Universal pension scheme could ease housing shortage
Peter Liang argues that a more comprehensive pension scheme will address Hong Kong’s social problems and ease growing public discontent
Nearly all politicians and social analysts in the city seem to agree that housing is the issue which is of greatest public concern. It follows that increasing supply to make housing more affordable than it is now would go a long way in easing social tensions arising from the widening wealth gap.
To this end, the government has devoted tremendous efforts and resources in the past several years to making more land available for public and private housing developments. In the process, the government has drawn bitter criticism from vested interests who claim that their land rights are being challenged and from environmentalists who complain about encroachment on public parks and wildlife sanctuaries.
The long and painful process of negotiating through countless hurdles to increase housing supply is not producing instant results that can help to silence skeptics and drum up public support. Instead, property prices have kept rising and the size of the newly built apartments is shrinking. The public has every right to feel outraged when they see that some apartments no bigger than parking spaces are put up for sale by developers.
The setback of the government housing policy can be blamed on multiple factors, some of which — including the flood of overseas capital into the property market — are beyond the control of the officials in charge. What’s more, increasing housing supply in land-scarce and densely populated Hong Kong is inherently a protracted and costly undertaking.
For that reason, some economists are beginning to ask if much more can be done in addressing Hong Kong’s social problems and easing growing public discontent by shifting the emphasis to providing a more comprehensive pension scheme to better cover the needs of the rapidly swelling ranks of retired workers.
To be sure, the public’s housing need has to be answered. But it must be seen as a long-term project spanning many years, with results that can never be assured because they are subject to mostly unpredictable market forces.
In comparison, offering workers a better deal for their retirement is a much simpler and more straightforward endeavor that can be shaped and controlled by the government which has a fiscal reserve of about HK$800 billion at its disposal. The size of the public coffers is widely deemed to have far exceeded the need to meet expected contingent liabilities, including the managing of the currency peg and covering the seasonal budgetary shortfalls.
The existing Mandatory Provident Fund (MPF) scheme is too small to support the livelihood of the average retiree with modest savings. It is made worse by a controversial provision which allows the employer to charge off part of the fund from the scheme against severance pay to which the retired worker is entitled.
The government has been dragging its feet in reforming the fund in the face of stiff opposition from employers represented by various influential chambers of commerce and other trade organizations. They claim that without the offsetting mechanism the extra expenses are too much for many small- to medium-sized enterprises.
It is a tactic employers used in
An even more ambitious move to win public support and goodwill is to scrap the MPF entirely and replace it with a universal pension scheme that can provide far better support to the retirees.” Offering workers a better deal for their retirement is a much simpler and more straightforward endeavor that can be shaped and controlled by the government which has a fiscal reserve of about HK$800 billion at its disposal.”
resisting the minimum wage proposal. But no shop or caterer was known to have been forced out of business when the law was eventually passed.
In one stroke, the government can win widespread public support by standing up to the entrenched business interest in reforming the miserly MPF scheme. It can count on the support of the legislators in striking down the charge-off provision which everyone who is not an employer hates.
An even more ambitious move to win public support and goodwill is to scrap the MPF entirely and replace it with a universal pension scheme that can provide far better support to the retirees. Citing budgetary constraints, the government has proposed one with a means test so exclusive that it has been deemed unacceptable.
Even some senior officials have expressed reservations about the government’s ultra-conservative budgetary policy which is seen to have thwarted efforts to make much-needed improvements to various social services. To make changes, a more inclusive universal pension scheme is a good place to start.
Many Hong Kong people are often considered to be obsessed with property. They consider buying properties as the surest way of having savings for old age. The introduction of a more comprehensive pension scheme, which is well within the capability of the government, can help ease the demand for housing and, at the same time, boost public morale.
The author is a veteran current affairs commentator.