The government has a congenital fear of establishing a social safety net that prioritizes helping people in need. So it has come up with all manner of cockamamie schemes that have been widely shunned by the people who are supposed to benefit from them.
None of these schemes address Hong Kong’s high levels of poverty, or the growing wealth gap. Instead, every single scheme supposedly designed to bolster the social security safety net is aimed at people with money, who are expected to self-finance these projects. There is nothing for the really poor.
One of these schemes is in hot contention to be the most insulting as it involves the care of very vulnerable children. Launched last year as a trust, it has now been revealed that a grand total of just four people expressed an interest in taking part. The idea of this scheme is to ensure that children with special needs, primarily involving mental disability, can be properly looked after if their parents die or are in other ways incapacitated.
Clearly there is a need for protection in this area but, equally clearly, it will not be provided by a scheme that requires a minimum deposit of HK$225,000 and is subject to an annual fee of HK$21,000. People with little money will falter at the first hurdle for joining the scheme and those with more resources will be wondering why the fees are so high and whether they could do better by simply investing their cash elsewhere.
The latest of these schemes, introduced this week, is the snappily titled Policy Reverse Mortgage Programme, a mind-bogglingly complex plan devised to give loans to people above the age of 60, secured against their life insurance policies. The bottom line here is that those using the scheme need to have pretty big life insurance before it will work for them.
It is likely to attract the kind of lack-lustre response which greeted the recently launched so-called Voluntary Health Insurance Scheme, designed to relieve pressure on the public health care system by luring people over to the private sector with the promise of a scheme that offers…well, what exactly?
Those joining the scheme at the lower end of the premium scale will find it covers practically nothing. And that once they have dipped their toes into the private health care sector they will rapidly be hit by fees they cannot afford, because their insurance cover barely touches the bottom strata of private medical fees.
At the upper end of the premium scale, the premiums are pretty much similar to those already on offer from health insurance companies. The one benefit is that these schemes offer a modest tax break… if you’re a taxpayer.
The government has been reluctant to give out figures as to how many people have signed up for this boondoggle but it is pretty certain that if the response had been enthusiastic we would have heard about it by now.
What we have heard about is the response to the also recently launched Annuity Scheme, another half baked plan to provide some additional pension assistance to elderly people with a bit of cash to spare. Here again, the poor need not apply because this scheme is reserved for the better off. And this is how it works: you put your money into the scheme and then get it back without any interest or consideration of the impact of inflation for the rest of your life.
If you live more than 20 years from when you start paying in, you stand to get back more than you put in but, and this is a massive but, you need to be 65 years old before you can apply, and thus need to live until you are at least 85 years old before anything extra comes back.
You also need to make the improbable assumption that after 20 years the monthly returns will still be worth something resembling their value at the start of the scheme. Women get smaller returns than men because they are assumed to live longer.
The initial response attracted a mere 9,410 investors putting in less than half the amount targeted by the government.
What the bureaucrats who dreamed up these schemes seem not to understand is that Hong Kong people are far more financially literate than government officials think. People fully understand that the mortgage, annuity and medical insurance schemes give priority to the needs of the banks and insurance companies issuing them, with the needs of the public placed firmly in second place.
As for the special needs trust, well, it’s an equal opportunity waste of space because it caters to no one’s interests.
So, why bother with all these schemes? The answer is that it is the government’s way of avoiding its responsibility to create a proper social care safety net. It prefers one-off handouts and half-baked social care schemes to create the illusion of doing something, rather than getting down to the hard and challenging work of devising a proper universal pension system and a proper social care system, to remove the stigma of one-fifth of Hong Kong people living below the poverty line.
Fortunately, none of the very well paid bureaucrats who think up these schemes will ever have to use them as they are among the world’s best paid civil servants, with pensions that are the envy of their counterparts in other countries. So, it appears that they are not entirely clueless when it comes to looking after people in the public sector, so long as they are at a very senior level in the civil service and spend their days ignoring the needs of mere ordinary people.
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