One of the biggest headaches facing governments around the world over is what to do to reduce wealth disparity, often referred to as the wealth gap.
According to the Credit Suisse Global Wealth Report, the top 10 percent of wealthiest individuals in Taiwan hold a total of 61.8 percent of the wealth, whereas the bottom 10 percent have a mere 0.1 percent.
The media have reported that one Taiwanese makes as much as NT$60 million (US$1.8 million) in interest on their holdings alone. Another report tells the story of a family who could not afford to pay rent so the parents killed their three young children before taking their own lives.
There are a number of approaches to reducing wealth disparity. One is tax reform. Another is the provision of social housing, something that has become a hot issue. Appropriate, affordable housing is one of life’s necessities. The government needs to do more than just address the “i-Voting” controversy, it also needs to set appropriate rental levels for social housing.
Months after opening the MeHAS City social housing project in New Taipei City’s Sindian District (新店) — developed with the Taipei Department of Rapid Transit Systems — the whole thing has turned into yet another expensive mosquito trap due to a lack of interest from prospective tenants.
One of the main reasons for this is the excessively high rent, which is only 20 percent lower than private rentals in the area, meaning that the majority of people who qualify for public housing cannot afford the rent.
The supply of the city government’s “compassion” far outstrips demand, as the people it is meant to serve — those who cannot afford to live in private rental properties — can only behold the social housing on offer and sigh.
Two thousand years ago, with common people dying of starvation amid a famine, Emperor Hui of the Jin Dynasty, or Zhengdu (正度), asked his advisers: “Why don’t they just eat meat?”
With deposits for renting social housing so unattainably high, it is as if we have not moved on.
The MeHAS project serves as a warning: The government needs to think carefully about what the goals of social housing actually are and then put supporting policies into place.
If its purpose is to cater to the needs of disadvantaged households or to give young people a chance to set themselves and their families up in their own accommodation, then the government needs to be careful about the level of rent and conditions. It cannot allow itself to cave in to the demands of vested interests.
In Hong Kong, private rental levels are higher, and by a considerable degree, compared with Taipei. However, rent in the Hong Kong version of social housing — public housing estates — is much cheaper — between 10 and 20 percent of the private-market level — than that offered in the MeHAS project.
Monthly rent for 91 percent of social housing units in Hong Kong is not even NT$10,000, and in some cases this is for households of four people. Some new units designed for one or two people are only NT$3,840 per month.
Over the past 60 years, the Hong Kong government has built about 750,000 public housing units, providing affordable housing for more than 2 million people. That is approximately 30 percent of the population of Hong Kong.
The rent in public housing estates, which is far below the market level, not only guarantees the housing rights of low-income households, it goes a long way to promoting social mobility.
Many of my colleagues at the Chinese University of Hong Kong, as well as many distinguished members of society, live in public housing.
In Taiwan, rent for social housing, calculated at a negligible 20 percent discount from the market level of the location, not only fails to help people in strained economic circumstances in the short term, it also does little to improve social mobility over the long term. There does not seem to be a connection between the level of rent set for social housing and its goals and aspirations.
President Tsai Ing-wen (蔡英文) promised 200,000 new social housing units while on the campaign trail. The crux of the policy was always the number of units to be made available, never how much they would cost to build.
From the way the MeHAS project has been implemented so far, it appears to have been as far from the mark as the emperor asking why the starving do not eat meat, and is likely to benefit mosquitoes more than poor people.
In her inauguration speech, Tsai said that she was ever mindful of the importance of finding an answer to this problem. The question is: Will she be able — in the first 100 days of her administration — to implement housing justice for disadvantaged groups?
This will not only be a test of the Tsai administration’s efficacy, it will also test the degree to which it will be able to react to vested interests, together with its ability to organize and implement the supporting measures needed to make the policy work.
Jason Yeh is an associate professor of finance at the Chinese University of Hong Kong.
Translated by Paul Cooper
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