Un Day inila
Mr Mixton (HKGD)
Reference.....
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CC:
Mr Hurst
(OLA)
Yes.
HONG KONG : SOCIAL WELFARE REVIEW
1.
You have requested comments on the Governor's letter of 30 July 1977 to Mr Stewart and the accompanying Draft Exco paper.
2.
3.
Firstly, I am in full agreement with Mr Hurst's minute of 4 August 1977.
Secondly, examination of the financial implications of the proposed social welfare programme shown at para 39 (ie excluding the sickness, injury and death benefits scheme) shows social welfare expenditure in real terms rising from HK$53 in 1978/9 to HK$177 in 1982/3; this is well within the scope of central government finances to take on; (a surplus of HK$900 occured in 1976/7). I understand that, at current tax rates, significant surpluses are still expected in the next three financial years; these would only be marginally eroded, and still in surplus, if this programme were adopted. In short there is no financial constraint for what is proposed.
t. Thirdly, may I refer to the new Sickness, Injury and Death benefit scheme (which is largely self-financing and incurs very little public expenditure) whereby a 2% voluntary employee and employer contribution is envisaged. It is somewhat usual for both parties to contribute equal amounts: in the UK I believe the employer % contribution is double, if not more (I think there is a surcharge in force currently). I can see little objection to a 1%/3% split which would provide the same revenue. Furthermore, the proposed 2% levy on low incomes could be regarded as an (income) tax for those of low incomes hardly an equitable move unless some compensatory move is simultaneously offered.
5. Fourthly, I find the gestation period for the Sickness scheme unusually long - 32 years (until April 1981 for its introduction). As with tax reforms it is not possible to move quicker.
6.
Finally the absence of an unemployment benefit is still obvious. Is it not worth asking for progress on this front as there does not initially appear to be a financial constraint for some limited schemes.
CODE 18 - 77
5 August 1977
l
Arnar Suni
Adrian Smith
Senior Economic Adviser
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