When asked what she likes best about living in Hong Kong, 71-year-old Fung Lin’s answer is surprising: “the assistance I get from the government.”. In China, she says, there is very little welfare for the elderly, and she would receive next to nothing.
Mrs. Fung first came to Hong Kong fifteen years ago, from Guangzhou. She receives HK$2,500 (US$324) each month in the form of the Hong Kong Government’s Comprehensive Social Security Assistance (CSSA) and a rental allowance. Out of this, she pays HK$600 (US$78) to live in a small but tidy Government hostel for the elderly with four other women. While the amount she receives is small, she says it is enough, and that she is happy.
Mrs. Fung is lucky. 80-year old Mrs. Chan also receives HK$2,500 from CSSA, and pays HK$1,000 (US$130) a month in rent, however she lives in a “caged home” in Mong Kok with 13 other women. The space is only slightly larger than that of the Government hostel, but here the women are housed in bunk beds, with each bed surrounded by cage-like wire to protect the occupant’s belongings. Mrs. Chan has lived here for 30 years.
Mrs. Chan’s eyes peer out from her gnome-like face, as she tells how she came to Hong Kong 36 years ago. She originally came in order to get medical treatment that wasn’t available in China. She stayed because “There was nothing to eat in China, and people were starving.”
Mrs. Chan’s husband was killed in the Japanese war. The Japanese conducted medical experiments on her son, until he died too. With her husband and son both gone, Mrs. Chan raised her daughter by herself. When her daughter died two years ago, she was left with no family in Hong Kong. “I can’t say it’s bad living here,” she says of her life in the caged home, “because I’ve been living here for so long. But I can’t say it’s good either.”
Mrs. Chan and Mrs. Fung are at the center of one of the biggest dilemmas facing Hong Kong today. Social welfare activists and politicians point to Mrs. Chan’s situation as a shameful blotch on the face of Hong Kong’s economic success, and call for the government to do more for the city’s poor. Even those who call for more spending on welfare however, acknowledge that it is precisely the lack of government intervention in the economy that has allowed the territory to be so successful - so successful in fact that even the poorest consider themselves lucky to be here.
The problem, then, is how the lives of the truly needy, especially the elderly poor, can be made better without creating a Western-style welfare state that encourages dependence on the state and puts a heavy burden on the territory’s taxpayers. This dilemma is coming to a head as the first year under Chinese rule draws to a close: those who call for more spending insist that there is no danger of Hong Kong turning into a European or North-American-style welfare state, because the Hong Kong people are by nature self-reliant and industrious, and the increases they call for will not raise spending to a level that could even compare to those of Western countries.
Government spending on welfare has been on the rise for several years, however, and so has the public’s willingness to take advantage of welfare services. Applications for CSSA, for instance, have risen dramatically in recent years, primarily among able-bodied workers, and during a time when unemployment in the territory was actually falling.
Whether Hong Kong is able to resolve this dilemma could determine the future success of the territory: whether it is able to continue as the vibrant and prosperous enclave that has earned it “economic miracle” status, or whether it follows the path of Western economies towards slow economic growth, high unemployment, and increased dependence on the government.
Mrs. Chan’s caged home is in Mong Kok, a district in Hong Kong that not long ago was ranked as the most densely populated area in the world. Like Mrs. Chan, most of her flatmates have no family to take care of them, and Government hostels for the elderly only accept new residents up to the age of 75, and have long waiting lists. The room in Mong Kok is dark and cramped, with only an old sheet to separate the sleeping area from the tiny kitchen. At night, Mrs. Chan and her thirteen roommates crawl into tiny bunks stacked three high, and close their caged doors behind them.
An estimated 1,500 to 3,000 people in Hong Kong live in these caged homes, paying an average of HK$600 to HK$800 (US$78-104) a month. The homes are privately owned and operated, and the vast majority of residents are elderly and others who have no family to support them. In Hong Kong, they are called “singletons.”
Most singletons are men, between the ages of 60 and 70 who either never married, or whose families are in China. Only a small percentage are women. Like Mrs. Chan, most are unskilled workers who came to Hong Kong in the fifties and sixties, looking for work. With Hong Kong’s manufacturing sector moving into southern China over the past dozen years, it has become even harder for such people to make a good living in the territory, and some of the younger residents are from this group of displaced manufacturing workers.
Recent years have also seen more new immigrants moving into caged homes. According to Kalina Tsang of the Society for Community Organisation (SOCO), some 10% of caged home residents are now immigrant families from mainland China. “In the past,” she says, “almost all of the people were singletons, but now more and more families are living in caged homes. They are not allowed to go to public housing, because you have to live in HK for seven years to become a resident and apply for public housing.” Even after they apply, says Tsang, the average waiting time for government subsidized singleton housing is ten years. “Even in such conditions,” says Tsang, “they think that life in Hong Kong is better than life in China.”
In the weeks leading up to Hong Kong’s handover to Chinese sovereignty, Hong Kong’s caged-home dwellers were in the spotlight. The city was flooded with foreign journalists, and the phenomenon of the city’s caged homes was at the top of their lists of things to see.
Foreign reporters streamed in and out of the city’s caged homes, and gasped in horror at the squalid accommodations of the cagemen and women. However, it seems that few bothered to investigate into the background of the caged housing. In the months leading up to the handover, welfare groups and the Hong Kong Government were swamped with requests to visit the caged people. Some caged dwellings were visited by as many as four camera crews a day as the handover drew near. Yet, when the Secretary for Housing gave a press briefing on the territory’s housing policies, only about a dozen foreign journalists showed up.
In their eagerness to seek out a “dark side” to Hong Kong’s capitalist success story, these journalists missed one important point: that the phenomenon of people living out their old age in cages is rooted not in the vagaries of Hong Kong’s capitalist system, but in a severe housing shortage caused by a long-standing government monopoly on land ownership, and early government intervention in the property market. These journalists also missed out on an even more interesting story: that in spite of a history of from zero to minimal government support for public welfare services, and in spite of the fact that less than 40 years ago well over half the population lived in abject poverty, Hong Kong has actually performed better than many western nations in the area of social welfare.
Hong Kong’s housing problems began in the late 1940s, when refugees flooding in from China more than tripled the local population in a five-year period. At the time, the government had a policy of rent control on all pre-war housing. Rent could not be raised at all on such housing until the tenant chose to vacate, and repossession of buildings for reconstruction became nearly impossible. The government’s control of all the land in the territory further impeded the construction of new buildings. In the absence of sufficient housing, the hundreds of thousands of new immigrants built makeshift squatter huts throughout the territory.
Christmas day of 1953 brought a change to Hong Kong’s housing policy in the form of a devastating squatter fire that left over 50,000 people homeless. The fire prompted the government to launch a massive public housing program. Today, over half of the territory’s population lives in public housing. The problem is far from resolved, however. The government has been slow to release land for private development, and even the public housing that has been built has yet to accommodate all of the squatters - a few corrugated tin roofed villages still dot the territory’s hillsides, and there are long waiting lists to get into public flats.
The public housing scenario runs counter to the myth of “laissez faire” Hong Kong. While in many ways this myth is a reality, in some very substantial areas, it is not. Hong Kong’s “traded sector” is probably the least subject to government intervention of any place in the world. There are significant exceptions to the government’s free market policies, however, and most of these form what is known as the “non-traded sector.” Housing is primary among these exceptions.
Not surprisingly, it is the areas most insulated from the free market - those in the non-traded sector - that are the most problem-ridden and produce the least satisfaction for their users. A prime example is the territory’s public health care system, which has been plagued in recent years by poor quality service and a long string of serious blunders.
Incidents like the accidental removal of a girl’s fallopian tube instead of her appendix; an operation last April, in which a woman died when a hospital attendant pumped a lethal dose of oxygen into her by mistake; and a mixup last November in which hundreds of children were mistakenly given mouthwash instead of fever syrup, have become almost commonplace in recent years.
Although the government’s Hospital Authority denies that such blunders are the result of staff shortages, health care professionals disagree. Doctors and nurses claim that public hospitals have cut back their budgets so much in recent years, that the level of service provided can now only be described as “bare bones.” The ongoing spate of medical blunders, they say, is a direct result of cutbacks in staff, and the Association of Hong Kong Nursing Staff has threatened industrial action if the Hospital Authority does not heed their demands to hire more staff.
"If you look at all the incidents, there are problems with staff, problems with the system,” said Public Doctors' Association spokesman Dr Andrew Yip Wai-chun, in response to the Hospital Authority’s assertion that the long series of medical errors in public hospitals was not linked to staff shortages.
Although there are some private hospitals in Hong Kong, the vast majority belong to the government. Critics have long predicted that the public health care system, unable to raise its prices to meet the level of consumer demand and cover growing costs, would begin to deteriorate in terms of the quality of care provided. In recent years, this is exactly what has happened. In an attempt to provide nearly free health care, the government hospitals charges fees that are a mere fraction of those in private hospitals. With both a guaranteed dominant position in the market, and a policy that prohibits raising prices to market levels, the government hospitals have very little incentive to be responsive to the public.
Public housing as well, although hailed internationally as a success for housing over half of the territory’s population, is not without serious problems, including grossly inefficient allocation of living spaces, and waiting lists that average six and a half years.
The benefits to the poorest in the territory are also in question. Parking spaces in public housing complexes are often filled with Mercedes and BMWs, and according to the Housing Authority, some 13% of public housing renters also own private residential property. In fact, the Rating and Evaluation Department indicated that nearly one quarter of all private housing units purchased between late 1992 and early 1993 were purchased by public housing tenants.
And those who could use the subsidy the most are not necessarily covered by the program. According to Richard Wong, Director of the Hong Kong Centre for Economic Research, as recently as 1986, income distribution among public renters was not significantly different from that of private renters, and at very low levels, there were actually more poor families in private housing than in public.
Part of the reason for the discrepancy lies in the fact that although new applicants must fall below a certain income level, they may retain their public housing even if their income rises above this level in the future. With rents for public flats far below market value, the right to live in public housing is a valuable asset in itself, and one that tenants do not give up easily. In addition, the government’s Home Ownership Scheme (HOS) places tight restrictions on the re-sale of public housing bought by existing tenants. This effectively means that tenants are being asked to purchase an asset that has very limited re-sale value. Even when these flats are offered at a deep discount to their market value, tenants have been reluctant to purchase them.
So, for now, existing tenants hold on to their public flats, simply because the alternative is less attractive. This, in spite of the fact that according to two separate estimates, public housing tenants only value the flats they live in at around 60% of the market value for that flat. Meanwhile, those who might value the property more are prevented from acquiring it, by the restrictions on re-selling. And those who could use the housing subsidy the most must face a six and a half-year queue to get in at all.
Public housing policy is only one side of the housing shortage in Hong Kong. The other side has to do with rapidly growing demand that is not matched by supply increases. This is due in large part to the Government’s policy of releasing land for new development very slowly. However, much land that has already been developed currently goes unused, or under-used, because of restrictions on re-development. Property in areas zoned for industrial use, for instance, rents at a fraction of the rents charged for office and residential property. Some, like the HKCER’s Wong, suggest that easing restrictions on redevelopment could go far in alleviating the housing shortage.
“An alternative way of increasing the supply of housing without having to increase the supply of new land,” says Wong, “is to make it easier to redevelop existing properties so that the effective supply of housing can be increased through the provision of more new units to replace existing ones.”
It is an idea the government may be more likely to consider, now that the current economic downturn has put a damper on the property market. Before the economic turmoil began, Chief Executive Tung Chee Hwa had promised that between public and private construction, an additional 85,000 new units would be built each year until the end of the century. Although the public sector plans to achieve its part of this goal, the 35,000 new units originally to come from the private sector now looks highly unlikely. In an effort to encourage private developers to build more flats, easing redevelopment and zoning restrictions would be a relatively inexpensive option. Allowing for public flats in the Home Ownership Scheme to be freely transferable would also free up valuable housing units now tied up in a system that does not allocate them effectively, or even serve those in greatest need of a housing subsidy.
Aside from the massive exceptions of public housing and health care, the Hong Kong government’s role in providing welfare services historically has been fairly minimal. What is surprising is that in spite of this, the welfare of the Hong Kong people is by many measurements at least on par with that of people in Western countries. In some significant ways, it is even superior.
The percentage of people living below the poverty line in Hong Kong is roughly the same as that in the USi, and is significantly lower than in many major US cities. Hong Kong does not have the large numbers of homeless people found in large cities in the US, and both crime and unemployment in the city are negligible compared to the US. Perhaps most importantly though, Hong Kong does not have the problem of chronic poverty that plagues communities in the United States. Somehow, it is still possible - and in fact is a frequent occurrence - for people to rise from humble beginnings to become successful on their own, with no assistance from the government. In the US, such a notion tends to be cynically dismissed as a “Horatio Alger myth,” as more and more resources are taken from the country’s citizens to pay for government welfare programs.
Stories like Mrs. Chan’s are among the many reasons behind calls in recent years for more Government spending on social welfare. Heeding these calls, Government has increased social spending (education, health, housing and welfare) from 21% of the budget in 1966 to 48% in 1996. In the 1998 budget, announced in February, total Government spending was increased by 11.2% to 19.2% of GDP, the highest level in a decade, and spending on welfare alone received an increase of 13.6%.
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