Ho Lok-sang

Writes that Leung’s term saw dramatic improvements for business, tech industries and for the underprivileged while laying solid foundations for dealing with the housing shortage

Leung delivered his last Policy Address on Wednesday. Consistent with his previous policy addresses, he continued to introduce initiatives that benefit grassroots people and boost the economy. Businesses in the old economy as well as the middle class, in particular those who do not qualify for the enhanced Old Age Living Allowance (OALA) for breaching the asset limits, will benefit less. They may in some cases have to bear additional costs. In regard to housing, which has been given top priority from the first day Leung assumed office, he is right in saying that because the production cycle of housing is long, additional supply does not materialize as quickly as is desired. He is also entirely right in saying that increasing supply is the only way to tackle the shortage problem. His effort in boosting housing supply throughout his term of office is commendable.

The latest Policy Address offered Leung the opportunity to review what he and his team have accomplished over the past four and a half years. Any fair-minded person would count his accomplishments with awe. In particular, against all odds, he was finally able to set up the Innovation and Technology Bureau — which is entirely necessary as technology is changing so fast that it is reshaping the business environment almost every day. Innovation and technology not only give us new products and services, but also new ways of producing old products and services which are much more efficient. The “new economy” therefore is not necessarily separate from the old economy. Yet those businesses in the old economy that do not adopt the right technology and adapt to the new business environment with updated management are likely to be eliminated. On the other hand, alert and open-minded managers will realize that the government’s support of innovation and technology is helping every sector to become more competitive.

For a long time the poverty among the elderly and the working poor problems were Hong Kong’s disgrace. Hard-working people should not have to struggle to make ends meet. While some economists are talking about the necessity for a “living wage”, the harsh and very competitive business environment does not allow the statutory minimum wage to rise sufficiently to achieve this. Because many workers have to put up with low wages, their Mandatory Provident Fund account does not allow them to accumulate sufficient funds to live a life with dignity after retirement. The Leung administration has introduced two new support programs — the enhanced OALA and the Low-income Working Family Allowance (LIFA).

Two new policy initiatives were announced in the 2017 Policy Address. The move brings a higher tier of “enhanced” assistance offering a monthly allowance of HK$3,435 per person, about a third higher than the existing rate, for single elderly persons with assets not exceeding HK$144,000. For elderly couples, the asset limit for this enhanced allowance is HK$218,000. The asset limits for the regular allowance are also relaxed (with effect from Feb 1) — from HK$225,000 to HK$329,000 for elderly single people and from HK$341,000 to HK$499,000 for elderly couples.

The government has also relaxed the policy for the LIFA — responding to complaints that some people lost their eligibility for the allowance because of extended family visits to the mainland — by abolishing the absence rule as of Dec 6, 2016.

Leung noted that because of these and other initiatives, the estimated recurrent government expenditure on social welfare had jumped a whopping 55 percent over the level four years ago. Notwithstanding this, the government has come up with budget surpluses in all fiscal years under his administration. Leung reported in his Policy Address that the number of unemployment cases under the Comprehensive Social Security Assistance Scheme has decreased for 87 consecutive months to a 20-year low, with a drop of about 70 percent from its peak.

At the press conference, Leung was confronted with the question of why housing prices have continued to climb. He answered correctly that this has to do with supply and demand. As I have noted above, his efforts in boosting supply is commend-

able. But I would advise that the Special Stamp Duty (SSD) should be lifted for owner-occupied properties. If the SSD is not applicable for owner-occupied properties, homeowners will have nothing to fear because trading up will never incur a SSD. A newly acquired, owner-occupied home can be disposed of any time without an onerous tax. This should incentivize trading up, and should increase the supply of second-hand and particularly entry-level homes.

I also agree with Leung’s suggestion that we need to be pragmatic with respect to our country parks. Our country parks are not untouchable. We need to be openminded about each parcel of land. I agree that some fringe land in our country parks may not have such high value for conservation and may be considered for housing development. But we should remember that housing development is not for boosting the profits of developers but for providing a roof over the heads of Hong Kong people.

Overall, I think Leung should be proud of what he has achieved.