HK’s flawed poverty line overstates the situation

It happens around this time every year. The government releases its figures on the prevailing poverty line and a storm of criticism is unleashed. This year, the criticism was sharper than ever as it was revealed that a record 1.37 million people are living in poverty, which could also be expressed as just over 20 percent of the population. As it happens, I have some sympathy for the government in this situation, although my sympathy is not unlimited.

First, it can be argued that these shocking figures do not measure poverty at all. The Hong Kong poverty line is, in essence, set by reference to aggregate figures for median household income, and households with an income of less than 50 percent of the median income for their household size fall below the poverty line. These figures thus tell us more about income distribution and income inequality. The word “income” is significant too as this is all that is taken into account in the calculations. No attempt is made to measure assets and yet the possession of assets can make important contributions to household’s wealth and well-being, particularly in the case of the elderly who may, indeed, be largely financing themselves by living off their savings. There is a third factor in the government’s favor which was expanded on by the chief secretary for administration but got rather drowned out by louder voices. Matthew Cheung Kin-chung talked about the “social transfers”, the services provided in both cash and kind which mitigate hardship. These may be income supplements or, in the case of Comprehensive Social Security Assistance, complete income support or the things like public housing, hospitals and schools that enable poorer families to meet their basic needs. I would be willing to go even further and point out the intangible value of living in a safe and orderly society like Hong Kong, the benefits are obvious when we consider some of our less fortunate neighbors in the region.

However, these defenses do not at all mean that the government can sit back in complacent self-satisfaction. There is much to be answered for and much room for improvement. The poverty line was introduced only in 2013 after years of badgering by academics and NGOs. It might be asked whether government was right to cave into this pressure. An alternative, and perhaps more pertinent question would be to ask whether, once the decision had been taken, they adopted a sensible methodology. It is an internationally acceptable approach and widely used, but as teenagers’ parents say: “You don’t have to do it just because everybody else is doing it.” It might have been more difficult but would also have been more meaningful to use a “basket of goods” for the poverty line: a costed estimate of the items needed by households of different sizes and in different circumstances to achieve a basically adequate standard of living.

A related, and salient point is that we actually know rather little about the aspirations and opinions of Hong Kong’s neediest. It is always comparatively easy to come up with “top down” solutions rather than delving deep and engaging the beneficiaries to tell us where in their lives the severest pinch points are and what would make the most positive differences.

Because, let us not fool ourselves, there certainly are problems that need to be addressed. In the past 20 years, real income growth for lower-income earners has been sluggish at best. Perhaps worst of all has been the impact of high housing costs. For example, in the mid-1990s, the housing component of the money provided to needy households through the CSSA scheme was sufficient to cover the rental costs of almost all recipients, whether living in public or private housing. By contrast, this year the CSSA rental subsidy for a single person was HK$1,810 per month while the rent payable by that person for the poor quality accommodation in a subdivided flat in Sham Shui Po was The author is a former assistant director of social welfare and now co-hosts RTHK’s Backchat current affairs program and supports various welfare-related NGOs.

HK$2,500, and the difference has to be made up from the budget for food and other essentials.

The heart and sentiment as well as the head and analytical skills have proper parts to play in tackling social problems. The unease that is widely felt at the poverty line revelations has its roots in something real, however much we may raise legitimate questions about calculation methods. We see the effects all around us. At the top of our economy, powered by trade in services, sit a small group with access to endless opportunities for all that makes life comfortable: housing, domestic help, travel, education, healthcare, smart cars and entertainment. Yet that comfort depends on the skills and industry of an army of workers whose own lives are much more constrained, dominated by the difficulties of making ends meet. Given such manifest unequal distribution of wealth, is it any wonder that many of Hong Kong’s young people are discontented, even resentful? In their own futures they do not see the social mobility enjoyed by previous generations, who can be assured of adequate rewards for their industry. Sadly, this is no longer true. We tend to blame the government for all that is wrong, and expect them to find the answers to everything. Yet when the issues are so complex and far-reaching citizens and groups of citizens should also turn their minds to understanding how this situation has arisen and what can be done to produce a fairer society which does better at meeting everyone’s needs.