The rising number of CSSA cases has taken its toll on available Government resources, the Secretary for Health, Welfare & Food says. To address this, the Executive Council has endorsed a deflationary adjustment in social-security rates.

In no way is this a welfare cut, Dr Yeoh Eng-kiong stressed. He added that the Legislative Council's Finance Committee had on Friday approved a supplementary provision of $250 million for CSSA in 2002-03.

Deflationary adjustment: Dr Yeoh Eng-kiong and Carrie Lam said at a press conference that the increasing number of social-security cases has taken a toll on Government resources.

Standard rates under the Comprehensive Social Security Assistance and Social Security Allowance Schemes will fall by 11.1%.

To allow a cushioning period, the downward adjustment of payments to able-bodied CSSA recipients and non- means-tested Disability Allowance SSA recipients will become effective in June.

There will be a longer cushioning period for non-able-bodied CSSA recipients - that is the elderly, disabled and those medically certified to be in ill health - to adjust their spending patterns.

Their standard rates will be adjusted in phases: by 6% from October 2003, followed by another adjustment  from October 2004.

The move is in response to general sentiments that the community should have more compassion for the sick and elderly, said Secretary for Health, Welfare & Food Yeoh Eng-kiong.

No reduction in buying power

Dr Yeoh emphasised at a press conference that the deflationary adjustment aimed only to return the buying power of the benefits to their originally intended level in light of the over-adjustment caused by continuous deflation since 1999.

Elderly CSSA recipients currently account for over 50% of the CSSA caseload, he noted. The Government cannot afford to exempt them from the adjustment.

Statistics show that CSSA payments for the elderly after the rate adjustment will still be adequate to meet their basic and essential needs.

The Administration will include an appropriate provision for CSSA/SSA in the 2003-04 Draft Estimates taking into account the plan to implement the rate adjustment and seek approval of the Legislative Council for the 2003-04 Budget.

All recipients will see adjustments to other standard payment rates, such as the maximum rent allowance under CSSA, starting from this June.

Old Age Allowance rates frozen

The Old Age Allowance rates under the SSA Scheme will remain frozen at current levels until inflation in subsequent years catches up.

The Government has frozen OAA rates because it understands that some vulnerable elders not on CSSA depend largely on this allowance for a living. 

The decision to adjust CSSA was reached after detailed analysis of facts and figures on the impact of the proposal, and careful deliberations by the Administration.

Social Welfare Department Director Carrie Lam hoped that assessment of the CSSA rates according to the Social Security Price Indexes could be conducted annually. She noted that there would still be room for downward adjustment next year as deflation continued.

She said the total social security expenditure in 2002-03 is estimated at $21.76 billion, compared to $4.38 billion in 1992-93.  Its share of government recurrent expenditure increases from 5% to 10% over the same period.

Over one million people are assisted through the social security schemes, including recipients of CSSA, OAA and Disability Assistance.

Provision needed to meet increased caseload

Dr Yeoh pointed out that the total CSSA caseload last January was 267,609 cases, representing a year-on-year growth of 9.8%. The number of unemployed CSSA recipients was 40,974, a rise of 37.6% over the same period.

He said the $16 billion approved provision for CSSA in 2002-03 was not enough. At its Friday meeting, LegCo's Finance Committee approved a supplementary provision of $250 million.

CSSA and SSA together account for about 10% of the Government's recurrent expenses, Dr Yeoh said. In these difficult economic times, their funding must also be trimmed.

The Government has also considered views expressed by different sectors of the community and balanced all relevant factors, including fiscal and welfare considerations.

The Social Welfare Department will introduce a package of intensified measures to promote self-reliance and help unemployed welfare recipients rejoin the workforce.