel unanimously agreed that the Administration should maintain the policy that no adjustment would be made in the new fiscal year to offset any inaccuracy in the inflation forecast in the previous year. The Chairman requested the Administration to review its proposal in the light of members' comments and to take into account the possible impact on the CSSA recipients as caused by the proposed new arrangement.

Adm

39. The meeting ended at 5:40 pm.

Provisional Legislative Council Secretariat
2 June 1998