Runaway Train
The concessionary $2 fare scheme for the elderly and persons with disabilities began life with clear objectives and manageable costs. It was well intentioned and made a meaningful difference to the lives of the intended beneficiaries. Unfortunately, it then lost focus, was extended to hundreds of thousands of less deserving individuals and the costs rose exponentially. Hence the attempt in this year’s budget to rein the scheme in to bring the costs under control.
However the intended remedies bring problems of their own, not least the revelation that our much vaunted technological prowess is not all it’s cracked up to be. Apparently it will take some 17 months to effect the necessary software changes so cost saving won’t kick in until the autumn of next year. Frankly that is ridiculous and it’s time to think again.
In the last policy address of his second term, in 2011, then chief executive Donald Tsang Yam-kuen announced the government’s intention to subsidise travel for elderly persons aged 65 and above and persons with certain disabilities. The scheme was implemented in 2012 and was on top of the various concessionary arrangements already in place at the transport operators’ own expense.
The plan was imaginative and socially significant. It is easy for seniors to gradually become disengaged from the wider community especially after retirement when they have less reason to venture out of their own homes and less income with which to do so. This can accelerate their mental, and then physical, decline. Capping the cost to them of public transport at $2 per trip removes any disincentive and indirectly encourages a more active and healthier retirement life. Setting the qualifying age at 65 was in line with the widely accepted retirement age at the time, which also coincided with eligibility for various welfare payments.
Over the years the scheme was gradually extended to cover more transport modes, for example green minibuses in 2015, and ferry services not covered from the outset for technical reasons.
But in 2022 came a radical change in approach when fifth term chief executive Carrie Lam Cheng Yuet-ngor lowered the qualifying age to 60. In February that year scope was also extended to red minibuses, kaitos and trams, and in September further extended to resident services. The age reduction was presented as part of a package ostensibly designed to improve community morale after the ravages of Covid but widely seen by many observers as an attempt by Lam to boost her popularity which had been severely dented by the mishandling of the extradition issue.
Whatever the real reason, the decision to lower the qualifying age to 60 was a major error, for two reasons. First, it threatened to nudge the public thinking about appropriate retirement age to a lower level. Many of the new beneficiaries are of course still working. In fact, with life expectancy for Hongkongers now well over 80 we should if anything be edging the age up higher in the direction of 70. That is the age at which fruit money for seniors ceases to be means tested. (It is from 65).
Secondly, the costs began to spiral, from $1.3 billion in 2021-22 to $3 billion in 2022-23 and $4.2 billion in 2023-24. The estimate for the current financial year is $4.7 billion and $5.7 billion in 2025-26.
Faced with these numbers the current administration has moved to curtail expenditure. In his budget speech, financial secretary Paul Chan Mo-po announced two changes viz the $2 would remain for trips costing up to $10, but thereafter passengers would pay the full fare less a discount of 80%. The number of concessionary trips per month would be capped at 240. Reprogramming Octopus card readers to give effect to the changes will take 17 months, and even then the savings would be modest.
However the administration has apparently ruled out reverting to the previous qualifying age of 65. I believe this is a major error. In addition to locking in the two mistakes of the Lam administration, it in effect starts to create a third – the myth of chief executive infallibility. How else to explain the reluctance to reverse a clearly erroneous decision?
One argument advanced against restoring the 65 age requirement is that existing holders of JoyYou cards would lose a privilege they had been enjoying. This problem is easily sidestepped: simply grandfather existing cardholders so they continue to enjoy the benefit and impose the requirement on new applications received after a future date, say 1 April 2025. Another advantage of this approach would be that without any changes in software at all, savings would start to accrue immediately.
Another quick win in terms of achieving savings would be to increase the beneficiary’s contribution, fixed since 2012 at $2, to $3. After such a long period, and given the many fare increases in the interim, this would be reasonable. If the software can’t be changed to effect the revised deduction within a few days, then frankly Hong Kong needs a new IT industry.
Neither of these options would preclude the government in due course from also implementing the measures outlined in the budget. But progress depends on current chief executive John Lee Ka-chiu accepting the principle that chief executives can make mistakes, and when they come to light the best approach is to acknowledge and correct them forthwith, rather than try to pretend the office is always perfect. After all, even popes have been known to correct dogma.