Four years ago, Hong Kong’s former colonial secretary David Akers-Jones died at 92. In the days before his death, then chief executive Carrie Lam Cheng Yuet-ngor visited him. It is said that his parting advice to her was: help the poor and build more housing
Despite her tearful and reverential eulogy, recent news and events – an Oxfam report on poverty, an HSBC survey on retirement savings, and a report from the Liber Research Community NGO about the property shenanigans of our super-rich – suggest that Lam made little of his advice, and that Chief Executive John Lee Ka-chiu and his team seem to be doing no better.
shows the gap between Hong Kong’s richest and poorest households widening stratospherically since 2019. On average, the richest 10 per cent earned HK$132,600 (US$16,950) a month at the end of the first quarter of this year, while the poorest earned HK$2,300 – 57.7 times less. At the end of 2019, they earned 34 times less.
With 129,500 Hong-Kong-dollar millionaires and 32 billionaires, the city is one of the most unequal places on the planet. Oxfam estimates that 1.3 million people in Hong Kong live in poverty, mostly aged over 65, and that about 220,000 live in our notorious “cage homes” or subdivided units.
The HSBC survey
of the savings needed for a secure retirement provides a surreal counterpoint. It found that a Hongkonger needed savings of US$1.1 million to be confident of a financially secure retirement.
This raised some troubling thoughts. First, the 4.7 million members of the Mandatory Provident Fund have, on average, a savings balance of just HK$236,800 each
, (US$30,270) – an unbreachable shortfall. Second, if you earn the median monthly income of HK$29,500 and manage to somehow save half of it, you would still need to work for 600 years to accumulate the ideal retirement savings. There is a phrase for that kind of prospect: magical thinking.
No wonder HSBC finds that more than 70 per cent of Hongkongers expect to need to work long after “retirement”.
The third glimpse into the extremity of inequality came from the landslide at Redhill Peninsula, which revealed
the underbelly of illegal property development in Hong Kong and provided a sharp reminder that if we believe salary inequality is problematic, then wealth inequality built off property assets and the securities markets is off the charts.
It has remained unnoticed and undiscussed simply because it was unseen – until Typhoon Saola and the rainstorm that followed brought it into dramatic focus.
Here, the work of the Liber Research Community has shed valuable light on the wealth hidden in luxury houses citywide. In quickly tracking down and mapping 173 houses that appear to be secretly and illegally occupying government land, it was an embarrassing riposte to government officials who suggested that, with 400,000 private buildings
, it was impossible to keep track of all illegal structures.
Most eye-popping are the antics of a Hong Kong couple who own one of the Redhill Peninsula properties damaged by last week’s landslide. Aside from that property, the couple bought a plot of land in Tuen Mun – where Villa Cornwall
, a luxury house, is now located – for HK$22 million in 2007. In 2019, they were prosecuted and fined HK$24,900 for illegal additions to that villa.
Now, following the Redhill collapse, it has been found that the removal order for the illegal structures has been ignored. Meanwhile, Villa Cornwall has been listed for sale at HK$380 million, for rent at HK$290,000 a month, and on Airbnb for HK$32,000 a night.
This tawdry vignette is fascinating not just for the peek into the wealth-creating potential of an abuse of building regulations by the already super-rich, but because the practice seems remarkably widespread (remember chief executive candidate Henry Tang Ying-yen’s illegal “ underground palace
”, and then-justice secretary Teresa Cheng Yeuk-wah’s “ unauthorised works
On top of the list of 173 houses, Liber Research has also reported on an estimated 10,500 village houses built via illegal means known as tou ding
, an abuse of the small-house policy
. These make up more than 30 per cent of the small houses in the 59 villages in the New Territories.
One can see the reluctance of government officials to open this property Pandora’s Box, given the scale of abuse and the number of Hong Kong’s rich, famous and influential that are its beneficiaries. But, surely, inequality in Hong Kong has reached such extreme levels that action cannot be delayed further.
Shortly before his death in 2019, Akers-Jones led a study
by the Business Professionals Federation calling for an assault on inequality in Hong Kong. It called for HK$90 billion a year for three measures: salary supplements for those on low incomes, a HK$5 billion boost to the Comprehensive Social Security Assistance
budget, and an increase in MPF contributions to 15 per cent, with the extra 5 per cent coming from the government.
Radically but credibly, the report called for the salary tax to be replaced with a proper income tax – which would for the first time embrace the rich. It would include a tax on income from dividends, interest, capital gains and inheritance.
I can see Hong Kong’s wealthy wincing at the prospect, but if our chief executive is truly focused on a “ Happy Hong Kong
”, then this is an issue he cannot duck. Maybe the coming policy address could be a place to start.
David Dodwell is CEO of the trade policy and international relations consultancy Strategic Access, focused on developments and challenges facing the Asia-Pacific over the past four decades