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Presentation to the
Hong Kong Central Policy Unit Seminar
by
Dr. William Wong
November 7, 1997
Part I: The Alberta Welfare Reform
A.
The Rapid Growth of Welfare in Canada
1.
Between 1969-95, the estimated number of welfare recipients in Canada
increased from 6.0% to 10.4% of the Canadian population. Approximately
over 3.0 million people were support by welfare.
2.
Because of the high turn over of the welfare caseloads, the actual
number of people supported by welfare could have been as high as 15% in any
given year.
3.
Over the past two decades, the rapid increase in welfare in Canada
occurred during both periods of economic recession and recovery as the trend
has not subsided during period of relative economic growth.
B.
The Cost of Providing for Welfare also experienced dramatic
increases
4.
From 1970-95, the per capita cost of social welfare increased from $163
to $511 (1995 real $)
5.
In Ontario, the largest province in Canada with a population of about
10.5 million, the total Provincial Social Assistance (welfare) expenditures
increased from $1.3 billion in 1984-85 to $6.8 billion in 1994-95 while the
caseloads (GWA = General Welfare Assistance and FBA = Family Benefits
Assistance) increased from 265,000 to 690,000 during the same period.
6.
A recent study on the Ontario’s welfare experience (Welfare - No Fair,
by the Fraser Institute, 1996) concluded that from 1984 to 1995, Ontario
embarked on a liberalization policy in their welfare benefits and eligibility.
The liberalization was intended to give recipients a sense of self-reliance and
independence and thereby help them to move into the workforce. However,
as it turned out, rather than reducing caseloads and encouraging independence,
Ontario went from being the province with the fewest welfare recipients per
capita to the province with the highest per capita caseloads. As caseloads
grew dramatically, more and more families became entangled in the so called
safety net.
C.
The Alberta Welfare Reform
7.
During mid-1980s, Alberta’s economy experienced a downturn and
unemployment levels increased to double digit, reaching 120,000 unemployed
and an unemployment rate hovering around 11%.
8.
Provincial Social Assistance (welfare) caseloads increased from 50,000
in 1985 to 70,000 in 1988, then shooting up to reach a peak of 93,000 by
January 1993.
9.
Because of the increasing caseloads, social workers were over worked,
each handling several hundred cases. The traditional philosophy in the
administration of welfare in the Department of Family and Social Services
(FSS) was to ensure all clients receiving every benefit they are entitled to
receive. The emphasis of most social workers was on the provision of
benefits, making sure that recipients were receiving each and every benefit they
were entitled to receive. Financial adequacy was the key emphasis rather the
self-reliance and economic independence through engaging in employment and
training programs.
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10.
In 1991, the Department initiated a series of changes to social welfare
by introducing the Support for Independence (SFI) to replace Social
Assistance. Officials of FSS also commenced closer working ties with the
Department of Advanced Education and Career Development (AECD) in
encouraging clients to move towards economic independence via participation
in employment as training programs.
11.
The job classification of social workers were changed to 3 categories:
(a) Intake Financial Benefits Worker conducts detailed assessment of
client eligibility;
(b) Financial Benefit Worker handles the calculation and distribution
of welfare benefits;
(c) The Employment and Client Support Services Worker conducts an
employability assessment of clients and refer them to suitable
training, education and/or employment programs.
12.
In December 1992, Mike Cardinal was appointed Minister of Family
and Social Services. Mr. Cardinal, an aboriginal native who was brought up
in a northern community of Calling Lake where, before the introduction of
welfare, every member was working and leading a happy and satisfying life.
After the introduction of welfare, he personally witnessed a tragic history of 20
years of devastation, family breakdown, alcoholism to that community where
90% of the population of Calling Lake was supported by welfare.
13.
Mr. Cardinal was very concerned that the social welfare program had
become too passive, too focused on providing financial assistance and other
benefits, too easy to obtain and to stay on, including able-bodies single
employable, childless couples and youth.
Therefore, as minister, he
announced a major Welfare Reform in January 1993.
14.
The “Cardinal Principles”
(a) Nobody really wants to be on welfare;
(b) Welfare recipients cannot to better off on welfare than the general
working population; and
(c) Any job is a good job.
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15.
The Four Goals of Social Welfare
(a) Reduce welfare caseloads
(b) Reduce welfare dependency in the province
(c) Encourage independence among potential, former and current
welfare recipients, and
(d) Develop more efficient and effective methods of labour force
participation
16.
Five Directions of the Alberta Welfare Reform
(1) Changes in Attitude among of Social Workers and SFI Clients to
emphasize
(a) “Welfare is a program of last resort”
(b) Temporary nature of assistance
(c) Self sufficiency and family responsibility
(d) Participation in employment and training programs
(2) Changes in Administration - Service Delivery Structure and
Procedures
(a) Tighten eligibility criteria
(b) Deflecting strategy
(c) Intensive error and fraud control/detection
(3) Review and Reduction of Benefits
(4) Comprehensive Array of Employment and Training Programs
(a) Establish thorough monitoring database and evaluation
system to track results of welfare reform
(b) Foster linkage with employer
(c) Develop labour market information/intelligence
(5) New Partnerships and Consolidate Working Relations
(a) One-window integrated service delivery Canada-Alberta Service Centres
(b) Joint management - co-management of social welfare and
labour market services
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17.
Results of Welfare Reform in Alberta
(a) Caseloads reduced from 93,000 in March 1993 to 39,000 in April
1997, then continued to decline to 34,500 in September, 1997
(b) Reduction of welfare expenditure from $900 million to $400
million
(c) Decline in the number of new applications to welfare
18.
External Interests and Review
Back to Work - Learning from the Alberta Welfare Experience
- CD Howe Institute (1996)
Where Are They Now? - Canada West Foundation (1997)
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Part II
Recent Changes in Social Welfare in Hong Kong
1991-92 to 1996-97
with Focus to the Comprehensive Social Security Assistance
(CSSA) Scheme
I.
Introduction - Philosophy of Social Welfare
“Social Welfare in Hong Kong is based on the premise that
societies have an obligation to assist their members to overcome
personal and social problems and to fulfill their role in life to the
optimum extent in accordance with the particular social and cultural
development of their society.” (p.3)
The Five Year Plan for Social Welfare Development in Hong Kong Review 1995
“In particular, they recognize a responsibility to help their
disadvantaged members to attain an acceptable standard of living. The
extent to which societies can meet these obligations depends very much
on their system of values and the resources available …….
“The challenge for Hong Kong is to improve (social welfare)
services without creating the sort of dependency culture that has
emerged in some developed industrialized societies, a phenomenon that
removes the incentive to work and undermines the productive engine of
the economy.” (p.13, 14)
White Paper - Social Welfare into the 1990s and Beyond (1991)
“As we work hard together to build our future, caring for those in
need, supporting the elderly and helping the disadvantaged are fundamental to
the quality of our society, my Administration will work to improve conditions
for the elderly, and people with disabilities, to help our new arrivals integrate
into the community and to improve health care.
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There has been much public debate about what is meant by providing adequate
social security to those who do not have the means to support themselves …..
We need to be compassionate and caring. But, we should not remove
incentives to work. To ensure that neither of these considerations are
compromised, I have asked the Secretary of Health and Welfare to conduct a
study on the scope and the administration of the CSSA scheme in 1998.”
1997 Policy Review, The Chief Executive, Mr. Tung Chee Hwa
II.
Recent Changes in Social Welfare Trends
A.
Changes in Social Welfare Expenditures
1.
Total Public Expenditures of the Hong Kong Government increased
from $108 Bln. In 1991-92 to $217 Bln. In 1996-97 during this five year
period.
It should be noted that inflation rate (CPI) in Hong Kong has averaged between
6 to 7 percent per year since 1991-92. Thus, any analysis in expenditures
should take into consideration this inflationary effect.
2.
During the same five year period, Social Welfare Services (SWS)
expenditures increased 2.7 times from$6.35 Bln. To $18.2 Bln.
3.
Within SWS, the Comprehensive Social Security Assistance (CSSA)
Scheme which provides for the basic and special needs of members of the
community who are in need of financial and material assistance, has
experienced the highest rate of increase from $1.1 Bln. in 1991-92 to $7.0 Bln.
in 1996-97, or 6.3 times. Particularly, the rate of increase for CSSA
expenditures has exceeded forty percent per annum during the last three years,
doubling the amount in just two years from $3.5 Bln. to $7.0 Bln.
4.
Such an increase in CSSA expenditure over the five year period has
resulted in CSSA accounting for an ever increasing share of the overall SWS
expenditures, from 17.8 percent to just under 40 percent.
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5.
As of 1996-97, for every dollar spent in the Total Public Expenditures
by the government, 8.4 cents is being spent on the delivery of Social Welfare
services. This amount has increased modestly from 5.9 cents in 1991-92.
B.
Changes in Comprehensive Social Security Assistance (CSSA)
Caseloads
6.
The CSSA caseloads increased from 72,969 in 1991-92 to 166,720 in
1996-97. This represents an increase of 2.3 time or 128 percent. The
caseloads during the past two years has been growing at a much faster rate than
that of the previous three years (23% compared to 14%).
7.
The estimated number of recipients supported by CSSA (at 1.5 persons
per case) as a percent of total population in Hong Kong has increased from 1.9
percent to 4.0 percent.
8.
The CSSA Dependency Rate, defined as the number of CSSA recipients
over population 15 - 64 years, has also increased steadily from 2.7 percent to
5.6 percent.
9.
With respect to CSSA caseload by categories, the “Unemployed” has
experienced the fastest differential growth rates. This category has increased
seven times from 2248 “unemployed” cases in 1991-92 to approximately
15,000 “unemployed” cases in 1996-97. This means almost one in five or
twenty percent of the total number of unemployed in Hong Kong are collecting
CSSA.
10.
“Low Earning” and “Single Parent Family” categories also experienced
fairly high growth rates in recent years, particularly during the past two years.
11.
The “Old Age” category, traditionally the largest CSSA cases, still
accounts for close to 60 percent of the total CSSA caseloads, down from a
two-third (66%) share in 1991-92. In contrast, “Unemployed” has increased
its share from 3.1 percent to 9.0 percent while “Single Parent Family” has
increased from 5.9 percent to 8.0 percent.
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12.
The number of New Applications in CSSA caseloads which includes
Re-applications has increased from 24,500 to 76,350. New Applications as a
proportion of total CSSA caseloads also increased steadily every year during
the past five years from 33.6 percent to 45.8 percent.
13.
The Average Cost per CSSA case (total CSSA expenditures over total
CSSA caseload) has also increased rather dramatically during the past five
years, from $15,566 to $42,778. Even if inflation effect is adjusted, the cost
per CSSA case has doubled since 1991-92.
14.
During 1995-96, the average CSSA monthly payment to a household of
four persons was $10,270 (increased from $6,300 to 1993-94) compared to the
Median wage of Craftsman/Operators fluctuating at approximately $6,500 to
$7,000 per month. The average earning of a full time graduate of retraining
programs operated by the Employees Retraining Board also hovers around
$6,500 per month, about 58 percent less than the amount of payment made
under CSSA.
C.
Question and Observations - For Discussion
1.
What are the reasons for such rapid increase in CSSA caseloads in
recent years? To what extent is fluctuation in the economy accounting for this
change?
Two possible reasons might have accounted for this trends:
(i) Hong Kong recorded a relatively high number of unemployed
persons in the labour force during 1995-96, reaching close to
100,000 persons as compared to approximately 65,000 unemployed
persons in most other years. Displaced unemployed workers might
have to resort to CSSA in order to meet their personal and family
financial need.
(ii) There was a system-wide adjustment to the CSSA benefits and
payment levels after the 1996 CSSA Review. Such wholesale
adjustments typically have the effect of extending CSSA coverage to
a larger percentage of people among low income population in Hong
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Kong and attracting more of them to apply for welfare under a set of
more generous eligibility criteria?
2.
Is the CSSA serving the truly needy and disadvantaged members of the
community? As the number of able bodied individuals such as unemployed
employable, low income earners and single parents continue to be supported by
CSSA in ever increasing number, have we slowly allowed these groups to
develop an unhealthy “dependency culture that has emerged in some developed
industrialized societies”?
3.
Is Social Welfare a passive income support social policy? To what
extent is the delivery of Social Welfare services fulfilling a proactive
development role in helping able bodied individuals within the system to
develop their full economic potentials and capacities in life “so that they can
become independent and productive members of society”?
4.
How to determine “adequacy” in setting CSSA Benefits levels? What
are the relationships between Benefits levels and Eligibility?
How
appropriate are the Benefits levels for non-Old Age and non-Disabled CSSA
recipients, relative to the medium wages of the working population and average
income of similar sized families?
5.
At $21.2 Billions and growing, the Social Welfare expenditures
represent close to nine percent of Total Public Expenditures in 1997-98. At
what point will Social Welfare expenditures consider unaffordable and
excessive in spite of the general fiscal abundance in Hong Kong?
The Secretary of Treasury in his recent Policy Porgramme Update (October 9,
1997) identified Social Welfare as the second highest among four key policy
areas that has significantly exceeded the average real growth in total
government spending over the past five years, 86% compared to 33%,
respectively.
6.
Why is it that the average cost per CSSA caseload in real term has
increased by approximately 100 percent over the last five years? With
increasing CSSA caseloads, what have been the financial impacts on the cost of
providing related essential services, e.g. services to young people, families,
newcomers provided by non-government subvented agencies?
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