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Proposed increase in Old Age Allowances poses intolerable burden on taxpayers
To provide retirement protection for all over the age of 65 by raising Old Age Allowances to the $2,300 per month level would place an intolerable burden on taxpayers, the Secretary for Health and Welfare, Mrs Katherine Fok, said.
Speaking on the amendment moved by the Hon Jimmy McGregor to the Government's motion on retirement protection at the Legislative Council today (Wednesday), Mrs Fok said 133,000 persons aged between the ages of 65 and 69 receiving the normal allowance in 1994/95 were paid $485 per month and 287,000 aged 70 years and over were paid the higher allowance of $550 per month.
Even at these levels, she said, the full year cost for 1994/95 was nearly $2.5 billion which is more than the $2.2 billion spent on Comprehensive Social Security Assistance (CSSA) payments in the same period for those over 60 years of age.
Mrs Fok said: "Assuming that the take-up rate of the allowance, if significantly increased as proposed, would rise to 85 per cent, it would require nearly $10 billion of additional recurrent expenditure in 1995/96 alone.
"Let me just repeat, over $10 billion of recurrent expenditure. And we estimate that this would rise to $15.6 billion of recurrent expenditure in 1999/2000.
"The additional expenditure involved over this five-year period would be as much as $55 billion."
This enormous burden would not result in funds being channelled to the needy but rather to all at or above 65 years of age, whether rich or poor.
Mrs Fok did not believe that the community would support such a move.
In her opinion, those who would benefit from retirement protection should, together with their employers, be obliged to contribute if they could afford to do so.
"This reduces or eliminates the burden on the general taxpayer," she said.
"This is vitally important consideration when we have an ageing population in which the number of elderly beneficiaries per salaries taxpayer is expected to continue to grow."
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