XN000022-1995-11-02 — Page 34

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"To set rates by reference to a percentage of the median wage would be too rigid to address needs; it should also be borne in mind that the median wage can drop in times of recession." she said.

"At such times it would not necessarily be wise to decrease welfare payments as well.

"It may be of some academic interest to note that the average CSSA payment for a single elderly person already represents about 29 per cent, and for a family of four represents 95 per cent of the median wage."

Turning to suggestions from members to increase the CSSA standard rates in line with the recommendations in Professor MacPherson's Report of June 1994, Mrs Fok maintained that the approach adopted in the Report was to provide a level of financial support to the vulnerable to enable them to enjoy a certain lifestyle.

This approach, she added, inevitably involved certain subjective judgments as to what type of lifestyle should be assumed to be appropriate, especially in terms of recreational and social activity.

While the Government's basic philosophy is different from that adopted in the Report, the methodologies used by both are not that far apart.

"But we have one key advantage in that we have been able to use the statistics produced by the first six months of the latest Household Expenditure Survey (HES)," Mrs Fok explained.

"This has enabled us to compare our CSSA standard rates with what CSSA recipients say they spend and with what people in lower income groups also say they spend monthly.

"These statistics showed us quite clearly that the CSSA standard rates for certain groups of recipients were too low. As a cross-check on the results of this HES- based methodology, we also built up a basic needs budget for each category of CSSA client.

"Although more work needs to be done to refine further this approach, the preliminary results broadly supported the conclusions we reached using the HES method."

For comparison purposes, the Government has compared the expenditure patterns of CSSA recipients with the group nearest to them in terms of financial resources, that is the lowest five per cent income group.