Hong Kong people are unhappy, a truth widely acknowledged in the city and now officially endorsed by a UN happiness survey that finds globally we rank 75th, just above war-torn Somalia, a state until recently best known for its pirates.
Factors which may contribute to the local gloom include the HKSAR’s evolving relationship with its sovereign, China; continuing global economic uncertainties, declining social mobility in the city, the vast gap between the rich and the poor, the cost of housing, the state of education and, quite possibly, recent unpleasant weather.
Yet another factor, more insidious in its impact, is the aging of Hong Kong’s population. In common with many advanced economies, birthrates have declined while life expectancy has increased.
To help deal with the issue of the ever-increasing elderly poor the government asked the Commission on Poverty to invite the submission, and then make an assessment, of various retirement scheme proposals to form the basis of a publication consultation that closes on 6 June.
The debate broadly divides participants into two camps: those who favour a universal pension scheme, paid to the elderly regardless of personal wealth; and those who believe support should target only those in need. Both camps acknowledge that longer-term tax increases are likely to be required to fund the schemes, with the universal being vastly more expensive than the targeted.
However, they differ on the issue of affordability. The Government’s official position is that a universal scheme is insupportably expensive. They favour a targeted approach building on existing programmes. The other camp disagrees.
To its credit, in its consultation paper the Commission on Poverty does make forecasts of potential economic growth and the impact on revenues of various pension schemes. And, yes, one does acknowledge that based on budgetary experience an accurate official forecast is an oxymoron, but at least they have tried. The universalists rely on breezy assertions that Hong Kong’s fiscal reserves and a few tax increases should nicely cover their schemes.
Primarily, the universalists couch their proposals in terms of ‘rights’, a moral claim that the elderly if deprived, regardless of personal wealth, of a public pension are robbed of their dignity and denied the bare essentials of existence. This, of course, is nonsense. Even that great document, the US Declaration of Independence, confined its scope to ‘the right to Life, Liberty and the pursuit of Happiness’.
Universalists also tend to regard means testing as the moral equivalent of rape. This is equally nonsensical. All taxpayers are annually means tested. Currently, the CSSA (Comprehensive Social Security Assistance Scheme) is a means tested programme, so the process is already established without irreparable damage to society. Means testing is part of daily life and an essential tool to avoid channeling public funds to those who least need them.
Contrarily, a universal pension scheme is, itself, morally dubious. There are no valid grounds for increasing the taxes paid by a Hong Kong middle class family in order to fund a pension for a billionaire. Taxing the struggling to reward the opulent is a bizarre distortion of justice.
Further, to accept the universalist terms of the debate would foreshadow a potential transformation of Hong Kong society. A self-reliant community, built on concepts of family, hard work and self-improvement, supported by a network of publicly funded social security schemes and public housing for those in need would gradually disappear.
It would be replaced by a society of entitlements and dependence, constantly seeking government support and societal intervention. It would also demand a huge increase in the burden of taxation at a time when the working population in a position to pay such taxes will be shrinking.
Exaggeration? Consider this:
Ever since German Chancellor Otto von Bismarck introduced in 1889 a mandatory, contributory retirement and disability benefits scheme (eligibility at 70 years, but life expectancy at the time just 45 years), social security programmes have expanded in depth, breadth and cost in developed economies, propelled by armies of beneficiaries actual and potential, NGOs, lobbyists and politicians. Hong Kong will be no exception.
The costs in many economies have become or are becoming unsustainable. Recently, UK Works and Pensions Secretary (minister), Iain Duncan Smith, resigned from the Government in protest at disability benefits cuts made by Chancellor of the Exchequer (finance minister), George Osborne, as the latter demanded budgetary savings in pursuit of economic discipline.
The issues are big, the stakes are high and the quality of the debate matches the gravity of the potential outcomes. Well, not quite. Inevitably there are entrenched views, some grandstanding, plus a dash of posturing, as well as solid discussion.
The silliest moment arrived with the announcement by 180 academics that they were boycotting the consultation because the Government was ‘misleading’ the public, thereby depriving the debate of potentially intelligent input in return for the professors’ futile and fleeting five minutes of fame.
However, there are many processes to be completed before the final policy emerges. The consultation will end and the Government will stand accused of skewing or misrepresenting the results. At some point a bill will be drafted and there will be furious discussion about its provisions. Legco will debate the bill and, possibly or possibly not, filibuster. Eventually, one hopes, a sensible policy will result.
At that point, one thing and one thing alone is certain: many people will still be unhappy. But never mind. The weather has to improve long before then.