It is unfortunate that the SAR government has lately been excessively responsive and generous to those who already receive very good benefits from the government but are vocal in their demands for more. Their demands necessarily can be met only at the expense of those who are less fortunate than they.
I am particularly incensed at the demands by some legislators to put a cap on rent increases for public housing in particular, so that public housing rental would amount to no more than 10 percent of the median income of the tenants.
Don’t they know that there are many households waiting in the queue, and many other households that do not even qualify for the queue, but who still face true hardship and fare much worse than those now enjoying the benefits of public housing?
The fact is those who are in the queue currently pay much higher rent and are living in much more crowded and poorer conditions. There are still others whose incomes are fractionally above the eligibility ceiling, who are actually much worse off than those who have already become public housing tenants.
According to household expenditure survey data from the Department of Census and Statistics, housing expenditures as a percentage of income, for a three person household living among the poorest 60 percent have risen from 27.8 percent in 2004/05 to 28.8 percent in 2009/10. Among the poorest 20 percent, however, housing expenditures have dropped from 27.1 percent to 19.6 percent in 2009/10. This drop is certainly associated with public housing rents lagging far behind private sector rents.
This year in particular, notwithstanding a proposed 10 percent increase in the rent from September, as set out in the rent adjustment mechanism, public housing tenants will receive an additional month’s free rent-on top of the two months’ free rent already promised in the budget in February. As a result, there will be a de facto decrease in rent totaling 4 percent!
According to Housing Authority figures, the operational deficit for public rental housing has been worsening over the years. An estimate put this year’s operational deficit at HK$1.4 billion, up from HK$1 billion last year. By 2015/16 the operational deficit is expected to top HK$3.1 billion.
A good question is, how will the Housing Authority finance the deficit that keeps going up? With reserve funds falling, and with the so-called “new HOS” housing that will permit buyers to resell without repaying the unpaid land premium at the market rate, it is possible that the rate of public housing construction may have to slow down. Some observers might say that the government has been running a budget surplus in the past, and that we can draw on that. But we will need more public housing; we will need more hospitals; there are demands for more financial support for community colleges and in particular the sub-degree programs. And we will need more homes for the elderly. How is Hong Kong going to come up with all the funds to meet these rising needs?
The proposed 10 percent rent increases should be seen in the light of a 16.24 percent increase in incomes among tenants. Many counter that inflation has eroded the purchasing power of tenants. But inflation has been eroding the purchasing power of those who are not tenants too! If there are resources to spare, shouldn’t they be better spent to uplift the needier ones?
When Mr Leung Chun-ying was visiting local communities, one person told a reporter that she hoped Mr Leung would relax the waiting list income limit (WLIL). She complained that being denied eligibility when income was just slightly higher than the WLIL was not fair. It is exactly in view of this that I have argued for a graduated family allowance that would treat public housing as an implicit level of income. A household would receive graduated income support on the basis of its disposable income after rent. Someone in the queue or someone not qualified may then get an income supplement. On the other hand, a public housing tenant’s disposable income after rent may be much higher than that of others and may not qualify for the supplement.
Understanding how fortunate one is having been given a flat, and taking up the responsibility to pay the rent as required is a duty of every citizen, we need to think of the plight of others, rather than asking for more and more benefits from the government. If a household has become better off and financially able to procure housing in the private sector, it should vacate the flat and let others who have greater need for the subsidized flat to enjoy it.
Unfortunately there are many who simply will not give up the flat. Since the rent is so low any way, they continue to pretend they live in the flat, which in fact serves only as a storage space, while the family lives elsewhere. While it is our right to ask the SAR government to do a better job, it is our duty to pay our dues and play fair.
The author is director of the Centre for Public Policy Studies, Lingnan University.