Who really cares?

SCMP May 16 2005

As they grow older and richer, societies tend to become more compassionate and less desperate to get rich at any price. That has been the case in most of East Asia, as well as in North America and Europe. As a society, Hong Kong is no different. The difference here is that we are governed by a bureaucracy devoted to capital accumulation and post-retirement jobs with developers, and a class of inheritors of property and textile-quota wealth.

Much lip service is being paid by the above to the question of poverty in Hong Kong. But there is a great deal of aversion to the facts.

In these pages on March 21, I made passing reference to the level of profits as a percentage of national income in Hong Kong, and the relationship of median household income to gross domestic product. These, I suggested, showed how skewed income distribution was. Seven weeks later, I received a letter from the Census and Statistics Department, which concluded that 'the ratio of median household income to GDP is not a meaningful indicator for inequality of household income or standard of living'.

I acknowledge that it is a far from perfect indicator. My point was to use data which is more readily understandable - and is far from being irrelevant. Indeed, there is a lively debate in the US now about the rising share of profits to GDP, its impact on income distribution and the fact that consumption through debt is rising, while real incomes are, at best, static.

The median household income as a share of total household income is also a legitimate measure of income inequality. Surely, too, it is relevant to ask why, if Hong Kong's per capita GDP equals that of Germany, the median household's living space, car ownership, educational access, holidays, health expenditure, and the like are so much higher there.

The bottom line is that not much of Hong Kong's GDP finds its way into the pockets of the majority.

I was surprised at the department's attack on an article which did not criticise its data, but pointed to something that the information illustrated, albeit imperfectly.

For the record, the data also shows that between 1995 and last year, the percentage of households with incomes of less than $10,000 a month rose from 25 per cent to 31 per cent - an increase which cannot be fully explained by post-1997 deflation.

Thirty per cent of Hong Kong's full-time workers make less than $7,000 a month, and 17 per cent less than $5,000. The gap between median wages for men and women remains huge - $11,000 against $7,800 - even though the average working week is identical.

But what is more alarming than the distribution of income is the attitude to the old and sick. The government is determined not just to close the gap in the operating budget, but to do so by cutting expenditure.

Academics warn that welfare spending cannot be increased, and the Hospital Authority says that it is heading for a huge deficit. But why not spend more public money on health care and support for the poorest, mostly the old and disabled? There will be a huge rise in the numbers of old people, so let us stop trying to make a virtue of cutting transfer payments and health care.

Let us not forget that the average ageing Hong Kong person has scarcely had the benefit of the Mandatory Provident Fund. The lower-paid ones mainly have savings accounts which have yielded nil real return.

Many never had the capital to enter the housing market in the days before 100 per cent mortgages. A younger generation which has foregone reproduction in favour of consumption and overpriced housing could pay more tax.

Instead of more pensions and better health care, we get cheap cross-harbour tunnel fares for the car-owning minority and inflated profits for the power companies which will be paid for by the community with illness long after the additions to the Kadoorie fortunes have been spent on helicopters or invested in cleaner climes.

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