User Pays Term Paper

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User Pays System Within the Hong Kong Social Welfare Programs

As an economically developed country with high standards of living, Hong Kong, like many developed countries in the West and the Far East, is facing an increasing problem in its traditional social welfare system. Hong Kong has a large middle-class and significant lower-class populations who need to be protected from unexpected economic problems, while the government also needs to maintain its competitiveness in the global arena. Fiscally austere policies aimed at building a business-friendly atmosphere may be good for economics overall but may leave the middle -- and the working-class insecure, while increasing government expenditures for social welfare programs may hurt the economy. In the face of this dilemma and other problems involving the economy and the welfare system, the government of Hong Kong plans to introduce and promote the "user pays" system. It is the position of this paper that, given socio-economic relations in Hong Kong and the public attitudes toward liberal market system as well as social welfare, embracing the "user pays" system is a wise decision. It is a policy that fits well into the socio-economic needs of Hong Kong.

The "user pays" system basically means that consumers pay for public goods and services they consume. The Martin Committee, in its report on banking and deregulation in 1991, defined the system as a "general practice of charging customers in such a way that the prices they face reflect the costs of providing the goods or services. The philosophy of user pays is not an end in itself but is held to lead to desirable consequences. It avoids (often arbitrary) cross subsidies. It also increases economic efficiency as clients face appropriate price signals rather than being encouraged to over consume some apparently 'free' services and under consume others" (Fine & Chalmers, 2000, p. 8). At the heart of the "user pays" system are economic efficiency and fairness.

The "user pays" policy maintains economic liberalism, encourages both producers and consumers to base the prices of goods and services on purely market values, discourages over consumption on goods and services consumers do not need, while encouraging greater levels of consumption on specific goods and services each individual needs. The policy also promotes fairness, as the burden of paying for public goods and services is not shared by everyone equally. For example, such services as water or gas are sometimes provided under a fixed price, forcing consumers pay the same amount of money regardless of the amount of water and gas they use. Under a "user pays" system, consumers only pay for the amount they consume. Those who consume less do not share the burden of paying for the heavier consumption of the same services by other consumers. Fairness of the system is also lies in the manner the government encourages those who can pay share a higher burden of financing public services. For instance, the government may offer subsidies to low-income families but not offer them to high-income families. In other words, the "user pays" system is a combination of social welfare and market liberalism.

The promotion of the "user pays" system in Hong Kong aptly fits into socio-economic relations of the society. As Wong, Wan, & Law (2009) found in their study of attitudes to welfare in Hong Kong, support for the welfare system is overwhelming. According to Wong, Wan, & Law, support for welfare comes from members of all social classes. In fact, as compared to Sweden and the U.S.A., where members of lower classes are more likely to support welfare, in Hong Kong the differences among members of social classes, in terms of supporting welfare, are negligible. In some cases, members of higher classes actually expressed greater support for welfare. This attitude of the society is interesting in the face of the fact that the "Hong Kong government has always resisted the notion of universal welfare. The great majority of social welfare recipients have to first undergo a means test, and the government's social welfare expenditures are maintained at a lower level than in Western societies" (Wong, Wan, & Law, 2009, p. 144). The Hong Kong population supports welfare but also follows market liberalism to make sure that the welfare expenditures are used responsibly and wisely.

Wong, Wan,…[continue]

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