XN000022-1995-07-05 — Page 26

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There is one other factor: it is an enduring myth among some commentators that keeping fees and charges low somehow reduces the cost of providing the services. Of course it does no such thing: it simply transfers part of the burden of paying for the service to the general taxpayer. Our social services are predicated on the assumption that persons in genuine need should be identified and helped. They are not predicated on the basis that the best way to ameliorate social need is to provide an across the board subsidy for all.

One final point: freezing all Government fees and charges for one year would hold down CPI(A) by less than 0.1%. It is not a drop in the bucket, it is a drop in the ocean. Moreover the increases would not be removed, merely delayed by a year. Once the honeymoon was over, the accumulated shortfall would have to be made good.

Mr President, some Members have made reference to the nine-month moratorium on revision of Government fees and charges in 1991-92. I must say the circumstances in mid 1991 when the moratorium was introduced were rather different. At that time, the inflation rate was well into double-digits with the increase in CPI(A) hitting 13.9% in April 1991. There was widespread public concern, and fears that the situation was getting out of control. The moratorium was announced by the Financial Secretary as one of a package of inflation curbing measures. An important element of that was for the Government to take the lead and to change the mind-set that inflation was inexorable. With hindsight, we were perhaps not wholly wise in acting as we did. Be that as it may, I have already explained what the Government has done and is now doing to fight inflation. I have no doubt that our current measures are more appropriate having regard to present day circumstances.

Public housing rentals

Let me turn next to the question of public housing rentals. In fixing and reviewing domestic rental levels, the Housing Authority's prime concern is affordability. It also takes into account estate value, inflation, and its own financial position. In accordance with this policy, the Authority has approved an increase in rentals for one group of 87 estates with effect from 1 September 1995. The new rentals will represent an increase of about 8.4% a year since the last increase in September 1993. Similar reviews will be carried out progressively for other groups of estates throughout the territory. The present median ratio of rent to household income for all public rental housing is a modest 8%.