Larry So: the problems of a wealthy government

Friday, April 30, 2010
Issue 1000, Page 4 – 5
Word count: 2388
Published in: Macau Daily Times

By Poyi (Natalie) Leung

Social work professor and political commentator, Larry So Man Yum, slammed the SAR government for its lack of long-term social welfare plans and heavily relying on gaming tax to implement one-off livelihood measures.

These, he said, are attributed to the “do-less-and-fewer-mistakes” culture among government officials and also the skyrocketing public revenue in recent years but without a watchdog to oversee how money is being spent.

According to this associate professor from the Macao Polytechnic Institute, economic diversification is the only solution if the Macau government wants to reduce its dependency on the gaming revenue. Yet, years have passed and little progress has been made. It now seems to Larry So Man Yum that diversification in terms of economic development is “much easier to be said than done”.

Having a wealthy government should be something that the Macau people are proud of, but Larry So said the inability of the Legislative Assembly to scrutinize and approve public expenditure proposals allows government departments to use public funds in improper ways.

Speaking to the Macau Daily Times last week, he also discussed why civil servants in Macau generally have “minimal initiative” to introduce long-term policies and whether Fernando Chui Sai On’s “sunshine government” is on the right track.

Reporter: What are the most prominent social problems in Macau nowadays?

Larry So Man Yum: As a social worker, we’re mostly concerned about social welfare issues. In Macau, there is no long-term plan and most of the measures we’re seeing now are remedial and temporary only.

For example, the people who are receiving financial assistance from the Social Welfare Bureau can only get MOP 2,600 monthly per head if they make no money at all. You can’t survive on MOP 2,600 in Macau. The quarterly MOP 12,000 income subsidy scheme is a temporary measure but the government afterwards didn’t try to improve the existing social welfare at all. It is just a reaction to a certain issue. It’s a typical policy direction in Macau.

Another big social problem is retirement and we’re facing an ageing society. You can see the short-term nature in the introduction of the central saving system. The plan is long-term but the problem is the government cannot and doesn’t dare to push for a true CPF [Central Provident Fund] because it is afraid of the businessmen who for sure won’t want to take out so much money.

A real CPF is about contributions from three sides – the people, the government and the employers. But now the central saving system will only rely on the government’s money injections from the annual gaming tax revenue.

But can we guarantee our tax revenue will be as good as nowadays? Our tax revenue comes from mainly the gambling industry. We see more and more casinos are opening in neighbouring regions and we’ve seen how much the central government’s tightening on the Individual Visit Scheme had impacted the gaming business.

If it is made voluntary, no employers will be willing to take the trouble and the employees may also forget to contribute to the system every month. Retirement funding needs all three parties’ effort to save money. It’s not fair for the government to bear all the responsibilities and most importantly, without the contributions from employers and employees the amounts they save at the end of the day will not be enough to support their post-retirement lives. And consequently the government will have to afford an even bigger burden because the saving isn’t enough and people will need to apply for the financial assistance.

The government is using money to cover the mouths of elderly citizens over 65 years old because they can withdraw the start-up capital of MOP 10,000 from their central saving accounts immediately.

All the so-called livelihood measures in recent years – cash handouts, healthcare vouchers, income subsidy and the start-up capital in each central saving account – we call them a ‘ventilation system’ to ventilate the people through a chain of one-off measures and thus they won’t get angry or protest. So both the Macau and the central governments are happy about it, so that’s it. But we’re not solving the problems.

May 1 in every year is usually the high season for protests and therefore all these measures must be announced before.

R: How about the social security system? Does it help at all?

Prof. So: The social security system, despite involving the contributions from employers, employees and the government, is only talking about MOP 45 a month. What can people expect to get in the future by just contributing MOP 45 per month?

Even though the contribution amount is going to be raised, our social security benefits actually don’t come from this money but the government’s annual injections which come from again the tax revenue.

If the contribution amount is, for example, set at 5 percent of the salary, then isn’t it the same as what I have been talking about regarding a mandatory Central Provident Fund? But how come the government has to be so stupid and use two separate systems [social security and central saving] to govern one thing [the retirement funding]? Not only that they will be overlapped but the government will need to spend a lot more money unnecessarily.

It is very clear that the government doesn’t have any long-term social welfare policies. All of the measures are one-off and welfare totally relies on the revenue from casinos which nobody can ascertain whether it can be maintained in the next year.

The problems continue to sustain and if we don’t act today, they will only get worse in the future.

R: Any other issues that you’re also concerned about?

Prof. So: Many people say Macau has no poverty. The Gini coefficient tells us the gap between rich and poor is very low in Macau. However, when we look at the real situations especially in the north district and Ha Van area, people are facing tremendous living pressure. Why is it like that? We can see all of our daily living expenses are increasing but they never decrease. So even if the actual income is within the median income, a family of four can barely survive on MOP 8,000 unless they have their own property. Or otherwise their housing expense already uses at least one fourths of their income. Even though the tuition fee is free and the bus fares are very cheap, the rest of the money really won’t be enough to support a basic living unless they go to eat in Zhuhai every time.

In addition, intergeneration poverty becomes more prominent in low-income families. These people live in poor conditions and don’t have the capability to upgrade themselves, whereas the others keep doing so. We can foresee that their children, who are around 14 years old now, won’t have many job opportunities. Their parents can’t afford giving the children the best education, so they always remain in the same socioeconomic class. And these parents are usually manual labour and may be jobless as what the government calls “structural unemployment”. It affects their children in the way that they are forced to drop out of school and to go to work even though they haven’t finished the 15 years of free education.

The whole community and the government don’t address this problem but only keep talking about how to get rid of imported labour. Long-term policies must have to depend on the government. Even most of our lawmakers don’t have that vision. The questions they ask and their written interpellations mainly focus on day-to-day topics and aren’t urging the government to formulate long-term strategies, except for gambling.

R: You believe social welfare policies should not largely rely on the gaming tax revenue, so how can the government change?

Prof. So: As what people have been talking about for a long time – economic diversification. For example, the MICE [Meetings, Incentives, Conventions and Exhibitions] industry. Macau has put a lot of effort into it but the government must have to take the lead. It has to provide land to build a large MICE centre. Hong Kong invested in the construction of the convention centre in Wan Chai more than a decade age and has already been receiving the harvest.

The Macau airport doesn’t release the air routes and only Air Macau can operate most of them. Viva Macau, which operated a few of the routes, certainly would loss money. The government doesn’t improve the facilities and the gaming industry will continue to monopolize and now even in the [sea] transportation [between Macau and Hong Kong]. Many of my friends don’t come to Macau as often as they used to be because the ferry tickets are expensive.

Major advertising and MICE companies in Macau always have to hire a whole team from Hong Kong to work on projects as they can’t find local people who have the knowledge in this field. The government didn’t give any resources to nurture MICE talents, no matter to the Institute of Tourism Studies [IFT] or the Polytechnic Institute. We talk about diversification every day but it’s useless without any actions. Since 2004 or 2005 Macau has already noticed the problem and the need of diversification. But we still can’t see it up till now the year of 2010. No school or institute has launched non-short-term courses to train MICE professionals.

Furthermore, the government has to work on how to link the concepts of ‘resort’ and ‘tourism’ together instead of only casinos when talking about tourism. Only in this year we knew that IFT is going to increase the number of student intakes. But four years later when these students graduate, all the work experience opportunities have already long gone. “Diversification” is easier to be said than done. Before the local economy can be truly diversified, Macau has to remain fully relying on the gaming industry, which at the same time very much relies on the mainland China market and the decisions of the current Chinese leaders. Once China suspends the Individual Visit Scheme, our gaming industry will be finished. There is a huge risk behind this total dependency.

R: Why do the government officials lack long-term vision?

Prof. So: It’s a management culture. Among the civil servants of Macau, the culture is ‘the more you do the more mistakes you will make, the less you do the fewer mistakes you will make, and if you don’t do anything you definitely won’t make any mistakes’.

When the government wants to introduce a long-term policy, a lot of discussions will be aroused in society and if the policy isn’t good enough, the related officials must be the ones to blame. Especially if it is a key official and approaching 60 years old, there are just five more years to go [until retirement], so why will he still be willing to do something big? The whole culture also doesn’t encourage it. In Macau’s civil service system, the one at the very top is the boss who makes ultimate decisions. The people under him better don’t speak anything but follow the orders. They don’t need to be creative and their initiative is basically minimal. The junior civil servants are also learning this culture. So the government will only move a step forward when society pushes for it.

We definitely have improved compared to 10 years ago – more consultations and the government will listen to public opinion. But it took us 10 years to achieve such a small improvement and the year 2012 is coming, [it’s] already ‘the end of the world’.

Why people like government jobs? The government is supposed to hire the best and most experienced candidates, but why it doesn’t perform well? The remuneration packages private companies or even casinos offer can never be as good as those of the government, so civil servants can’t afford losing the jobs and thus have to do whatever they’re told. They won’t take any initiative, let alone any risks, and are very passive to respond and most importantly, they must have to learn that they can never create any trouble for their bosses.

R: Has the Chui Sai On government succeeded in realising a true “sunshine policy”?

Prof. So: I know they want to do it but really haven’t achieved that yet. A few incidents showed that the government was not ‘sunshine’ at all.

The biggest incident is about Viva Macau. Ngan In Leng [Viva Macau’s chairman] said this while Francis Tam Pak Yuen also said something different on the other hand. It was good that the crisis management mechanism was activated once the incident arose, but it was only to help tourists and the problem was the government spokesperson system didn’t work at that time. The spokesperson had to tell the media or society what had happened. Everyone was asking about why and wondering where the MOP 200 million loan has gone. The government lent MOP 200 million to Viva Macau but didn’t monitor how the money was spent, as if it was just giving MOP 20 to the company. It wasn’t transparent and ‘sunshine’ at all. The spokesperson only came out when the tourist problem was almost solved and after Ngan In Leng held the press conference. But by that time a lot of different versions of the story had already been developed within the community. It was a true international incident but not transparent completely.

R: The Macau government has very strong financial power but no fiscal reserve system is in place to make sure public funds are being properly spent?

Prof. So: Definitely. The Legislative Assembly basically has no power to control how the government spends the money. The annual surplus doesn’t go to the reserve and therefore the administrative departments have the power to use the money without the legislature’s approval. The Legislative Council of Hong Kong has a Finance Committee which is responsible to scrutinize and approve public expenditure proposals put forward by the government.

The Macau government has the power but doesn’t need to shoulder responsibility. The community didn’t know why MOP 200 million was lent to Viva Macau and the government did not monitor the company afterwards to make sure that they could turn deficit into profit. A conspiracy theory would suggest that the government deliberately revoked Viva Macau’s license so that it doesn’t need to repay the money.

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