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香港之小政府、管治危機舆第三條路的前景社會政策角度的分析 (Small Government, Governance Crisis and the Prospect of the Third Way in Hong Kong – A Social Policy Analysis) Wong Chack Kie(王卓祺) Professor Department of Social Work The Chinese University of Hong Kong Workshop on the Role of Government, Central Policy Unit, the Government of SAR Hong Kong 15 May 2009 1 Outline Small government in comparative analysis Governance crisis – a structural analysis Third Way – the only way to tackle governance crisis? 2 Hong Kong has a small government in social policy in terms of public expenditure (Table 1) 3 Table 1 Social Expenditure (Social protection + Education) as % of GDP, OECD selected countries and Hong Kong 1995 Social protection Sweden Education 32.1 7.1 Korea 3.3 NA Japan 14.3 3.6 UK 20.2 5.1 USA 15.3 NA OECD* Total-30 19.9 5.3 Hong Kong@ 5.07 2.96 2000 Total 39.2 Social protection Education 2005 Total Social protection Education Total 28.5 7.2 35.7 29.4 7.0 36.4 5.0 3.9 8.9 6.9 4.4 11.3 17.9 16.5 3.7 20.2 18.6 3.5 22.1 25.3 19.2 4.4 23.6 21.3 5.4 26.7 14.5 4.9 19.4 15.9 5.1 21.0 25.2 19.3 5.1 24.4 20.5 5.4 25.9 8.03 7.87 3.9 11.77 5.69 3.85 9.54 *Social protection in OECD including pension, unemployment, family, disability and housing allowances, and health care, etc. Source: http://stats.oecd.org/wbos/Index.aspx?datasetcode=SOCX_AGG Education in OECD countries, source: Education at a Glance 2008: OECD Indicators –OECD 2008 @ Social protection in Hong Kong including health care, social security and social welfare, and public housing. Source: Budget, various years. 1995=1995-96, 2000=2000-01, 2005=2005-06 4 But small government is not necessarily meant economically competitive (Figure 1) Nordic countries, high spending but are competitive than Hong Kong 5 Figure 1 Social Expenditure as a % of GDP and Global Competitiveness Index (GCI) 2005 Score in selected Countries and Hong Kong 6.0 United States 5.8 Denmark Sweden GCI 2005 Score 5.6 Switzerland 5.4 Norway Australia 5.2 Japan Netherland United Kingdom Canada Korea Germany New Zealand 5.0 Hong Kong 4.8 Ireland Austria Luxembourg 4.6 0 5 10 15 20 25 30 35 Social Expenditure as a % of GDP Social Expenditure as a % of GDP GCI 2005 Score 6 Why Hong Kong has a small government in social policy? Hong Kong spends less in every aspect of social policy except education In particular, it is very constrained in cash transfer On average OECD countries spent 12% of GDP on cash transfer (Figure 2) 7 Figure 2 On average OECD selected countries spend on cash benefits % of GDP (2003) 7.0 5.0 Average (12.0) 6.2 2.2 United States (8.4) 5.6 4.2 United Kingdom (9.8) 8.0 7.4 Sweden (15.4) 10.2 4.5 Portugal (14.7) 5.3 8.8 Denmark (14.1) 3.0 Canada (7.4) 0 4.4 10 5 15 20 Cash Benefits Income support to the working age population Pensions (old age and survivors) Source: The Social Expenditure database: An Interpretive Guide, SOCX 1980-2003, OECD2007 (Version: June 2007) 8 Hong Kong is shy away from cash transfer! In 2003-04 financial year, we spent 22.7 billion HK$ on cash benefits (CSSA, OAA and disability allowances); equivalent to 1.8% of GDP We don’t have pension (7% of GDP, OECD), but Mandatory Provident Fund, a forced savings, but it does not include in public expenditure 9 We don’t have tax credit and other benefits to the working population (5% of GDP, OECD) But our public education expenditure is similar with OECD average 5.0% (OECD, 2004) 4.6% (HK, 2004) 10 o In public health care, we spent 2.03% of GDP (2007-08) but no-one in Hong Kong is denied of appropriate health care • We adopt the British Universal Health Service model • USA has a predominantly private health system funded by employer-paid insurance But USA spent 7% of GDP on public health (another 8% on private health, 2005), but 45 million people without health care insurance 11 o In housing, we provide public rental housing for 30% of the population, 15% in home ownership scheme housing Public rental housing in Hong Kong Some are more than affordable housing! 12 So, we are doing fine! Why should we change? We may face a a governance crisis! Now, we come to a structural analysis of a small government in social policy in a new economic order 13 The World Bank sees the role of government in governance, “Even in societies that are highly marketoriented, only governments can provide two sorts of public goods: rules to market work efficiently, and in some cases, corrective interventions where there are market failures” (1991:3) 14 Where market fails Hong Kong is good in the first type of public goods - rules to market work efficiently But not the second type - corrective interventions where there are market failures Evidence - Income between the poor and the rich is always a concern in Hong Kong But Hong Kong is shy away from income redistribution This might be fine in pre-1997 era But not in post-1997 era! See next, Figure 3 15 Figure 3 Hong Kong Household Income Distribution (1981-2006 Census years) 41.8 41.4 18000 17500 16000 14000 45 18705 41.2 17250 37.3 35.2 35.5 35 30 12000 25 10000 9964 20 8000 15 6000 5160 10 4000 2955 2000 40 1.4 1.6 1.3 1.1 5 0.9 0.8 0 1981 1986 1991 Median Monthly Domestic Household Income Lowest 10% Household Income Distribution 1996 2001 0 Top 10% & Lowest 10% Households as % of Total Household Income Monthly Household Income (HK) 20000 2006 Top 10% Household Income Distribution Source: Census & Bi-Census Reports, various years, Census and Statistics Department 16 Widening income gap has been an international phenomenon (Table 4 on Gini ratios since mid-1980s) But tax and transfer help reduce income gap Table 4 – OECD-25 31% reduction in after tax and transfer (mid-2000s), whilst 10% in Hong Kong We did poorly in comparative terms 17 Table 4 Gini Co-efficient: HK & OECD selected countries Mid80s Country Canada Denmark Portugal Sweden Before Tax & Transfer 0.39 After Tax & Transfer 0.29 Before Tax & Transfer 0.37 After Tax & Transfer 0.22 Differenc e (%) -25.6 -40.5 Mid90s 0.42 0.28 0.42 0.21 Before Tax & Transfer - - 0.49 After Tax & Transfer - - 0.36 Before Tax & Transfer 0.40 After Tax & Transfer 0.20 United Kingdom Before Tax & Transfer 0.44 After Tax & Transfer 0.33 United States Before Tax & Transfer 0.40 After Tax & Transfer 0.34 -50.0 -25.0 -15.0 0.44 0.21 0.48 0.35 0.45 0.36 Hong Kong redistributes much less! Difference (%) -33.3 -50.0 -26.5 -52.3 -27.1 -20.0 Mid2000 s 0.44 0.32 0.42 0.23 0.54 0.38 0.43 0.23 0.46 0.34 0.46 0.38 OECD-25 Before Tax & Transfer - - - - 0.45 (Total) After Tax & Transfer - - - - 0.31 1986 Hong Kong Before Tax & Transfer After Tax & Transfer 0.453 - 1996 - 0.518 - Difference (%) -27.3 -45.2 -29.6 -46.5 -26.1 -17.4 -31.1 2006 - 0.533 0.475 -10.9 Source: OECD (2008) Social Expenditure Database, download from http://stats.oecd.org/wbos/Index.aspx?datasetcode=SOXC_AGG 18 In sum, governance crisis is structurally caused by the insufficient market wage in the new economic order where the lower income groups are not able to get a larger share, accompanied by the inadequate or insufficient corrective government interventions for making work pay or with a social wage/income that is considered as just as compared with the rich This crisis has a moral dimension The poor and disadvantaged do not get more in the new economic order – social justice is at stake! 19 Third Way – the only way to tackle governance crisis? 20 What is the third way in social policy? (1) The Third Way values Third way stresses values like equality of opportunity, rights based on responsibility, rewards for entrepreneurship, and risk taking (Bonoli & Powell, 2002) are at home with Chinese traditional beliefs (2) The Third Way is business friendly It reorganizes state apparatus in favour of economic competitiveness, i.e., active labour market policies and turns passive welfare into positive welfare It harmonizes economic efficiency and social justice, albeit it is criticised as neo-liberalism in disguise (Callinicos,2001) 21 3) Policy principles or slogans (Bonoli & Powell, 2002; Powell, 2000) Initial redistribution of assets and productive endowments of skills and jobs ‘Make work pay’ ‘No rights without responsibilities’ ‘Work for those who can, security for those who cannot’ 4) Target groups and policy tools The target groups of the Third Way social policy primarily at the employable adults - working poor, single-parents, youth and migrants (Powell, 2000; Hills & Waldfogel, 2004; Myles & Quadagno, 2000,156) 22 Policy tools used include the followings: Minimum wage Earned income tax credit (USA), Working families tax credit (UK) Child-care tax credit (UK) Family accounts- inherited capital fund for retirement and health care, if not spent in one’s life, for the next generation (Novak, 1998:16-18) Matching grants, e.g., matching grants to private donation for universities (Hong Kong) Endowment fund model Put aside budget surplus for designated use in future, e.g., the injection of budget surplus to MPF accounts (Hong Kong) Social Security Fund for retirement protection(China) 23 Is Third Way the only way for Hong Kong in social policy? 24 Morally – the erosion of government legitimacy due to structural change of the economy and outcome of income distribution the trickle-down is no longer true – no more larger pie for the underdog to get ahead in life Therefore, the need to use Rawlsian justice (Kapstein, 1999; Myles & Quadangno, 2000) 25 In terms of government capacity Hong Kong has more budget deficits than before in the post-97 era! This is a good excuse for a small government See Figure 4 26 Figure 4 Surplus or deficit of government budget as % of GDP 1973/74-2007/08 10.00 8.00 6.00 4.00 2.00 2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01 1999/00 1998/99 1997/98 1996/97 1995/96 1994/95 1993/94 1992/93 1991/92 1990/91 1989/90 1988/89 1987/88 1986/87 1985/86 1984/85 1983/84 1982/83 1981/82 1980/81 1979/80 1978/79 1977/78 1976/77 1975/76 1974/75 1973/74 0.00 -2.00 -4.00 Supposed that Hong Kong has more budget deficits than before in the post-97 era! -6.00 This is a good excuse for a small government, but! 27 In fact, it is not the case The Hong Kong SAR Government was able to spend more in social policy Figures 5 & 6 We had falling public and social expenditures under Mr. Tsang’s Administration 28 Figure 5 Public Expenditure and Social Expenditure in Hong Kong 25 Started Tung’s Administration 1,700,000 1,600,000 1,500,000 20 1,400,000 1,300,000 1,200,000 15 1,000,000 900,000 800,000 10 700,000 600,000 Started Tsang’s Administration 500,000 400,000 5 300,000 200,000 100,000 0 83 19 /84 84 19 /85 85 19 /86 86 19 /87 87 19 /88 88 19 /89 89 19 /90 90 19 /91 91 19 /92 92 19 /93 93 19 /94 94 19 /95 95 19 /96 96 19 /97 97 19 /98 98 19 /99 99 20 /00 00 20 /01 01 20 /02 02 20 /03 03 20 /04 04 20 /05 05 20 /06 06 20 /07 07 /0 8 0 19 HK million$ 1,100,000 GDPat current price (Million $) Total Social Service Expenditure (Million $) Social Service Expenditure as % of GDP (%) Public Expenditure and Social Service Expenditure as % of GDP (%) 1,800,000 Total Public Expenditure (Million $) Public Expenditure as % of GDP (%) 29 Figure 6 Social Expenditure (by policy area) as % of GDP Started Tung’s Administration 14.00 Started Tsang’s Administration 12.1 12.04 11.77 11.54 11.38 11.31 12.00 10.57 10.00 9.54 8.85 8.03 7.16 6.50 6.78 6.37 6.33 6.66 7.05 6.83 8.38 7.26 7.4 6.72 5.86 6.00 4.00 2.00 Social service expenditure as % of GDP Education Health Housing 2007/08 2006/07 2005/06 2004/05 2003/04 2002/03 2001/02 2000/01 1999/00 1998/99 1997/98 1996/97 1995/96 1994/95 1993/94 1992/93 1991/92 1990/91 1989/90 1988/89 1987/88 1986/87 1985/86 1984/85 0.00 1983/84 % 8.00 8.82 8.33 Social welfare 30 We can spend more, a choice not about government capacity The Administration under Mr. Tung could do that! 31 The policy trajectories Hong Kong can choose 1. Status quo – government legitimacy is slowly eroded – not politically and socially desirable 32 2. Regime jumping to social democratic countries Unlikely due to the lack of collectivist tradition and weak labour movement (Power resource theory, Korpi, 1983) Societal preference: a low-tax regime Also on fiscal implication, impossible- taken 2005 as the base for calculation, Hong Kong needed to spend 16.36% of GDP (OECD average 25.9%, whilst HK 9.54%, Table 1), it was 213,516 million HK$ 33 3. Expansionist trajectory to the Third Way More likely as Hong Kong has similar values as the Third Way in relation to business; it is business friendly The missing thing is – we need to have a new set of social ethics; such as with the following beliefs: It is unjust to have working people unable to make ends meet It is morally wrong not able to allow children from poor families to get ahead in life From Blair To Tsang? 34 In fact many policy choices Hong Kong now has are typical Third Way social policy tools and similar practice MPF – save for one’s welfare, asset than income distribution Matching Grants – shared responsibilities, e.g., matching grant for universities Home ownership scheme and child development fund – asset building Travelling expenses for working poor in remote districts 35 But we don’t have Earned income or working family tax credit Work does not pay Child development fund is just a pilot Great danger of intergenerational poverty Working families do not get carer allowances Great stress on dual-worker families Travelling allowance – not enough in coverage and benefits 36 We have Abandoned the home ownership schemes for the lower-middle class More difficult for them to accumulate assets Adopted some market mechanisms e.g., cost recovery, in social policies Make life more difficult for the lower class people Contracted out public services The race to the bottom in worker’s wages at the lower-end of the labour market 37 The Third Way expansionary trajectory in fiscal terms means That is, to spend 11.2% of GDP on social policy on average (the average of the 8 budget years under Mr. Tung) No reason why Mr. Tsang’ Administration could not do what Mr. Tung had done! This means, using 2007-08 8.38% of GDP as the base, the gap was 2.82%, that was HK$46,587 million on that budget year Not to be excited about the Third Way in social policy, not at all progressive, it is just in the middle ground, just a small step away from the small government! 38 The government can especially spend more on public housing, it is particularly less financed in Tsang’s Administration But it does not mean, not to spend smartly, e.g., Matching rights with responsibilities Rewarding work ethics Asset-based equal opportunity for the poor to get ahead in life and to tackle social risks at different stages of life 39 Conclusion The small government in social policy seems to be unable to cope with the new social and economic orders It is run out of stream in terms of moral highground The Third Way social policy seems to be the viable option with a new set of ethics and policy tools compatible with the new reality 40 References: Giuliano Bonoli & Martin Powell (2002) Third Ways in Europe? Social Policy and Society, 1,1:59-66 Alex Callinicos (2001) Against the Third Way, Oxford: Polity Press John Hills & Jane Waldfogel (2004) A “Third Way” in Welfare Reform? Evidence from the United Kingdom, Journal of Policy Analysis and Management, 23,4:765-788 John Myles & Jill Quadagno (2000) Envisioning a Third Way: The Welfare State in the Twenty-first Century, Comparative Sociology, 29,1:156-167 Michael Novak, Is the a Third Way? IEA Choice in Welfare No. 46 Martin Powell (2000) New Labour and the third way in the British welfare state: a new and distinctive approach, Critical Social Policy, 20, 1:39-60 W. Korpi (1983) The Democratic Class Struggle. Boston: RKP 41