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2010-11 Policy Address by Chief Executive (6)

Wealth Gap

50. Social tension in Hong Kong stems partly from the wealth gap.  The most fundamental way to ease such tension is to enable the community to benefit from economic development and share the fruits of prosperity.  Past experience has shown that Hong Kong's poor can have their living conditions improved once the economy embarks on a solid recovery.

51. The wealth gap is related to economic restructuring.  The forces of globalisation have propelled Hong Kong towards a high value-added service economy to achieve further economic development.  In the transition to a knowledge-based economy, however, the wages of some low-educated, low-skilled workers have continued to lag behind economic growth owing to differences in education and skill levels among the working population.  As a result, income disparity has widened. Less demand for low-skilled workers stemming from our economic integration with the Mainland means that these workers have to face keen competition due to excess supply.  New arrivals from the Mainland have further enlarged the pool of low-skilled workers in Hong Kong, which is another cause of their stagnant wage growth.

52. The Government can effectively narrow the income disparity through taxation, housing, education, healthcare and welfare measures.  This involves the issue of how public resources should be allocated, which requires a consensus between the Government and members of the public.  Hong Kong maintains a simple and low tax regime.  In drawing up the budget, the Government must also comply with the Basic Law to follow the principle of keeping expenditure within the limits of revenue, keeping spending increases in line with GDP growth and striving to achieve a fiscal balance.

Combating Inter-generational Poverty

53. Education is fundamental to alleviating inter-generational poverty.  Good education helps enhance the quality of our next generation and raise their competitiveness in a knowledge-based society, enabling them to improve living standards for themselves and their families.  We will continue to devote substantial resources to education.  I will talk more about this later.

54. We are particularly concerned about the development needs of children from low-income families.  The Government has launched a number of projects under the Child Development Fund to foster the personal development of underprivileged children.  A subsidy for internet access charges and other measures were announced in this year's Budget.  When preparing his coming Budget, the Financial Secretary will consider further measures to cater for the needs of these children.

Textbook Assistance for Students in Need

55. The Government has been providing financial assistance to primary and secondary students from low-income families to help them cover the costs of textbooks and school-related expenses.  We propose to significantly increase the flat-rate grant under the School Textbook Assistance Scheme from the existing $408 to $1,000 per year for full-grant students, and from $204 to $500 per year for half-grant students, with effect from the next school year.  The proposed increase will cost an extra $120 million each year. We will also streamline the approval procedures so that the grants can be disbursed to most applicants before the new school term begins.

Work Incentive Transport Subsidy Scheme

56. Travelling expenses put pressure on low-income earners.  To relieve their burden and encourage them to stay in employment, the Government has decided to launch a Work Incentive Transport Subsidy Scheme to help all eligible employees in Hong Kong meet part of their travelling expenses. The monthly allowance will be $600 a person. The new initiative will replace the existing Transport Support Scheme. The Labour and Welfare Bureau is working on the details and implementation timetable, and will brief this Council as soon as possible.  We will review the scheme three years after its implementation.  

Community Care Fund

57. Hong Kong has a sound social security system to help our people meet their basic needs.  The Government also heavily subsidises various social services for the benefit of people in need.  Actively engaging the community and the business sector in poverty alleviation will not only demonstrate tripartite collaboration and a readiness to share responsibility, but also bring in new ideas to make our measures more flexible and effective.  This is also the experience of other developed societies.  To encourage the business sectorˇ¦s participation in helping the poor, I have decided to set up a Community Care Fund, to which the Government and the business sector will each contribute $5 billion to support people in need in areas not covered by the Comprehensive Social Security Assistance Scheme.  The fund will be chaired by the Chief Secretary for Administration.  I will raise funds from the business sector.  The initial response has been positive.  I am confident that the fund can directly benefit many people in need.  The Government will put forward an execution plan after consulting the community.

Legislating for a Minimum Wage

58. Legislating for a minimum wage to protect low-income workers is a major labour policy that I have advocated during my term of office.  The Minimum Wage Ordinance was passed by this Council in July.  We will submit to this Council the subsidiary legislation on the minimum wage level as soon as possible, and prepare for and publicise the implementation of the legislation.  I expect the statutory minimum wage to come into force in the first half of next year.

Enhancing Employment Services

59. With the implementation of the statutory minimum wage, the Labour Department (LD) will strengthen employment services for young and middle-aged people and those with disabilities.  The LD will also launch a two-year Pilot Employment Navigator Programme later this year, and set up a pilot one-stop employment and training centre in Tin Shui Wai next year to offer targeted assistance to job seekers.

Labour Rights

60. We have amended the legislation to criminalise wilful defaults of Labour Tribunal and Minor Employment Claims Adjudication Board awards.  This is another milestone in the protection of labour rights.  The LD will rigorously enforce the law and raise public awareness of the legislation.

61. The Protection of Wages on Insolvency Fund provides a safety net for employees affected by business closures.  To further enhance employee protection, we will amend the law to expand the scope of the fund to cover pay for untaken annual leave and statutory holidays under the
Employment Ordinance.

62. With the Minimum Wage Ordinance enacted, some suggest it is time to embark on a policy study on standard working hours.  We must handle this complex and controversial issue with care to strike a balance between the interests of various sectors. I have asked the Secretary for Labour and Welfare to conduct the study.

Assisting New Arrivals and Ethnic Minorities

63. Various government departments have been providing a range of services to help new arrivals adapt to their new environment as soon as possible and help ethnic minorities integrate into our society. The Permanent Secretary for Home Affairs will lead a dedicated team to step up and co-ordinate efforts in this regard.  The team will monitor closely the service needs of new arrivals during the adaptation period and the difficulties faced by ethnic minorities in daily life, so as to ensure that the support services can meet their needs.  Moreover, the team will enhance collaboration with non-government organisations and district organisations to facilitate the early integration of new arrivals and ethnic minorities into the local community.

Overall Strategy

64. Short-term benefits offered by the Government cannot bridge the wealth gap.  They are only relief measures for exceptional times.  The Government mainly employs a three-pronged strategy to address the issue of poverty.  First comes investment in education, which facilitates poverty alleviation through social mobility.  Next comes employment support, which includes enhancing the quality of the workforce and ensuring reasonable wage levels for workers.  Finally, there is social welfare.  Assistance is given to families in need to help them cope with difficulties and maintain a reasonable standard of living.

(To be continued)

Ends/Wednesday, October 13, 2010
Issued at HKT 11:45


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