CONFIDENTIAL
"Social insurance is widely accepted, not just in
developed countries but throughout the world, as the basis round which an effective overall social security system should be built. However, while there may be no overriding technical reason why social insurance should not be considered as suitable for Hong Kong, there are a number of practical objections which, in the Government's view, argue against the introduction of social insurance in Hong Kong at the present time. Foremost amongst these is the fact that a social insurance system is usually built round the payment of compulsory contributions by employees and employers. The Government does not believe that such a system would be generally acceptable to the people of Hong Kong. On the other hand, the alternative of making employers alone responsible for funding the scheme is not regarded as the right way of financing social security, because it would concentrate the burden on only one section of the community. Moreover, contributions by employers alone is not the way in which other countries normally finance social insurance. In any event, even if these obstacles were overcome, it would not be possible to build up the necessary administrative machinery without a fairly lengthy preparatory period. Social insurance, therefore, is not judged to be the right way in which social security in Hong Kong should develop at this stage."
48.
One important argument against an insurance type fund is omitted (no doubt deliberately in a public document) i.e. that the uncertainty about Hong Kong's future precludes the creation of a large insurance fund. Be that as it may, the growing problem of the aged, taken together with the recurrent cost of assistance en the present basis, would seem to justify some deeper examination. of the problem."
49. As a first step, the "Report of the Inter-departmental Working Party on Social Security 1967" might be resurrected and re- examined. What is clear is that there is a serious inconsistency in a policy which proposes that aid to the aged of the 65 - 69 group should be almost indefinitely deferred (see paragraph 46 above) and which at the same time rejects the type of contributor; scheme that alone would make it possible to assist these (and other) groups without an unreasonable burden on public funds. Life expectancy in Hong Kong approximates to that in Western Europe. The expenditure on social welfare in 1972/73 was less than 2% of the Budget but may rise to 5% by 1977/787. (This is an area where Singapore, with its long established National Provident Fund, has taken a lead over Hong Kong).
/Staff Relations
As a matter of historical interest, I append (Annexe A) a copy of a note prepared by me on the subject on the occasion of a visit to Hong Kong in November 1965. (A Statement of Aims and Policy for Social Welfare had previously been presented to Legislative Council in that year).
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CONFIDENTIAL
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