David Demos
Hong Kong’s Chief Executive, John Lee Ka-chiu, has announced a range of new measures to try to counter the city’s declining birth rate. Notably, a HK$20,000 (US$2,556) cash incentive will be given to parents holding permanent residency in Hong Kong for every newborn.
At A Glance:
- The Birth Rate Crisis: The average number of children per woman in Hong Kong has sharply fallen from 1.3 in 2017 to just 0.9 in the previous year.
- Cash Incentive: Starting Wednesday, parents with permanent residency will receive a HK$20,000 bonus for every child born for the next three years. The policy’s effectiveness will be reviewed after this period.
Housing & Tax Reliefs:
- Mortgage and Rent Relief: Parents of newborns can expect a 20% rise in tax deductions on domestic rents or home loan interest, increasing the ceiling from HK$100,000 to HK$120,000. This benefit will be available until the child reaches 18.
- Faster Access to Housing: Families with babies born from Wednesday onwards will get accelerated access to public housing. They can also expect priority in the balloting system for subsidized flats, with 10% reserved. Additionally, these families can enjoy the perks when their child turns three.
Health and Childcare Boosts:
- Support for Fertility Treatments: To aid couples facing fertility challenges, the government will up the assisted reproductive service quota by over 60% in the next five years. Expenses related to these services can be deducted from the taxable income.
- Expanded Childcare Services: The working family allowance increased by 15%, 900 additional day child care spots, and an extended after-school program for pre-primary students have been introduced. Home-based child carers will now earn between HK$40 and HK$60 per hour, a notable rise from the previous HK$25.
To put things in perspective
Mainland China, which has a lower birth rate than Hong Kong, still face similar economic pressures when raising children. A report by the YuWa Population Research indicates that the cost of bringing up a child between ages 6-14 is a significant 210,000 yuan ($31,021), accounting for nearly 45% of the entire child-rearing expense up to age 18. Peking University’s Liang Jianzhang emphasizes that China needs to channel 10% of its GDP to raise its fertility rate from 1.3 to the replacement rate of 2.1. Hong Kong, in comparison, needs HK$284,000 ($36,323.60) a year, let alone the cost of raising a child to the age of 14. This highlights the scale of support required to boost fertility rates effectively and how little the measures are in the face of the problem.
Bottomline
Hong Kong’s recent measures are being met with calls for even more robust initiatives. The overarching goal remains: reversing the declining birth trend.
