Hong Kong has become a city of haves and have-nots, where nearly half the population lives in public housing but cannot afford to break out due to astronomical property prices. This conflict is playing out in the city’s politics and also represents one of its deep contradictions, according to Chair of Economics, Professor Richard Wong, Philip Wong Kennedy Wong Professor in Political Economy.

Professor Wong recently released a book of essays that examines the roots of the city’s current political impasse. The opening of China, globalisation and the 1997 handover have forced Hong Kong to balance between integrating with both the Mainland and the world economy, and insulating itself while maintaining a free and open economy and society.

The lack of political action to address these conflicting goals has polarised opinion and left society less equal. But Professor Wong says there is a solution: start fixing housing.

“If we can fix one thing first – one thing that is important and easy to fix and would open up the possibility of fixing other more difficult problems – then it should be to reform the public housing sector,” he said.

“There would be immediate windfall gains and it would restore hope by addressing the problem of the haves and have-nots. I see this not as addressing a housing problem but as a first step to addressing Hong Kong’s deep contradictions.”

A subsidy with few benefits

Professor Wong’s interest in public housing dates back to the 1980s, when it was being argued that a tenant paying HK$1,000 for a public housing flat valued at HK$3,000 received a direct subsidy of HK$2,000. His research found this to be a wild distortion because people had no choice where they lived.

“Let’s say you give me premises in Tuen Mun. I work in Pokfulam so I have more commuting time. My children have to go to school in Tuen Mun. And my wife is stranded there and knows no one. My situation is not a lot better off. Taking into consideration my cost and other dimensions, the benefit is not HK$2,000 but HK$200. And the real benefit varies from household to household.

“I was shocked by my findings. Generally the poor didn’t get much out of public housing and the units were very small. They might have lived in a different unit if they went to the market but public housing was so cheap. From that time onwards I began to urge people to privatise public housing.

“Then another problem arose [in the 1990s]. Private sector housing values went through the roof so there were now haves and have-nots, who were not able to keep up with the times in terms of property prices. They couldn’t afford to go elsewhere.”

The big bang: privatise public housing

All of that underscored the need to reform public housing, he said. Giving flats to tenants to do with as they please, including selling them, would be costless because the land the flats occupy does not have value – it cannot be used for anything else. This would also free public money to invest more aggressively in education and healthcare, which has been lagging.

“People need human capital and financial and other assets to stay afloat. You need to offer them a good education and subsidise the poor more heavily, and one good way to help them is to give them an asset. If you do that society will be less divided. There won’t be other fixes that could have this big bang.”

But the only way to do that is from the top, he said. Reforming public housing requires leadership that sees the value – and votes – in taking action, and a democratically-elected Chief Executive would be best placed to recognise this.

Professor Wong said he had received encouraging indications his proposals would be adopted, perhaps even in the next administration.

In the meantime, he will keep delivering his message: “Let the have-nots become haves. Hong Kong belongs to its people, what’s wrong with giving a chunk to the poor? It’s not a bad idea for helping society to achieve consensus on the way forward. The alternative is an impasse or revolution and the people in the middle, a generation, will suffer.”

Diversity and Occasional Anarchy: On Deep Economic and Social Contradictions in Hong Kong is published by HKU Press.■