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LCQ5: Social mobility in Hong Kong
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     Following is a question by Dr Hon Kwok Ka-ki and a written reply by the Secretary for Education, Mr Eddie Ng Hak-kim, in the Legislative Council today (April 29):

Question:

     A Research Brief on "Social mobility in Hong Kong" published by the Legislative Council Secretariat on January 12 this year points that there are limited opportunities for people moving higher on the social ladder and sustained economic growth is key to providing earnings mobility to a society. The median monthly employment earnings of the overall local workforce surged by a total of 139% in real terms during the period from 1976 to 1996, but the growth rate moderated to a mere 14% during the period from 1997 to 2013. The subdued growth in people's earnings has added to the difficulties in home ownership. The average flat price for a small residential unit surged by a total of 188% during the period from 2006 to 2013, whereas the median monthly household income increased by only 30% over the same period. In the recent public sale of a new batch of Home Ownership Scheme (HOS) flats, the Hong Kong Housing Authority received a total of 128 900 applications, representing a record-breaking oversubscription rate of 59 times. On the education front, the expansion of post-secondary education places has been concentrated on the self-financed sub-degree sector. Yet, higher educational attainment has not led to better job prospects, with an increasing share of people engaged in lower-paid associate professional jobs. In this connection, will the Government inform this Council:

(1) whether it will formulate new measures to boost the economic growth of Hong Kong, with a view to comprehensively increasing the income levels of Hong Kong people; if it will, of the details;

(2) whether it will consider according priority to young people in allocating public rental housing units as well as selling flats under HOS and Urban Renewal Authority's development projects; if it will, of the details; whether the authorities will consider re-launching the Sandwich Class Housing Scheme to assist those whose income and asset levels have exceeded the eligibility criteria for HOS in achieving home ownership; if they will, of the details;

(3) whether it will formulate new measures to assist post-secondary graduates in pursuing further studies and seeking employment; if it will, of the details; and

(4) whether it will consider granting a partial waiver of student loans to post-secondary graduates so as to relieve their financial pressure; if it will, of the details?

Reply:

President,

     Young people are the future of Hong Kong. The Government has always been concerned about the development of young people and their opportunities for upward mobility. The Government has been working on promoting diversified economic development, improving the overall employment structure, and opening up more opportunities for employment and mobility. Also, it has been providing diversified education and training opportunities for young people with different aspirations with a view to enabling our next generation to give full play to their strengths and skills.

     As Hon Kwok's question covers a number of policy areas, the Education Bureau (EDB), in consultation with the relevant bureaux and departments, gives the following reply on behalf of the Government:

(1) The Government attaches great importance to economic development for creating employment and business opportunities, enhancing the overall competitiveness of Hong Kong and enabling the public to increase their income. Established in 2013 and personally led by the Chief Executive, the Economic Development Commission (EDC) has been providing visionary direction and advice on the overall strategy and policy to broaden our economic base and enhance our long-term development. It has submitted specific recommendations on supporting the development of individual industries over the past two years for the Government's consideration and implementation as appropriate. The EDC will continue to explore and identify growth sectors which present opportunities for Hong Kong's further economic growth, and recommend possible policy and other support measures for these industries.

(2) Given limited public rental housing (PRH) and subsidised sale flats resources, there is a need for the Government and the Hong Kong Housing Authority (HA) to set priority. Our current policy is to accord priority to families and the elderly. During the public consultation on the Long Term Housing Strategy, many respondents also agreed that the HA should continue to accord higher priority to families and the elderly over non-elderly one-person applicants for PRH. We will continue our efforts to build more PRH flats, ensure the rational use of PRH resources, and provide more subsidised sale flats to address the housing needs of low to middle-income people, including the youngsters.

     As for the suggestion to re-introduce Sandwich Class Housing Scheme (SCHS), as development of land for housing requires substantial amount of public resources, including land, financial and manpower resources, and given limited resources, our priorities are to house PRH applicants to PRH flats, and to assist low and middle-income families to achieve home ownership. The Government will strive to achieve the supply targets of PRH and subsidised sale flats under the 2014 Long Term Housing Strategy. From the policy perspective, the Government currently has no plan to re-introduce SCHS.

     As regards the Urban Renewal Authority (URA), all along, the redevelopment projects of URA have been targeting the private property market and the standard of finishing as well as the sale price of the URA flats is different from those of flats sold under the Home Ownership Scheme (HOS). As pointed out in the Chief Executive's 2015 Policy Address, high property prices decrease the public's relative ability to purchase a home and result in a marked increase in demand from low and middle-income families for subsidised sale flats. The Government must explore ways to increase the supply of subsidised sale flats through a multi-pronged approach by engaging public organisations, including URA. In view of the difference in standard of finishing, the sale price and target purchasers of the subsidised sale flats to be provided by URA may not necessarily follow that of the HOS. The Government is awaiting concrete proposals with details from the URA Board. There are no concrete proposals, including proposal on target purchaser group, finalised at this stage.

(3) The Government attaches great importance to the development of post-secondary education and strives to provide the younger generation with flexible and diversified articulation pathways with multiple entry and exit points. Currently, over 46% of our young people in the relevant cohort have access to degree-level education. If sub-degree places are also taken into account, the rate of youth pursuing post-secondary programmes is nearly 70%. Under the new academic structure, post-secondary institutions have revamped their curriculum to equip young people with a broad knowledge base, strengthen their language proficiency and other generic skills for enhancing their whole-person development and lifelong learning capabilities, which will help lay a solid foundation for them to seek employment in various sectors.

     The 2014 Policy Address has put forward a series of measures which include broadening the opportunities for students to receive higher education, strengthening vocational education to provide more opportunities for youngsters to pursue professional development, and establishing a $1 billion Qualifications Framework Fund to promote lifelong learning and enhance the competitiveness of the local workforce. Measures concerning employment and articulation opportunities for post-secondary graduates are set out below:

(i) increasing the number of University Grants Committee-funded senior year undergraduate intake places to 5 000 per annum by the 2018/19 academic year to provide meritorious sub-degree graduates with more opportunities for articulation to the last two years of a publicly-funded undergraduate programme;

(ii) introducing from the 2015/16 academic year the Study Subsidy Scheme for Designated Professions/Sectors to subsidise about 1 000 students per cohort to pursue self-financing undergraduate programmes in selected disciplines to nurture talents for industries with keen demand for manpower and encourage the self-financing sector to develop programmes that meet Hong Kong's social and economic needs. The Scheme will benefit three cohorts of students, and its effectiveness will then be reviewed; and

(iii) vocational education plays a pivotal role in integrating education and employment. It provides young people and the working population with comprehensive and diversified opportunities in articulation and career development, thereby nurturing talent in support of Hong Kong's development. Apart from launching various measures to strengthen vocational education, the EDB set up the Task Force on Promotion of Vocational Education in June 2014. The Task Force will submit a report to the Secretary for Education in mid-2015 with a strategy and concrete proposals to raise the public's awareness and recognition of vocational education. The Government will examine and consider the report in due course.

     Moreover, to assist young people in obtaining employment, the Labour Department (LD) puts in place the Youth Employment and Training Programme (YETP) which provides one-stop pre-employment and on-the-job training for young school leavers aged 15 to 24 with educational attainment at sub-degree or below. LD encourages employers, through the provision of training allowance, to employ young people joining YETP and provide them with on-the-job training. In 2014, LD furthered its collaboration with employers and various organisations to launch six pilot employment projects under YETP, making available about 760 on-the-job training places to enhance the employability of young people and promote their employment.@These pilot projects were to address the employment needs of specific groups of young people including sub-degree holders or to cater for industries with recruitment needs. In 2015, LD will continue to explore suitable pilot projects. So far, two projects have been launched for young people seeking a career in the hospitality industry or culture and publishing industry.

     In addition, the Employees Retraining Board (ERB) provides diversified vocation skills training courses for local residents aged 15 or above with education level at sub-degree level or below. Young people may enrol in some 800 ERB courses according to their education levels, career aspirations and training needs.

(4) To ensure that no eligible students will be denied access to education due to a lack of means, the Government has implemented various student financial assistance schemes to provide appropriate support to needy tertiary students, which include means-tested schemes such as the Tertiary Student Finance Scheme V Publicly-funded Programmes and the Financial Assistance Scheme for Post-secondary Students, as well as non-means-tested schemes such as the Non-means-tested Loan Schemes. The former provides eligible students with a grant and/or a low-interest loan to cover tuition fees, academic expenses and living expenses, while the latter provides eligible students with a loan to cover tuition fees.

     To relieve the repayment burden of student loan borrowers, the Government has implemented a series of measures to improve the means-tested financial assistance schemes as well as non-means-tested loan schemes since the 2012/13 academic year. The improvement measures include:

(i) lowering the annual interest rate of the means-tested loan schemes from 2.5% to 1% (Note 1) and extending the standard repayment period from five to 15 years;

(ii) reducing the risk-adjusted-factor rate of non-means-tested loan schemes from 1.5% to zero (subject to review in three years after implementation). The current interest rate is 1.395% (Note 2) per annum and the standard repayment period has been extended from 10 to 15 years; and

(iii) making the relaxed deferment arrangements a standing practice. Borrowers who fail to make loan repayment on time on grounds of further full-time studies, financial hardship or serious illness may apply for deferment of repayment. If their deferment applications are approved, loan borrowers would enjoy an interest-free deferment and extension of the standard loan repayment period for a maximum of two years, meaning that the entire repayment period can be up to 17 years.

     Moreover, in the 2012/13 and 2013/14 Budgets, the Government introduced a measure to give student loan borrowers who complete their studies in 2012 and 2013 the option of starting the repayment of their student loans one year after completion of studies. Since the measure could effectively alleviate the financial burden of fresh graduates and allow them more time to secure a stable job, it was announced in the 2014 Policy Address that the Government would make this a standing practice.

     The above measures have greatly eased the repayment burden of student loan borrowers and offered appropriate support to students in need. Student loans are financed by Government funding. It is against the principle of proper use of public money to grant a waiver of student loans.

Note 1: The rate is fixed.
Note 2: Subject to adjustment according to the movement of average best lending rate of note-issuing banks in Hong Kong.

Ends/Wednesday, April 29, 2015
Issued at HKT 16:04

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