Comment on the pros and cons of privatization of social welfare services in Hong Kong society. Use the “LINK-REIT” as an example to illustrate your answer.

Topics: Hong Kong Housing Authority, Public housing, Real estate Pages: 15 (4279 words) Published: March 6, 2012
TOPIC 6: COMMENT ON THE PROS AND CONS OF PRIVATIZATION OF SOCIAL WELFARE SERVICES IN HONG KONG SOCIETY. USE THE "LINK-REIT" AS AN EXAMPLE TO ILLUSTRATE YOUR ANSWER.

INTRODUCTION

The Link-Reit (Real Estate Investment Trust) has long been a controversial issue ever since its launch. The issue in fact concerns the privatization of welfare services. The purpose of this paper is to review the worthiness of privatization in the midst of conflicts of interests among different groups of people in Hong Kong. For a start, the definition of privatization of welfare services will be stated. Then, there would be a brief summary on the privatization development in Hong Kong. As this paper will focus on discussing privatization by using the Link-Reit as an example, the background information of Link-Reit will be given. The merits and demerits of privatization of social welfare services will be reviewed in the context of the Link-Reit. Eventually, recommendations regarding the disadvantages of privatization will be given. The scope of privatization to be discussed in this paper will be confined to privatization of public housing.

DEFINITION OF PRIVATIZATION OF WELFARE SERVICES

Privatization of welfare services is defined as the transfer of the provision of welfare services from the public sector to the private sector. Le Grand & R. Robinson (1984) pointed out that any reduction of the roles of the government in welfare provision, such as direct provision, subsidy and regulation, is defined as the introduction of the process of privatization of welfare services. It is a way to enhance the equitable distribution of social resources. A. Walker (1984) stated that privatization takes place when responsibility for a service or a particular aspect of service delivery passes wholly or in part, to the private sector and when market criteria, such as profit or ability to pay, are used to ration or distribute benefits and services. Asher (1987) is in support of the rationale behind privatization, which is to improve efficiency and reduce public cost because private sector has greater market competition. In fact, it would be difficult to give privatization a universal definition. However, one common idea about privatization is that there is a decrease in role of the government while there is an increase in the role of private sector in the provision of welfare services. (Leung, 2006, p.8).

PRIVATIZATION DEVELOPMENT IN HONG KONG

As a matter of fact, privatization is a common tool for governments all over the world to reform the public sector (Leung, 2006, p.7). The trend of privatization in the economy of Hong Kong starts from the late 1980s. In 1987, the Housing Authority announced the Long Term Housing Strategy (LTHS) which shifted from providing large-scale public rental housing to assist home ownership and expand the role of the private sector in housing provision (HKHA 1987). The public housing development has entered an age of privatization and the public housing policy has shifted from the provision of public rental housing to owner-occupier housing (Poon, 2004). It was expected that there would be a decrease in the overall demand for public rental housing (PRH) and an increase in the demand for self-owned, self-contained housing units due to economic growth and social stability in the years to come.

The Housing Authority (HA) has implemented three major privatization schemes, the Home Ownership Scheme (HOS), the Private Sector Participation Scheme (PSPS) and the Home Purchase Loan Scheme (HPLS). HOS was introduced in 1976 which comprises the construction of flats for sale to eligible households (La Grange, 1997, p. 73). PSPS was introduced in 1978, which is a joint venture development between the public and private sector. The public sector procures a number of housing units at scale from the private sector at a guaranteed price, for resale to eligible households (La Grange, 1997, p. 74). The HPLS was introduced in 1987. In...

Bibliography: Madsen Pirie, (1998), Privatization, Aldershot, Hampshire, England : Wildwood House
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South China Morning Post, "Housing estate patients face higher clinic fees", Nov 4, 2009
South China Morning Post, "New Link chief not to be feared, tenants told", Jan 31, 2007
South China Morning Post, "Profits come first", April 28, 2007
The editorial of Ming Po, "Re-launch of Link Reit", Ming Po, 8 September, 2005
Wiltshire, K., (1987), Privatization : the British Experience - an Australian Perspective Committee for Economic Development, Melbourne, Longman Cheshire
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