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Following is an oral reply by the Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung, to a question by the Hon Frederick Fung on the impact of inflation on low-income families in the Legislative Council today (May 14):
Question:
As there have been comments that low-income families are more seriously affected by the continuously escalating inflation, will the Government inform this Council:
(a) whether it has assessed changes in the consumption pattern of poor families in the state of escalating inflation in the past 12 months;
(b) given that an inflation rate as high as 5.3% was recorded for March this year, which was higher than the Government's forecast of 4.5% made at the time the current year's Budget was published, of the new measures the Government has put in place to further alleviate the pressure of inflation on poor families, and whether it will further waive public housing rents and provide more allowances and support to recipients of Comprehensive Social Security Assistance; and
(c) given that the Labour and Welfare Bureau had indicated earlier that the latest information on the poverty indicators for 2007 were expected to be available by mid-2008, of the latest progress of such work and the specific date in this year for the publication of such indicators, and whether it will reconsider re-establishing the Commission on Poverty as soon as possible, so as to study the needs of poor families in a systematic manner, as well as set targets on eradicating poverty with time limits and formulate appropriate policies to alleviate poverty?
Reply:
Madam President,
(a) The Census and Statistics Department conducts "Household Expenditure Survey (HES)" once every five years to collect up-to-date information on the expenditure patterns of households (including low-income households) in Hong Kong for updating the expenditure weights used for compiling the Consumer Price Index (CPI). The latest round of the HES was conducted in 2004-2005. Planning work for the new round of survey to be conducted in 2009-2010 has started.
Although the consumption patterns of households do undergo gradual changes in response to various factors such as changes in income, price level and other socio-economic factors, changes in expenditure patterns accumulated in a period of less than five years should not be large enough to warrant a new HES to be conducted. In fact, the practice of conducting the HES at a five-year interval conforms to international practice and is considered adequate for maintaining the accuracy of the CPI.
(b) Inflation is a global phenomenon and Hong Kong cannot be spared from its influence. In the first quarter of 2008, Hong Hong's overall consumer price inflation averaged 4.6%, which is higher than the 2.0% of the same period in 2007. Hong Kong's economy experienced a robust growth in the past four years with an average growth rate of 7.2%, while the unemployment rate has dropped to the lowest level in the recent ten years. With increased household income for most families, buoyant investment and consumer confidence, as well as higher wages and rentals, inflationary pressure is rising gradually.
Nevertheless, the recent acceleration in inflation is mainly driven by the upsurge in global food prices. High energy and commodity prices in the international markets against the backdrop of a weakening US dollar also contribute to high inflation. It is expected that global food supply and demand will remain tight for some time and that the situation will only be eased until later this year or early next year.
The Government fully understands that the continuous rise in inflation (especially the increase in food prices) will add to the pressure faced by the vulnerable groups and low-income earners. Therefore, besides providing long-term social support in social security, medical and health services as well as education etc., the Government has introduced a range of measures for the grassroots in order to relieve the inflationary pressure facing them.
These measures include rates exemption for the whole year; a $1,800 electricity charge subsidy for each residential account; and payment of one month's rent for lower income families living in the rental units of the Hong Kong Housing Society (HS) and the Hong Kong Housing Authority (including tenants of the Elderly Persons' Flats in HS Group B estates).
In addition, Disability Allowance recipients will be given one additional month of allowance; Comprehensive Social Security Assistance (CSSA) recipients will be given one additional month of standard rate payments; and each Old Age Allowance recipient will be given a one-off grant of $3,000. Upon approval by the Finance Committee of the Legislative Council, we will release the relevant allowance/CSSA standard rate payment as soon as possible.
All along, the Administration adjusts the CSSA standard payment rates according to the movement of the Social Security Assistance Index of Prices (SSAIP) annually in order to maintain the purchasing power of the payments. We will adjust the CSSA standard payment rates ahead of the normal schedule in accordance with the existing mechanism around the middle of this year. We will also continue to monitor closely the SSAIP movements in order to preserve the purchasing power of CSSA payments
The Government will also strengthen communication with the Mainland and other food supplier regions, continue to maintain Hong Kong as a highly open economy and adhere to the principle of free trade on food import with a view to securing a stable food supply in Hong Kong.
(c) The former Commission on Poverty (CoP) submitted a report in June 2007 to the Administration on the direction for future poverty alleviation work. With the conclusion of the work of the CoP, the Chief Executive announced the establishment of an inter-bureau/department Task Force on Poverty (Task Force). The Task Force is headed by me, with senior officials from relevant bureaux/departments as members. Through the efforts of different bureaux/departments, the Task Force will maintain liaison with the relevant stakeholders.
Since the former CoP had put forward a series of recommendations on poverty alleviation, monitoring the progress in implementing these recommendations is one of the priorities of the Task Force. Besides, the Task Force will also co-ordinate the Government's efforts in tackling poverty related issues which have cross-policy implications and enhance the understanding of poverty alleviation. We do not consider it necessary to re-establish the CoP.
The work on updating the poverty indicators is in progress. We expect that the updated poverty indicators for the year 2007 will be available within the next two months.
Ends/Wednesday, May 14, 2008
Issued at HKT 14:56
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