XN000022-1996-11-27 — Page 20

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In recent years like many developed economies, Hong Kong has been undergoing structural transformation from a manufacturing-based to a service-oriented economy. This has led to a strong and increasing demand for professional, managerial, supervisory and technical personnel, and hence a faster increase in salaries and wages for people in these jobs than for people in other jobs requiring a lower level of knowledge and skill. Income disparity thus widens as a natural consequence. Such a widening does not reflect the whole picture of income distribution in Hong Kong as it does not take into account welfare and other social provisions by the Government to help those in need, including those in the lowest income group.

We should also remember that Hong Kong is a free market economy. There is no barrier or impediment to entry into jobs in different sectors, occupations or professions. Through the exercise of talent and hard work, people can increase their income, improve their standard of living and move up the social ladder over time.

As regards Part (b) of the question, there is no evidence or statistical information to support the argument that domestic rent increases, either in the private sector or in the public sector, have caused financial hardship to those in real need. Over the past five years, the average annual rental increase for private housing units has been 7.5%, which is lower than inflation and lower than wage increase.

As regards public housing rents, they are well below the affordability level. On average, the median rent-to-income ratio for tenants is 8%, which is substantially below the affordable levels of 15% to 18.5% set by the Housing Authority. For tenants who may experience temporary financial hardship, the Housing Authority operates a Rent Assistance Scheme: the rent payable is reduced by one half for up to two years.

Households facing longer term financial difficulties, whether living in private or public accommodation, may apply for assistance under the Comprehensive Social Security Assistance Scheme administered by the Social Welfare Department. This scheme is designed to bring the income of such households up to the level where essential needs can be met.

As regards Part (c) of the question, the Government does not have a policy of reducing the number of public rental flats. We announce the targets for public rental flats and subsidised home ownership flats to be built in a given planning period, and I would stress that we are firmly take steps to enable these targets to be met. committed to providing public rental housing for people who are in genuine need.

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