Press Releases

ExCo endorses rate adjustment of CSSA and SSA

The Executive Council (ExCo) earlier has approved a downward adjustment of 11.1 per cent to the standard rates under the Comprehensive Social Security Assistance (CSSA) Scheme for able-bodied recipients and those of the non means-tested Disability Allowance (DA) under the Social Security Allowance (SSA) Scheme in accordance with the established adjustment mechanism with effect from June 1, 2003.

For non able-bodied CSSA recipients -- namely the elderly, the disabled, and those medically certified to be in ill health -- their standard rates would also be adjusted downwards by 11.1 per cent but this would take effect in two phases over two years, first by six per cent effective from October 2003, followed by the second phase adjustment effective from October 2004.

Adjustment to other standard payment rates such as maximum rent allowance under CSSA would be effected from this June for all categories of recipients.

The rates of Old Age Allowance (OAA) under the SSA Scheme would remain frozen at their current levels until inflation in subsequent years catches up.

The Administration would include appropriate provisions for CSSA/SSA in the 2003-04 Draft Estimates taking into account the plan to implement the rate adjustment and related measures as announced and seek approval of the Legislative Council (LegCo) in the context of the 2003-04 Budget.

The ExCo also endorsed a package of intensified measures to promote self-reliance and help unemployed welfare recipients to rejoin the workforce.

Explaining the Administration's decision at a press conference this afternoon, the Secretary for Health, Welfare and Food, Dr Yeoh Eng-kiong, stressed that the decision was reached after detailed analysis supported by facts and figures of the impact of the proposal and very careful deliberations by the Administration, taking into account views expressed by different sectors of the community in the past several months and balancing all relevant factors, including fiscal and welfare considerations.

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

"This is not and should not be regarded as welfare cuts," he said.

Dr. Yeoh pointed out that the total CSSA caseload as at last January was 267 609 cases, representing a year-on-year growth of 9.8 per cent while the unemployed CSSA caseload was 40 974, which rose by 37.6 per cent over the same period.

Based on this growing trend, he estimated that the approved provision for CSSA in 2002-03 of $16 billion, which already contained a growth of 11.1 per cent over the actual expenditure of $14.4 billion in 2001-02, would fall short of the requirement and the estimated requirement for 2003-04 would be well in excess of $18 billion.

He noted LegCo's Finance Committee approved a supplementary provision of $250 million for the CSSA for 2002-03 at its meeting last Friday (February 21).

Despite the continuous deflation since 1999, Dr Yeoh noted no adjustment had been made to the CSSA and SSA standard payment rates in the past few years. In total, there had been a cumulative over-adjustment of 12.4 per cent up to March last year.

Dr Yeoh said: "The number of families and individuals requiring financial support by the Government is also bound to increase amid the current economic situation and high unemployment. The rates had to be adjusted to ensure existing resources go further to meet the increasing demand and to ensure the sustainability of the safety net.

"In view of the fiscal stringency faced by the Government, the CSSA and SSA expenditure, which together accounts for some 10 per cent of the Government recurrent expenditure, cannot be made immune from the fiscal challenge.

"The ExCo has therefore approved a downward adjustment of 11.1 per cent to the standard rates of able-bodied CSSA recipients and the non means-tested DA recipients with effect from June this year, which has allowed for a cushioning period.

"For non able-bodied CSSA recipients, namely the elderly, the disabled and those medically certified to be in ill-health, we propose to give them a longer cushioning period to adjust their expenditure pattern and also to reflect the general sentiments that the community should display more compassion for the sick and elders.

"Their standard rates will therefore be adjusted downwards by 11.1 per cent in two phases over two years, first by six per cent effective from October 2003, followed by the second phase adjustment effective from October 2004."

Also speaking at the press conference, the Director of Social Welfare, Mrs Carrie Lam Cheng Yuet-ngor, emphasised that there was an urgent need to strengthen welfare to work programmes to counter the significant rise in the unemployed CSSA cases.

Building on past success of the Support for Self-reliance (SFS) Scheme introduced in 1999 in assisting unemployed recipients to move towards self-reliance, she said the following intensified measures would be introduced to tackle the rising number of unemployment cases.

These measures are :

*to strengthen the Active Employment Assistance programme to provide employable CSSA recipients with more targeted assistance upon their entry into the CSSA system, including direct job matching where possible;

*to enhance community work requirements targeting the needs of different types of CSSA recipients to help them develop better work habits, and to contribute to society whilst on CSSA;

*with the proposed Lotteries Fund funding of $100 million, to commission more intensive employment assistance projects to be run by non-governmental organisations (NGOs) to assist the longer term CSSA recipients and other would-be CSSA recipients back to work; and

*to raise the maximum level of disregarded earnings under the CSSA Scheme for those who have been on CSSA for three months or more from $1,805 to $2,500 a month, and correspondingly the "no deduction limit" within the disregarded earnings from $451 to $600. This measure will be provided on a time-limited basis for three years and subject to continuous review.

Please refer to Annex A for a summary of the proposals on standard rates payments and asset limits under the CSSA and SSA Schemes; and Annex B for a summary of the intensified support for self-reliance measures.

End/Tuesday, February 25, 2003
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