The financial deficit is overestimated, Luo Zhiguang should not blindly follow "fiscal discipline"

The government last month asked social services organisations that receive government funding to cut recurring funding by 1 per cent in 2022/23.

In response to a question from the Legislative Council on Wednesday (19th), Secretary for Labour and Welfare Law Chi-kwong refused to allocate other resources to fill it, on the grounds that the government must strengthen fiscal discipline and implement cost-saving measures to ensure the sustainability of public finances and meet social needs.

However, given the urgent need for social services amid the epidemic, and the lower-than-expected government deficit this year, the Bureau should not and need not take action against institutions.

Last year, the government anticipated that the fiscal deficit will be severe under the epidemic, so it proposed in the budget proposal that all policy bureaux and departments should reduce expenditure by 1% in the 2022/23 financial year. and health-related resources.

However, the Social Welfare Department still requires subsidized social service agencies to reduce their funding by this proportion, which may involve about 200 million yuan.

Legislative Councilor Di Zhiyuan verbally questioned Law Chi-kwong, Secretary for Labour and Welfare, whether he would mobilize other resources to make up for the cut funding.

Luo Zhiguang categorically refused, saying that the epidemic and the challenges to public finances, the government must strengthen fiscal discipline and implement cost-saving measures in order to ensure the sustainability of Hong Kong's public finances and meet the long-term development needs of all aspects of society.

The Government hopes that the subsidized organisations will make good use of public resources and formulate cost-saving plans to meet the objectives of the plan.

He also pointed out that in the past, social welfare organizations have been able to adopt different measures to deal with work flexibly in the past to achieve cost savings.

Legislative Councilor Di Zhiyuan worries that institutional resources and manpower have been severely strained, which may prevent the disadvantaged from receiving appropriate services.

(Photo by Luo Junhao)

Cut down social welfare organizations without justification for grassroots victims

The truth is that the challenge to public finances is not as bad as it was estimated at the beginning of last year.

Law's boss and Financial Secretary Chen Maobo posted on his blog on Sunday (16th) that, benefiting from the steady recovery of the economy, the income related to land and buildings was higher than expected, "These incomes have greatly eased the pressure on deficit this year. ".

Just looking at last year's three major residential "spicy taxes", there was 12.95 billion yuan, more than 60 times the amount cut by funding agencies. The so-called fiscal discipline is no longer urgently needed.

More importantly, the SWD's reduction of funding to subsidized agencies is in contradiction with the allocation principle in this year's Budget.

Social services include elderly care, young children, youth, community development, physical and mental rehabilitation, etc., which directly involve people's livelihood and grassroots, and should not be reduced.

In the coming year, each subsidized organization will cut its funds by an average of 1.22 million yuan, but the specific amount depends on the allocation amount of each organization.

Generally speaking, large subsidy organizations have suffered more cuts, but they can still make up for the cuts through fundraising or financial reserves, with limited impact on their day-to-day operations.

The annual subsidy of small institutions is only a few million yuan or even more than one million yuan, and the impact of tens of thousands of yuan in budget cuts is much greater.

Constrained by their popularity and manpower, they may not be able to easily recover their income by applying for other subsidies or raising funds. The Hong Kong Social Workers Union expects that the organization will reduce the number of employees or freeze recruitment.

If so, recipients will not receive stable services and will be victims of underpayment.

How can this consequence have nothing to do with social welfare?

In 2017, the Hong Kong Federation of Social Workers, the Hong Kong Social Workers Association, the Hong Kong Council of Social Service and the office of Shao Jiazhen, a member of the Legislative Council, held nine consultation sessions, sorted out 10 pain points, and urged the government to completely reform the LSG system , but the effect is still not ideal.

(File photo/Photo by Li Zetong)

Reforming the funding mechanism is more important than cutting funding

Law Chi-kwong emphasized that funding agencies have always responded flexibly to funding cuts, but one of the ways for agencies to deal with them is to keep funding, and the reserves even exceed the allowable level, failing to use them properly in a timely manner, such as retaining staff or expanding services.

The frontline and the management are arguing endlessly over resource allocation, consuming their minds, impacting the unity and sense of belonging within the organization, and damaging the ecology of the industry.

Of course, there may be waste in the use of resources by the organization, and even child abuse scandals are exposed due to neglect of management like the Child Protection Association. The LWB and the SWD can deal with bad cases individually, and deal with matters violating the "Agreement on Allowances and Services". Disciplinary agency.

Looking at the overall situation, the government uses social welfare institutions to provide social services, and the demand for social services increases during the epidemic. The amount of government funding for institutions should increase accordingly, or at least remain the same. It is against common sense to reduce funding.

In this regard, the Labour and Welfare Bureau should take the initiative to work with the Financial Secretary to suspend the implementation of the cost-saving plan, so as not to allow fiscal discipline to delay the public's assistance.

In fact, the entire block grant system has been riddled with holes. The Government's primary task is not to cut funding, but to improve the funding mechanism and strengthen the regulation of institutional finances more fundamentally.

Precise bailout means justice, financial stability, tax reform, citizens’ year-end difficulties