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Transcript of remarks at press conference on poverty alleviation initiatives in Policy Address (with photos/video)

     The Chief Secretary for Administration, Mrs Carrie Lam; the  Secretary for Labour and Welfare, Mr Matthew Cheung Kin-chung; and the Chairperson of the Community Care Fund Task Force under the Commission on Poverty, Dr Law Chi-kwong, held a press conference today (January 16) to elaborate on poverty alleviation initiatives outlined in the Policy Address. Following is the transcript of remarks at the press conference:

Reporter: I would like to ask whether you have any estimate as to the impact that new arrivals applying for this Low-income Working Family Allowance would have on your estimated cost of $3 billion per year, and what impact this would have on the long-term feasibility of the scheme? Thank you.

Chief Secretary for Administration: I have said that in order to achieve the objective of the Low-income Working Family Allowance, which is really to sustain employment amongst the poor population, we do not find it necessary to distinguish applicants on the basis of their length of residence in Hong Kong, because you can imagine if new arrivals are coming to Hong Kong for family reunion, the best way is really to integrate them into society as early as possible. And the best way to integrate people into society is to enable them to work. So giving support where it is needed amongst the working population is the primary objective of this scheme, so we are not drawing any distinction on the basis of residence and hence we do not have a separate estimate on the likely cost of extending this allowance to new arrivals.

     And on the fiscal sustainability, my reply is this: Well, first is every new initiative in the Policy Address which has financial implications will have to go through a due process, not only in the formulating of the policy measure, but also in terms of its financial implications. So this proposal to introduce a Low-income Working Family Allowance has gone through that very vigorous process to ascertain its financial sustainability. And secondly, if you look at the details and the objective of the scheme, it is unlikely to generate a major fiscal burden, because it really tackles families with children, and so it will not be affected by the changing demographics in Hong Kong, particularly in terms of ageing population. And you could imagine that if these children, if the children in the low-income family, when they have finished their schooling and go to work, then we do not have to provide them with the allowance anymore. And more importantly is the objective of the Low-income Working Family Allowance is also to prevent people, the low-income families, from falling into the Comprehensive Social Security Assistance Scheme, which is a far more expensive scheme costing us about $20 billion in the current financial year. So taking all those factors into account, I think this scheme has been well designed with the fiscal prudence in mind.

Reporter: My question is slightly similar. Can I first ask, do you see that this low-income allowance scheme, would it actually suppress the minimum wages or suppress the increment of wages by employers because, as Professor Nelson Chow expressed this sort of concern, whether there would be employers who would not actually want to increase any wages because such a scheme is already subsidising the workers? And secondly, Mrs Lam said you have a 2.1 and 4.4 (percentage point) decrease of the poverty rate by this scheme. Do you see these as targets set by you with this scheme? What if you don't match them? Thank you.

Chief Secretary for Administration: I'll answer the second question and Matthew could take your first question. Well, first of all, these figures that you have quoted are not targets. They are not poverty alleviation targets. They are the estimated outcome of this proposal to introduce a Low-income Working Family Allowance. We have said repeatedly since last September, when we announced the poverty line, that we do not find it appropriate to set a rigid target to bring down the percentage points. One, is because the poverty line is drawn on the basis of relative poverty, so it has its sort of limitations in assessing the poverty situation in Hong Kong. And secondly, we have heard from many quarters that, if we are going to introduce any relief measures, we should not just focus on people living below the poverty line, so we have taken that view into account and proposed that the Low-income Working Family Allowance should also benefit households slightly above the poverty line. So that means that it will not be appropriate to set a target which is based entirely and exclusively on bringing down the poverty rate as measured by the number of households under the poverty line. What is the significance of those figures of reducing overall poverty rate by 2.1 percentage points and child poverty rate by 4.4 percentage points is that would help us to assess and monitor the effectiveness of these poverty measures, and this is one of the primary objectives of having a poverty line in Hong Kong.

Secretary for Labour and Welfare: In designing this Scheme, we took great caution in striking a balance between avoiding distorting the labour market on the one hand and at the same time improving the well-being of the grassroots working poor on the other. So we believe that at the end of the day this will not distort the labour market. But we will certainly keep the whole Scheme under a very close observation when it is launched. It is worth mentioning that the allowance itself, I think, would promote employment in the long term, particularly at a time when there is labour shortage in many many sectors in Hong Kong at the moment.

(Please also refer to the Chinese portion of the transcript.)

Ends/Thursday, January 16, 2014
Issued at HKT 22:18


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