Hong Kong Fudges Poverty Numbers

A record 1.65 million people are in poverty in Hong Kong

Hong Kong has a record 1.65 million people living in poverty in 2020, since the government kept records 12 years ago. The latest number was released in its annual Poverty Situation Report released today.

That's over one in five Hongkongers live on HK$4,400 a month or less, or a three-person family at HK$16,000 or less. 

Govt says handouts made poverty stats smaller

However, instead of being concerned about the situation, the government preferred instead to add that it has given residents lots of subsidies and handouts so the actual number of people in poverty is 554,000, at just 7.9 percent of the population, better than the 9.2 percent recorded in 2019.

Huh?

In its tally, because the government gave several cash handouts and public housing, the people who fit its definition of "poverty" is actually less than 1.65 million.

But campaigners and experts say the numbers are too high, masking the reality of how the coronavirus pandemic has financially impacted not only individuals but families as well.

"Poor people have been hit the hardest during the year of the pandemic, from job losses to underemployment and homelessness. The government must not turn a blind eye to the serious findings in its own report," said Sze Lai-shan, of the Society for Community Organization (SoCO).

Sze says poor hit hardest during pandemic

In 2020, the government gave out HK$316.4 billion (US$40.6 billion) in four rounds of subsidies from its anti-epidemic fund to support businesses from closing due to strict social-distancing rules, as many of them had to shut for months.

But unemployment soared to a 16-year high of 6.6 percent in the final quarter of the year, with some 245,800 people out of work during the fourth wave of the pandemic.

Wednesday's report saw Hong Kong's poverty-stricken population rise from 1.49 million to 1.65 million in one year. 

While the government claimed in the report that its interventions helped prevent an even sharper poverty rate, SoCO's Sze said last year's mass unemployment was a direct result of the government's tough policy on social distancing, and that relief measures fell short of supporting those most in need. For example, relief measures for businesses did not trickle down to employees.

What will Xia think of the poverty report?

One wonders what Xia Baolong thinks of this report and if he believes it. The director of the State Council's Hong Kong and Macau Affairs Office has singled out poverty and wealth inequality as deep-rooted issues that need to be tackled by the next leader.

He and his staff have done several home visits, so they have seen on the ground how some of Hong Kong's down-and-out live -- and those are the ones with roofs over their heads. Has Bao seen the homeless people living on the streets and asked them how they are doing?

Meanwhile at the other end of the spectrum, it was reported today one buyer bought two luxury flats on The Peak for a record HK$1.2 billion (US$154 million). The two flats next to each other are at Mount Nicholson, at HK$134,000 per sq ft and HK$140,800 per sq ft.

How will the next leader resolve this is anyone's guess. 

The Good News, Bad News

Many people took advantage of the opportunity to get the jab

 

This morning a lot of people in Hong Kong signed up for the vaccine online now that the government has allowed people from the age of 30 upwards to get it, as well as domestic helpers, and students 16 years and older who are studying overseas.

The process was relatively efficient, though if you spent time reading through all the precautionary measures and possible side effects, then you wasted precious time getting the dates and times you wanted.

Now people over 30 are eligible to get vaccinated

Nevertheless some of these people are getting the jab as early as this Friday and are only too excited, showing off their confirmation emails on social media.

Today there were 18 cases recorded, five imported, and five more added to the growing gym cluster to 127.

Yesterday University of Hong Kong microbiologist Ho Pak-leung complained that the government's LeaveHomeSafe app is not working effectively to notify people if they had been in the same place at the same time as an infected person.

"The 100 or so people must have gone out for dining in the past 10 days. We are not seeing there's any improvement in contact tracing on that front. Although many people have installed the LeaveHomeSafe, the app seems not to have fully shown its effectiveness," he said.

A friend told me her three colleagues went to the Grand Hyatt Hong Kong recently, one used the app, the other two wrote down the contact details. In the end it was the latter two who were notified by the hotel and not the one who used LeaveHomeSafe!

Leung said if there is a delay in tracking down people there could be more clusters forming from restaurants, which we have seen here and there, with places like Zuma, Somm, Mandarin Bar + Grill, Arabica and Tree House just to name a few.

Dr Ho worries tracing app is not effective enough

There is also the concern that new infections won't show up for about two weeks too.

The chance to get a vaccine can't come fast enough.

Meanwhile Hong Kong is facing its highest unemployment rate since 2004 at 7.2 percent. That means more than 261,000 people are out of a job, 8,300 more than before.

The sectors most affected are tourism, hospitality and retail, while the food and beverage area has improved slightly. 

Back in 2003 the jobless rate was 8.5 percent during SARS, but that was for about four or five months, compared to now being well over a year. 

If that wasn't bad enough news, the government has approved fare hikes for buses by as much as 12 percent.

With bus fares going up, will more take the tram?

This is hard to understand because during the pandemic last year till now the frequency of the buses have decreased significantly, making people wait longer for buses or they are more packed. 

Fares for Citybus and New World First Bus will go up 12 percent in two phases, one in April the next in January, while Kowloon Motor Bus can charge 8.5 percent more, and New Lantao Bus company can raise fares by 9.8 percent.

However Long Win Bus, which runs bus services to the airport will not see an increase in fares as the government believes travel will come back soon...

At the same time the government is increasing the public transport subsidy to HK$500 per person, up from the current HK$100 and as long as people spend at least HK$200 on public transport per month.

Maybe -- just maybe -- this may push some people to use the tram and the Star Ferry more often.

Or in my case, walk more.

Hong Kong's Budget Hopes to Jumpstart Economy

Paul Chan delivered his budget today with a green tie

Financial Secretary Paul Chan Mo-po delivered a sobering budget today with only a few sweeteners in a bid to jump start Hong Kong's economy after a year of recession because of the coronavirus pandemic. 

The city fell into a record deficit of HK$257.6 billion (US$33.14 billion), and Chan warned Hong Kong would continue to have deficits in the following years. Nevertheless he forecasts 5.5 percent economic growth in the coming year.

Permanent residents get HK$5K in vouchers

There are a few main highlights from the budget:

While last year the government handed out HK$10,000 to each Hong Kong permanent resident and low income non-permanent residents, this year Chan said only HK$5,000 that would be given out to every adult permanent resident and new immigrant from China -- but in the form of electronic vouchers, and incrementally, to be used by a certain date each time. There were no further details on how that would work and what that could be spent on, but some speculate it will be for food, which makes supermarkets, or rather the conglomerates that own them -- even richer.

For those who have been unemployed, with proof of paperwork, they can take a one-off low interest loan of up to HK$80,000 and borrowers would only have to repay the interest in the first year, and the balance within a maximum of four years. Those who pay back the loan on schedule will be reimbursed the interest.

As the unemployment rate is now at a 17-year high at 7 percent, Chan has earmarked HK$6.6 billion to create 30,000 jobs for the next 12 months. 

The government will create 30,000 new jobs

Seeing as Hongkongers are stuck in the city because of the pandemic and many have turned to hiking, the financial secretary has pledged HK$500 million to spruce up country parks, installing new washrooms, barbecue pits and picnic sites, including HK$55 million improve 10 hiking trails with the potential of promoting for tourism.

Speaking of tourism, Chan has allocated HK$934 million into that sector, perhaps in a bid to get the city ready when the pandemic calms down and people can start traveling again. The Hong Kong Tourism Board is probably salivating over that money it gets to play with.

Those playing the stock market were shocked to hear the government will raise the stamp duty to 0.13 percent from 0.10 percent on stock trading, the first hike since 1993 that could help the public coffers grow to HK$92 billion.

The response was immediate on the Hong Kong Stock Exchange, with the Hang Seng Index plunged as far as 9.3 percent before finishing the day down 3 percent to 29,718.24. Investors didn't see that announcement coming and many feel this hike on the stamp duty is bad for the financial sector. 

Money will be used to upgrade hiking trails

But perhaps the most eyebrow-raising news that Chan did not announce in his speech is that a whopping HK$8 billion will be spent "to safeguard national security".

In a press conference with the media following his budget speech, Chan said he did not include this figure because it has already been accounted for, and that Chief Executive Carrie Lam Cheng Yuet-ngor had already approved the amount.

Also suspicious was that Chan did not explain where the money came from and how it would be spent. 

In a separate budget document, it says the HK$8 billion is a "non-recurrent appropriation to a special fund to meet the expenditure for safeguarding national security". During the press conference, Chan only said that the money would be used over the coming several years and did not clarify how the money would be spent and on what.

One reporter on Twitter has pointed out this amount is almost three times the budget in 2018-2019 on "internal security", just before the anti-extradition bill protests erupted. 

A whopping HK$8 billion on national security

There is also HK$3.5 billion that will be spent on prison management, up from HK$3 billion last year, while "constitutional and mainland affairs" will receive a budget of HK$200 million, twice as much as it got five years ago.

Jeremy Tam Man-ho, former lawmaker and vice-chairman of the opposition Civic Party, said the funding allocation for national security was equal to "dumping money into a dark hole", and called on the government to explain. 

"It is a large amount of money," he said. "But there is no transparency at all. The people have no idea how the money is to be used. I think the government owes Hong Kong people an explanation."

Indeed. 

Cathay's Knock-On Effect in Hong Kong

Many flats in Discovery Bay are vacated by Cathay staff

 

The termination of the Cathay Dragon airline last week has already had a knock-on effect in the property market.

Someone I know who lives in Discovery Bay told me today how many of the residents there work for Cathay and they have had their salaries cut by 20 to 40 percent for flight attendants, 40 to 60 percent for pilots, or either one or even both spouses have lost their jobs and they immediately have to find a cheaper flat to live in or leave Hong Kong.

A friend described "tsunami" of empty flats

The result is a lot of people moving out and flats left empty. He described it as a "tsunami". 

A property agent in Discovery Bay says there is an increase in flats renting at HK$65,000 per month available. 

The same thing is happening in Tung Chung too.

In the last three months over 60 renters have given up their flats according to Joe Lee of Midland Realty.

"I've never seen so many people giving up their rented apartments in my career," Lee said. "Local crew members who were let go or had their salaries cut are terminating their leases."

Of those who still have jobs at Cathay have opted to swallow the pay cuts, though the airline unions criticized management for not giving the flight crews and pilots more time to consider the new contract, let alone give them a chance to negotiate for a better deal.

However, at this point having a job is better than none at all, and Cathay has reported the majority of Cathay pilots and flight attendants have opted for permanent pay cuts. 

Chris Beebe warns of Cathay's "bullying"

Chris Beebe, general secretary of the Hong Kong Aircrew Officers Association, said if the airline's comments were accurate, it would serve "as proof that bullying and intimidation" worked.

"The real [payback] may come in the months and years ahead as pilots remember how they and their families were dealt with harshly and opportunistically when most vulnerable," he warned.

While the pay cuts are severe, the projections for air travel don't look good. The International Air Transport Association projects airline revenues for 2021 to be half that of 2019 due to the global pandemic.

The cuts at Cathay have contributed to Hong Kong's unemployment rate to rise to a nearly 16-year-high of 6.4 percent with tourism taking the biggest hit. 

Simon Lee Siu-po, co-director of the international business and Chinese enterprises program at Chinese University, warned the jobless rate could rise to 7 percent or more by year's end after the wage subsidy ended.

Tung Chung as seen from a plane

"Those who didn't joint the second stage of the [wage subsidy] scheme have already axed staff, such as Cathay Pacific," he said.

"After November when the wage subsidy scheme ends, companies may start to lay off staff. The situation will be more serious in early next year when companies are due to close their accounts for the year end."

Yep 2020 has been a complete wipe out in many ways.

Hearing and reading these sad stories make you appreciate whatever you have... left.