For discussion FCR(95-96)109
on 19 January 1996

ITEM FOR FINANCE COMMITTEE

HEAD 170 - SOCIAL WELFARE DEPARTMENT
Subhead 179 Comprehensive social security assistance scheme
Subhead 180 Social security allowance scheme

Members are invited to approve supplementary provision of -

1. $867.6 million under Subhead 179 Comprehensive social security assistance scheme; and
2. $275.2 million under Subhead 180 Social security allowance scheme.

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PROBLEM
PROPOSAL
JUSTIFICATION
FINANCIAL IMPLICATIONS
BACKGROUND INFORMATION
Social Security System

Introduction
Eligibility
Comprehensive Social Security Assistance scheme
Social Security Allowance scheme

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PROBLEM

The approved provision for the comprehensive social security assistance (CSSA) and social security allowance (SSA) schemes is inadequate to meet increased expenditure in 1995-96.

PROPOSAL

2. The Director of Social Welfare (DSW) proposes supplementary provision of $867.6 million under Subhead 179 Comprehensive social security assistance scheme and $275.2 million under Subhead 180 Social security allowance scheme.

JUSTIFICATION

3. On the basis of the actual expenditure for the eight months from April to November 1995, DSW estimates that expenditure for the whole financial year on the CSSA and SSA schemes will exceed the approved provision by $867.6 million and $275.2 million respectively, calculated as follows -

4. As regards the CSSA scheme, the supplementary provision required is due to -

1. an across-the-board increase of 8.5% in the rates of standard payment with effect from 1 April 1995 to take account of inflation. This accounts for $285.9 million of the supplementary provision required;
2. actual increases in non-standard payments resulting from general price increases and an increase in the number of payments. These account for $224.2 million of the supplementary provision required; and
3. a greater than anticipated increase in the number of CSSA beneficiaries in 1995-96. This accounts for $357.5 million of the supplementary provision required. In estimating the provision required for 1995-96, we have allowed for a 13% increase in the number of CSSA beneficiaries. But the number of CSSA paid cases has already increased by 14.5% during the first eight months from April to November 1995, from 101 800 as at end March 1995 to 116 600 as at end November 1995. Having regard to this increasing trend, we anticipate another 10% increase in the number of CSSA beneficiaries for the remainder of 1995-96.

5. As regards the SSA scheme, the supplementary provision required is mainly due to an across-the-board increase of 8.5% in the rates of payment with effect from 1 April 1995 to take account of inflation. There is no significant change in the number of SSA recipients as compared to our original estimates.

FINANCIAL IMPLICATIONS

6. We are seeking total supplementary provision of $1,142.8 million under Subheads 179 and 180. If Members approve the proposal, we shall offset the supplementary provision required by deleting an equivalent amount under Head 106 Miscellaneous Services Subhead 251 Additional commitments.

BACKGROUND INFORMATION

7. The social security system comprises two schemes : the CSSA scheme and the SSA scheme. An explanatory note is at the Enclosure.

8. On 17 February 1995, Members approved an across-the-board increase of 8.5% in the rates of standard payments under the CSSA and SSA schemes to take account of inflation, and accepted the financial implications of $265.3 million a year for CSSA and $292.3 million a year for SSA. Members noted that these financial implications were estimated on the basis of the caseload prevailing at that time. We informed Members that we would seek supplementary provision, including any additional requirements for non-standard payments, later in the year.

Health and Welfare Branch
January 1996

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Enclosure to FCR(95-96)109

Social Security System

Introduction

The social security system provides a safety net for individuals or families suffering financial hardship for various reasons, such as old age, disability, illness, unemployment, low earnings, etc. The aim of the Comprehensive Social Security Assistance (CSSA) scheme is to bring the income of such individuals or families up to a level where basic and special needs can be met. The aim of the Social Security Allowance (SSA) scheme is to help the severely disabled and the elderly to meet the special needs which arise from disability and old age. A person can receive either assistance under the CSSA scheme or one of the allowances under the SSA scheme.

Eligibility

2. Both schemes are non-contributory. The CSSA scheme is means-tested. Applicants for SSA are not subject to a means test except that persons aged between 65 and 69 claiming the Old Age Allowance have to declare that their income and assets do not exceed the prescribed levels.

3. There are residence requirements for both schemes. In addition, applicants for CSSA, if unemployed and in normal health, are expected to seek work actively by registering for employment assistance with the Labour Department for at least one month after the date of application.

Comprehensive Social Security Assistance scheme

4. The amount of assistance is determined by the resources and needs of the applicant. The difference between the applicant’s income and his total needs as determined by reference to certain prescribed levels, will be the amount of assistance given.

5. The scheme embraces different standard payments to meet the basic needs of broad categories of recipients. In addition, an annual long-term supplement is paid to those who have been receiving assistance continuously for more than 12 months. Apart from these standard payments, a wide range of non-standard payments in the form of special grants are payable to meet the specific needs of an individual client or family. They include payments to cover such expenses as rent, school fees and other educational expenses, medically recommended diets, spectacles and dentures.

Social Security Allowance scheme

6. Four allowances are payable under this scheme as follows -

1. Normal Disability Allowance

   For severely disabled persons who, broadly speaking, suffer from a 100% loss of earning capacity, or who are profoundly deaf.

2. Higher Disability Allowance

   For severely disabled persons who require constant attendance from others in their daily life but are not receiving such care in a government or subvented institution or a medical institution under the Hospital Authority.

3. Normal Old Age Allowance

   For persons aged between 65 and 69 whose income and assets do not exceed the prescribed levels.

4. Higher Old Age Allowance

   For persons aged 70 or over.

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