Published: 00:11, May 21, 2024
City can learn about social policy from Singapore
By Ho Lok-sang

Singapore offers many lessons for Hong Kong. Singapore is a much smaller city than Hong Kong, with a much smaller population and a much smaller land area. For many years, Hong Kong and Singapore had comparable economic growth and a comparable per capita GDP. But in just two decades, Singapore has had consistently and noticeably faster economic growth, and the rapid growth has not compromised Singaporeans’ living environment. Singapore’s success is grounded on a policymaking style that is pragmatic and well-reasoned, and reflects a strong sense of self-confidence.

Pragmatic and well-reasoned means that policies are designed to bring a net benefit to the economy. Singapore weighs the costs and benefits of policies, and will go ahead with a policy if the social benefits are deemed to outweigh the social costs. When the evidence and theory show that there will be a net gain in social benefits, it will go ahead, even if the policy may raise eyebrows in some quarters. Singapore was among the first in the world when it introduced road pricing in 1975 to contain road congestion. When this was found to be inadequate to check the growth of the car population on the road, Singapore introduced the “certificate of entitlement” in 1990. This means a quota is set and auctioned off to bidders each year. Winners, upon paying the price, are then entitled to own and use their cars for 10 years. This was a bold but effective measure. Some people certainly do not like it. But it makes economic sense. Under this form of “price rationing”, the certificates of entitlement go to those who are prepared to pay a higher price for the privilege of using the roads. Economic theory presumes that they derive a greater value from the use of scarce road resources.

Since 2012, the National Environment Agency of Singapore has been collecting standardized refuse collection fees. From July 1 this year, household refuse collection fees will rise by 39 Singapore cents (29 US cents) per month to S$10.20 for households living in Housing Development Board (HDB) flats and nonlanded private housing. For those living in landed homes, the fee will rise by S$1.33 to S$34 per month. Critics may say that this may not be fair because some households generate more waste than others so they are effectively subsidized by those who generate less waste. But this saves both administrative costs and compliance costs, and the savings may more than offset the benefit of a more complex system that charges households more precisely. In Hong Kong, we have been talking about solid-waste charges for more than a decade, and we are still wondering whether we should implement the program in August.

It is important to restore the spirit of self-reliance in Hong Kong and to assess public policy based on comparing social cost and social benefit. This will greatly improve fiscal sustainability in Hong Kong

Singapore today has four waste-to-energy incineration plants. Hong Kong will have its first waste-to-energy incineration plant, which is scheduled to start running in 2025, in Shek Kwu Chau, south of Lantau Island. Singapore replaced two such plants that had operated for 30 years and 36 years with new plants in 2009 and in 2022 respectively.

Singapore practices the self-reliance principle but ensures that Singaporeans can afford to pay their medical bills with subsidized charge rates in public hospitals and facilities. For private hospitals and medical facilities, the Ministry of Health posts “fee benchmarks”, which are recommended charges for doctors and hospital fees in the private sector. The benchmarks indicate a reasonable range of fees that patients and insurers can expect to pay, and serve as a reference for doctors and hospitals in setting their fees. Because Singaporeans can go to public hospitals and facilities without an unduly long waiting time, private doctors and hospitals are unlikely to charge exorbitant fees. Unlike Hong Kong, however, public hospitals, publicly operated polyclinics, and accident and emergency charges are much higher in Singapore than in Hong Kong for a good reason: The resources are costly and valuable. Users of the services should pay their fair share. For emergency department attendance, the fee is S$154, or about HK$893. This compares with only HK$180 per attendance in Hong Kong.

In earlier columns, I have recommended that Hong Kong should adapt the concept to Hong Kong’s setting. The home ownership rate in Singapore was 89.7 percent in 2023. However, only 77.8 percent of Singapore households live in Housing Development Board flats (public housing), down from 88.1 percent in 1998. Singaporeans are opting out of HDB housing and moving into higher-grade, better-located, private housing. In Hong Kong, in contrast, people are increasingly opting out or dropping out of private housing and moving into public housing. We need to redesign our public housing program so more people will opt to move into private housing when they can afford it. My proposal, dubbed HOS II (a new Home Ownership Scheme), is to eliminate the means test and offer basic HOS housing to all Hong Kong families at eight times the median annual household income of economically active households. These flats should not be located on prime land that is pricier than the median land premium per-square-foot price of usable area paid by developers. For those who cannot pay this price, public rental housing (PRH) will be available and again the PRH projects should not occupy expensive land.

It is important to restore the spirit of self-reliance in Hong Kong and to assess public policy based on comparing social cost and social benefit. This will greatly improve fiscal sustainability in Hong Kong.

The author is director of the Pan Sutong Shanghai-Hong Kong Economic Policy Research Institute, Lingnan University.

The views do not necessarily reflect those of China Daily.