8.
3 -
Moreover, even for those employers who will do the job properly, it must be for consideration whether it is desirable to put on them the extra costs, whether administrative or financial, of carrying out this function at a time when their competitors in South-East Asia and elsewhere are seeing greater responsibility for social security being taken over by the Government concerned.* Thirdly, I think one would want to be cautious about accepting that private arrangements can provide the same cover at much less cost. The figures in the Green Paper were primarily illustrative and (out of caution) deliberately underplayed the benefits that would be produced by a given contribution rate. It was clear from the advice from the United Kingdom's Government Actuary's Department that significantly better benefits could be provided on the basis of the contribution rate proposed in the Green Paper without in any way running actuarial risks. As a general proposition, of course, you get what you pay for and given that insurance companies are in business to make profits, they would have to do very well to offer equivalent cover at a lower cost whilst paying for administration, whereas under the Green Paper proposals, the administrative cost of the sickness, injury and death benefit scheme was to be paid by the Government. As I recall, it was not possible for the insurance companies to do better than the Hong Kong Government when the possibility of using them as an alternative to run the traffic accident compensation scheme was under consideration.
(b) Non-contributory death benefit
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A non-contributory death benefit scheme is an attractive proposition if it can be fitted in satisfactorily with the rest of the social security structure. One way of doing so would be to fit it in to the present pattern of accident compensation (which provides lump sum death benefits - and other benefits for victims of natural disasters, crimes of violence and more recently, traffic accidents). Since all are non-contributory and non-means tested it should be possible to avoid duplication by providing that receipt of a grant under one of the other schemes I have mentioned would be an alternative to, not in addition to, receiving it under the new arrangement. I imagine that the death benefit would be, as proposed in the Green Paper, only for people under retirement age. I would suggest that careful thought should be given to the current proposal that it may be desirable to base entitlement to the death benefit on a relaxed means-test criterion. It is accepted that it may appear that as a matter of allocating scarce resources it is desirable, or even essential, to limit the scope of the proposal by incorporating a means test. But as I have advised in another context, it is desirable to avoid, if at all possible, having different types or levels of means test. That can only lead to a situation where one test is played off against another and the Government is under constant pressure to improve one or the other.
*In this context, it may be worth noting that in the United Kingdom one objective (which has the Prime Minister's personal support) of the industrial strategy is to reduce the burden which Government and public bodies impose on industry, so as to permit those engaged in industry to devote a greater proportion of their efforts to their prime purposes of production and marketing of goods. Of course, the Hong Kong Government imposes many fewer burdens than the United Kingdom Government but the point is still relevant.