KONG YUNMING v. THE DIRECTOR OF SOCIAL WELFARE

HCAL 127/2008

IN THE HIGH COURT OF THE

HONG KONG SPECIAL ADMINISTRATIVE REGION

COURT OF FIRST INSTANCE

CONSTITUTIONAL AND ADMINISTRATIVE LAW LIST

NO. 127 OF 2008

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J U D G M E N T

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Background

1.  In this application for judicial review, the applicant challenges the seven-year residence requirement for receiving assistance under the government’s Comprehensive Social Security Assistance (CSSA) scheme. 

2.  The applicant was born on the Mainland on 18 December 1949 and is now 59 years old.  She was a Mainland resident before she came to settle in Hong Kong on 21 December 2005.  She and her first husband were divorced in 1983, and her two sons out of the first marriage are residents on the Mainland.  On 22 October 2003, the applicant married Mr Chan Wing, a Hong Kong permanent resident and recipient of CSSA from 1985 until he passed away in 2005.  The applicant had earned her living by looking after an elderly person but, according to her, she was unemployed since early 2005. 

3.  On 30 November 2005, the applicant was granted a one-way permit by the Mainland authority for settlement in Hong Kong.  She arrived in Hong Kong on 21 December 2005.  Very sadly, her aged husband, who had been suffering from chronic obstructive airway disease, passed away on the following day. 

4.  The applicant sought and received emergency meal services and bereavement counseling from an integrated family service centre.  Her case was referred to a non-governmental organisation for follow up services on long-term accommodation plan, financial assistance and emotional support.  She was admitted to a street sleeper shelter following the Housing Authority’s repossession of her late husband’s public housing unit after her unsuccessful attempt to register herself as the new tenant for the unit.  In addition to some cash assistance from the Community Chest Rainbow Fund and a charity fund, she also received employment support service, counseling service and assistance in kind.

5.  On 20 March 2006, the applicant applied for CSSA on the ground of unemployment.  She claimed in her application form that she was unemployed and was a single parent.  She had suffered significant changes in family or financial circumstances due to the death of her husband and that had resulted in her losing financial support in Hong Kong.  She was interviewed and during the processing of her application, she disclosed that she had a property on the Mainland in which her sons were residing, but maintained that the property was an illegal structure and therefore could not be leased out or sold.  She claimed that her two adult sons had failed to provide financial assistance to her.

6.  By letter dated 16 May 2006, the Director of Social Welfare rejected the applicant’s application for CSSA on the sole ground that she did not satisfy the requirement that all applicants for CSSA shall be residents of Hong Kong for at least seven years.  Furthermore, the Director refused to exercise his discretion to waive the residence requirement in her case, after considering the applicant’s personal circumstances as well as the Director’s established guidelines on the exercise of discretion to waive the requirement.

7.  On 6 June 2006, the applicant lodged an appeal to the Social Security Appeal Board against the Director’s refusal to grant her CSSA.  The appeal was heard on 11 October 2006.  The applicant attended the hearing and made representations.  By letter dated 1 November 2006, the appeal board dismissed the applicant’s appeal on the ground that she did not satisfy the residence requirement.

8.  The applicant has undergone several retraining courses as a caretaker and domestic helper.  She has worked for very short periods of time as a substitute cleaning worker and a substitute security guard.  But for most of the time, she has remained unemployed.  The applicant says she is suffering from hypertension and diabetes and also has a chronic right eye disability.  She now resides in a room in a flat rent to her by the Society for CommunityOrganisation, a non-governmentalorganisation, at a monthly rent of $1,500.

Application for judicial review

9.  Since the applicant only arrived in Hong Kong in December 2005, she will not be eligible for CSSA until December 2012 at the earliest.  She now challenges the seven-year residence requirement under the CSSA scheme.  Originally, the applicant also challenged the decision of the appeal board dismissing her appeal from the refusal of the Director of her application for CSSA.  But that is no longer pursued.

10.  The present application for judicial review turns on one single issue, namely, the constitutionality of the seven-year residence requirement under the CSSA scheme.  It is the applicant’s case that the requirement is inconsistent with articles 25, 36 and 145 of the Basic Law, article 22 of the Hong Kong Bill of Rights (article 26 of the International Covenant on Civil and Political Rights (ICCPR)), and is therefore unconstitutional. 

11.  The merits of the applicant’s application for CSSA are not in issue.  Nor is the Director’s refusal to exercise his discretion to waive the residence requirement in her case.  For this reason, the present challenge is not case-sensitive, and it is not necessary to go further into details of the applicant’s own case, its background having been set out above.

Hong Kong’s social welfare system and the CSSA scheme

12.  Before turning to the specific grounds relied on by the applicant, it is helpful to provide a bird’s eye view of the social welfare system in Hong Kong in general and the CSSA scheme in particular.

13.  In Hong Kong, formulating policies on the development and improvement of the social welfare system is the responsibility of the Labour and Welfare Bureau.  Implementation of those policies lies with the Social Welfare Department, headed by the Director of Social Welfare, which is the executive arm of the Labour and Welfare Bureau.  There are a variety of services and assistance provided by the Social Welfare Department.  They include family and child services, services for the elderly, rehabilitation and medical social services, services for offenders, services for community development, services for young people and most importantly, social security services comprising the CSSA scheme and the Social Security Allowance (SSA) scheme (which provides largely non-means tested allowances for the severely disabled and the elderly).

14.  In 2006-2007, total recurrent public expenditure on social welfare reached $32.8 billion, taking up 16.0% of the total recurrent public expenditure amongst various policy areas, including education (21.9%), health (14.6%), housing (5.0%), security (11.1%), infrastructure (5.4%), economic (5.3%), environment and food (3.9%), community and external affairs (3.4%) and support (13.1%).  In 2006-2007, total actual expenditure of the Social Welfare Department was $32.5 billion.  Social security took up the largest share (73.3%) amongst the various welfare services in 2006-2007, according to the materials placed before the Court.

15.  The social security services provide a safety net for individuals or families who are unable to support themselves financially because of age, disability, illness, low earnings, unemployment or other family circumstances.  The CSSA scheme and the SSA scheme form the mainstay of the social security system.  The CSSA scheme provides cash assistance to people suffering from financial hardship to enable them to meet basic need.  Apart from cash assistance, the Social Welfare Department also provides personalised employment assistance under the Support for Self-reliance scheme to help able-bodied unemployed CSSA recipients move towards full-time paid employment and become self reliant.

16.  According to statistics, as at the end of 2007, there were 288,145 CSSA cases providing assistance to 496,922 people.  The expenditure in 2007 amounted to $18.12 billion.  The CSSA scheme is a non-statutory scheme administered by the Social Welfare Department.  It is based on the government’s policy to provide financial assistance to bring the income of needy individuals and families up to a prescribed level to meet their basic needs, which broadly include food, clothing, fuel and light, rent and schooling expenses for children etc.  The amount of assistance is determined by the amounts of income and needs of a family.  The difference between the total assessable monthly income of a family and its total monthly needs asrecognised under the scheme in terms of various types of payment will be the amount of assistance payable.  As the CSSA scheme is non-contributory, heavy subsidies from the government are required to carry out its stated objective.  In order to ensure that only people suffering from genuine financial hardship are benefited, the CSSA scheme is means tested, which includes both income and assets test.

17.  Self-reliant, able-bodied adults aged between 15 and 59 in normal health are required to provide acceptable reasons for not being available for work or to be earning not less than a pre-determined monthly salary and working not less than a fixed number of hours per month, or alternatively, to be actively seeking full time jobs and participating in the Support for Self-reliance scheme, in order to qualify for assistance.

Origin of the CSSA scheme and later changes

18.  The origin of the CSSA scheme can be traced to 1 April 1948.  Prior to that, welfare services in Hong Kong were provided to the public by religious groups and other charitableorganisations with financial subsidies from the government.  On 1 April 1948, a Social Welfare Office was established as a specialised sub-department of the Secretariat for Chinese Affairs.  The principal activities of the office included, among other things, public assistance and development of welfare policy for the then colony.

19.  It was a time when Hong Kong was beginning to experience a massive influx of immigrants from the Mainland, which continued for several years after the establishment of the People’s Republic.  It was a time of social and economic unrest, which led to the passing of the Expulsion of Undesirables Bill 1949 into law on 31 August 1949, empowering the government to expel persons who were found to be “undesirables”, unless they could satisfy the authority that they were British subjects or that they had been ordinarily resident in the colony for ten years or more.  For the same reason, a residence requirement of ten years was established for public assistance provided by the Social Welfare Office.

20.  By 1958, the Social Welfare Office had become a fully-fledged government department and continued to provide food and shelter to the destitute.  The cost to the government of the public assistance given during the year 1959-60 was just under $2 million, the major proportion of which was spent on free feeding.  Due to changes in social and economic circumstances, the residence requirement was lowered to 5 years in 1959.  Nonetheless, the governmentrecognised that it would not be realistic to envisage comprehensive services or to introduce any further elements in a social security programme beyond the provision of relief services based on strict need, according to an internal Executive Council memorandum dated 25 March 1965.  The memorandum pointed out that it was important to continue to take strict measures to ensure that the incentive to be independent would not be weakened, and that the future capacity of the economy to finance public assistance would not be jeopardized by leading people to expect that hardship would automatically be relieved at public expense, save where really necessary.

21.  Following a thorough review in 1968 of the then public assistance scheme, there was a major revision of policy in 1970, in response to further changes in social and economic conditions in Hong Kong.  The changes included a radical change from the pre-existing scheme based on the distribution of food to needy families, to a scheme for cash payments and the maintenance of a minimum income level, depending upon the size of the family concerned subject to a suitable means test.  The residence requirement of five years adopted since 1959 was reduced to one year, with a discretion on the Director of Social Welfare to pay assistance to people who did notfulfil the condition if, in their particular circumstances, he considered it necessary having regard to other available sources of aid.  The revised public assistance scheme was endorsed by the Governor in Council in March 1970 and was introduced in two stages in 1971. 

22.  Over the years, apart from inflationary adjustments, many improvement measures had been introduced, and the public assistance scheme had evolved from a scheme providing for basic subsistence to a comprehensive safety net meeting not only the basic but also individual needs of its recipients.  With effect from 1 July 1993, a package of social security improvements was introduced, with the initiation of the CSSA scheme and the SSA scheme which replaced the public assistance scheme and the special needs allowance scheme respectively.  Major improvements included a real increase in the level of benefits from 4% to 37% for different categories of CSSA recipients.

23.  However, by 1998, there was growing public concern about the rapid growth in the CSSA caseload and its expenditure, the high levels of CSSA benefit for larger families as compared with market wages, and the sharp increases in the number of people of working age turning to CSSA.  A review of the CSSA scheme was conducted in 1998.  According to the Report on Review of the CSSA scheme dated December 1998:

“10.      Over the recent past, the CSSA caseload and expenditure have been increasing sharply.  The number of CSSA cases rose by 146% from 88,600 in September 1993 to 218,400 in September 1998.  CSSA expenditure increased dramatically by nearly three times, from $2.4 billion in 1993/94 to $9.4 billion in 1997/98, and its share of the [Social Welfare Department (SWD)’s] budget increased from 27% to 45%.  In 1998/99, the approved provision for CSSA is $11.5 billion (representing 49% of SWD’s budget), but it is expected that supplementary provision of over $1.5 billion will be required ….

…..

12.        The ever-increasing growth in CSSA expenditure is worrying and unsustainable in the long term, bearing in mind that it is a non-contributory scheme, financed by general revenue obtained from a low tax base.  In recent years, CSSA expenditure has taken up the lion’s share of the public resources available from economic growth to meet the community’s aspirations for new or improved services.  Its share of total Government recurrent spending has increased from 2.6% in 1993/94 to 6.2% in 1997/98, and is estimated to increase to 6.7% in 1998/99.  Inevitably, this has directly and significantly constrained the Government’s ability to expand and improve services in other areas.”

24.  The 1998 review resulted in various tightening measures which were implemented in June 1999.  Furthermore, to promote self-reliance and guard against unhealthy reliance on CSSA by those who can work, the Support for Self-reliance scheme was launched in 1999 with an aim to encourage and assist the unemployed CSSA recipients move towards self-reliance.

The residence requirement

25.  Turning to the residence requirement, the subject of the present challenge, the rationale behind introducing a residential qualification to the public assistance scheme in the early days was the government’s concern that public assistance might attract a mass influx of new immigrants from the Mainland into Hong Kong at that time.  The development of social services was perceived to be a struggle against the tide of population growth.  When the residence policy was revised and relaxed in 1970, the government considered that a reduction of the residential qualification from five years to one was appropriate in light of the then economic conditions and social needs.  It was confident that the new residential qualification could safely be reduced to one year.

26.  But 30 years on, this was no longer thought to be so.  The adoption of the seven-year residence rule for qualification for, among other things, social security benefits was recommended by the Taskforce on Population Policy chaired by the then Chief Secretary for Administration in its report released on 26 February 2003.  The taskforce was set up in September 2002 to develop a comprehensive population policy which would be designed to fit Hong Kong’s long term social and economic development, to complement family requirements, and to address the interest of different sectors in the society.  In its report, the taskforce pointed out that the profile of Hong Kong’s population, like other advanced economies, was aging rapidly and that the primary objective of the population policy was to nurture a population that could sustain Hong Kong’s long-term economic and social development.  The proposed population policy should aim to improve the overall quality of Hong Kong’s population through achieving various goals, and most of all, to ensure the long-term sustainability of Hong Kong’s economic growth.

27.  In respect of demographic characteristics, the report highlighted that Hong Kong was committed to a programme of admitting almost 55,000 immigrants from the Mainland each year (150 persons per day).  The entry of one-way permit holders was therefore one of the main sources of Hong Kong’s population growth apart from births.  The report revealed that while Hong Kong’s population grew by 0.7% in 2002, only 28% of this was due to net natural increase.  Some 72% of growth was generated by the net inflow of people, mostly coming under the one-way permit scheme.  Many of the adult new arrivals when they first arrived had few work skills and little education.  Although the government should continue to provide education, training and skills upgrading programmes to new arrivals of different age groups, the report pointed out, it had become clear that Hong Kong faced a severe fiscal situation.  The report stressed that the government needed to take steps to address the rising public spending on social and other services, many of which were heavilysubsidised, particularly in the light of population aging and the continuing influx of new immigrants.  In the case of CSSA, proportionally more resources were allocated to new arrivals than to the rest of the population, the report pointed out.  The taskforce therefore suggested that in formulating a population policy for the Special Administrative Region, the privileges of Hong Kong’s residents should be considered critically in terms of their eligibility forsubsidised services and it must be ensured that there was a rational basis on which social resources were allocated.  A very fine balance between the interests of various sectors of the community had to be struck, the report noted, giving due regard to the long term sustainability of our social services within limited financial resources.

28.  It was in those circumstances that the taskforce recommended, inter alia, that a uniform seven-year residence rule be applied to all heavily subsidised social services.  The report reasoned that eligibility based on a seven-year residence requirement reflects the contribution a resident has made towards Hong Kong economy over a sustained period of time, and the period is normally required for the grant of permanent resident status for the enjoyment of additional rights as prescribed by the laws of Hong Kong.  For exceptional cases, the Director of Social Welfare would have discretionary power to grant CSSA on compassionate grounds by waiving the residence rule.  The taskforce’s recommendation led to a series of deliberations at different levels in Hong Kong, including the legislature.  Concerns were raised and competing interests were weighed.  Amongst other things, a major concern was that by 2031, it was estimated, overall dependency ratio would reach 562, ie every 1,000 persons aged between 15 and 64 would have to shoulder 562 persons aged under 15 or aged 65 and above.  As at end December 2002, there were 69,345 new arrivals CSSA recipients (mainly from the Mainland), constituting 14.9% of all CSSA recipients, an increase of 2.9 percentage points from March 1999.  In 1993-1994, expenditure for CSSA amounted to $2.4 billion.  In the 2003-2004 Draft Estimates of Expenditure, the administration was seeking a provision of $17 billion for CSSA to meet anticipated increase in demand.  This was $780 million over the revised provision of $16.3 billion in 2002-2003.  Between March 1999 and December 2002, the number of CSSA cases involving new arrivals increased significantly by 48% while the CSSA caseload grew by 14% over the same period.

29.  Eventually, after detailed discussions and debates, including consideration of the constitutionality of the proposed new residence requirements, they came into force on 1 January 2004.  The new residence requirements are as follows:

“The applicant must satisfy the following residence requirements:

a.      he/she must have been a Hong Kong resident for at least seven years; and

b.     he/she must have resided in Hong Kong continuously for at least one year immediately before the date of application (absence from Hong Kong up to a maximum of 56 days during the one-year period is treated as residence in Hong Kong).

Note:

(1)     Persons whose presence in Hong Kong is unlawful or persons who are permitted to stay in Hong Kong for a purpose other than residence (for example, imported workers or visitors) are excluded from the Scheme.

(2)  Persons who have become Hong Kong residents before 1 January 2004 are exempted from the residence requirement in a. above.

(3)  Hong Kong residents aged below 18 are exempted from the residence requirements in a. and b. above.

(4)   In exceptional circumstances, CSSA may be granted at the discretion of the Director of Social Welfare toa person who does not satisfy the residence requirements.”

30.  It should be noted that the new residence requirements do not affect those who have already become Hong Kong residents before 1 January 2004 and therefore have no retrospective effect as such.

31.  As regards the exercise of the Director’s discretion to waive the seven-year residence rule, there are established guidelines:

“Guidelines on the exercise of discretion

·        In general, financial hardship alone does not merit exceptional treatment, especially in the case of able-bodied adults.

·        The SSO(D) can exercise discretion to exempt a Hong Kong resident from the [seven-year residence] rule if the applicant can satisfy all the following criteria:

-         having no or insufficient income to meet his/the family’s basic needs;

-         having no relative or friend to turn to for assistance;

-         no other forms of assistance being available to him/his family;

-         having suffered a substantial and unexpected change in circumstances beyond his/the family’s control (see Note below);

-         having genuine difficulty in returning to his country of origin or the place where he came from;

-         the total resources available to him/his family, including any savings or other assets held by him/his family and any CSSA payable to his family members, are not sufficient to meet his/his family’s recognised needs under the CSSA Scheme for two months.

Note

Some examples of the types of situation that would constitute a substantial and unexpected change are given below:

…..

Failure to find or keep employment by a new arrival ... is usually not regarded as a substantial and unexpected change in circumstances justifying exceptional treatment …”

32.  According to statistics, the new residence requirements have proven to be effective in stopping further growth in CSSA expenditure on new arrivals after January 2004.  They also show that almost 38% of applications for waiver of the seven-year residence requirement (including applications subsequently withdrawn) were successful in the period from April to September 2008.

Grounds of challenge

33.  Mr Hectar Pun, appearing for the applicant, essentially takes two points to challenge the new seven-year residence requirement.  First, counsel argues that this new requirement contravenes article 36 of the Basic Law:

“Hong Kong residents shall have the right to social welfare in accordance with law.  The welfare benefits and retirement security of the labour force shall be protected by law.”

Mr Pun relies on the first sentence in article 36 only.

34.  In so far as the government seeks to justify the new residence requirement by reference to article 145 of the Basic Law, Mr Pun argues that it does not constitute a policy on the “development and improvement of [the previous social welfare system]”.  Article 145 reads:

“On the basis of the previous social welfare system, the Government of the Hong Kong Special Administrative Region shall, on its own, formulate policies on the development and improvement of this system in the light of the economic conditions and social needs.”

35.  Mr Pun submits that the new residence requirement, which is, counsel argues, highly discriminatory in nature, cannot be regarded as constituting any “development and improvement” of the pre-existing system.

36.  And this leads naturally to Mr Pun’s second point of attack, namely, discrimination.  Mr Pun relies on article 25 of the Basic Law.  The article says:

“All Hong Kong residents shall be equal before the law.”

37.  Similar protection can be found in article 22 of the Hong Kong Bill of Rights (article 26 of the ICCPR), which is constitutionally entrenched by article 39(1) of the Basic Law.  Mr Pun accepts that article 22 of the Hong Kong Bill of Rights does not add anything of substance to his argument based on article 25 of the Basic Law.

38.  Mr Pun also prays in aid article 39(2) of the Basic Law which provides that the rights and freedoms enjoyed by Hong Kong residents shall not be restricted unless as prescribed by law, to say that the new residence requirement discriminates against those residents who do not meet it and therefore unconstitutionally infringes their rights to social welfare provided in article 36.

Art 36 – right to social welfare

39.  I will start with articles 36 and 145 of the Basic Law, although it will become apparent that the crux of the matter lies in Mr Pun’s second point of attack, discrimination.

40.  Article 36 is unique in the sense that it gives all Hong Kong residents “the right to social welfare in accordance with law”.  It comprises one of the “fundamental rights” of residents of the Hong Kong Special Administrative Region guaranteed under Chap III of the Basic Law.  It may be noted that with the exception of article 26 (right to vote and right to stand for election), which is reserved for “permanent residents” of the Hong Kong Special Administrative Region, all other rights, including the right to social welfare in article 36, contained in Chap III of the Basic Law are enjoyed by “Hong Kong residents”, without any distinction.

41.  Article 24, the first article in Chap III, defines residents of the Hong Kong Special Administrative Region as including permanent residents and non-permanent residents.  It goes on to define permanent residents by reference to six categories of persons.  Of particular significance to the present case is the second category:

“Chinese citizens who have ordinarily resided in Hong Kong for a continuous period of not less than seven years before or after the establishment of the Hong Kong Special Administrative Region.”

42.  Permanent residents have, according to article 24(3), the right of abode in the Hong Kong Special Administrative Region and are qualified to obtain, in accordance with the laws here, permanent identity cards which state their right of abode.  Non-permanent residents, says article 24(4), are persons who are qualified to obtain Hong Kong identity cards in accordance with local laws but have no right of abode.

43.  It can be immediately seen that the new residence requirement coincides, generally, with the requirement for a Chinese citizen to become a permanent resident of the Special Administrative Region by seven years continuous residence.  As already described, this was indeed the intention behind choosing seven years’ residence as the qualification for receiving CSSA in the first place.

44.  Mr Pun’s argument under article 36 is straightforward.  Article 36 makes no distinction between permanent residents and non-permanent residents.  It applies to all Hong Kong residents.  It expressly says that Hong Kong residents shall have “the right” to social welfare in accordance with law.  Like permanent residents, non-permanent residents –the majority of whom are Chinese citizens resident in Hong Kong for less than seven years – equally have the constitutional right to social welfare.  It is a “right”.  Moreover it is a “fundamental” right.  Although Mr Pun accepts that like many other rights contained in Chap III, this right to social welfare is not absolute but can be restricted, the right must be generously construed whereas any purported restriction should be narrowly interpreted.  Gurung Kesh Bahadur v Director of Immigration (2002) 5 HKCFAR 480, 490, para 24; Ng Ka Ling v Director of Immigration (1999) 2 HKCFAR 4, 28I-29A.

45.  Mr Pun argues that the seven-year residence requirement is undoubtedly a restriction on a non-permanent resident’s right to social welfare guaranteed under article 36.  Mr Pun accepts that since the right to social welfare is only found in the Basic Law, but not in the Hong Kong Bill of Rights, the proper approach to any purported restriction would depend on the nature and subject matter of the right in issue, which would turn on the proper interpretation of the Basic Law and is ultimately a matter for the courts: Gurung Kesh Bahadur, supra at p 491, para 28.  Mr Pun vaguely suggests in his submission that the proportionality test is the right test to apply in determining whether a purported restriction is constitutionally justified or not.  He notes that in fact in Gurung Kesh Bahadur, a case involving the freedom of movement guaranteed to all Hong Kong residents under article 31 of the Basic Law, the Court of Final Appeal was prepared to assume, without deciding, that the test of proportionality was the appropriate test for judging whether the relevant right could be subject to restriction (p 492, para 34).

Restriction on the right to social welfare

46.  In my view, as the Court of Final Appeal said in Gurung Kesh Bahadur, ultimately it is a question of interpretation of the Basic Law.  Article 36 itself does not expressly say that the right to social welfare can be restricted, or the type of restrictions that can be imposed if it can be done at all.  On the other hand, a right to social welfare is not an abstract right, it is a right to social welfare “in accordance with law”.  Article 36 does not set out the type of social welfare that one may enjoy, or the level of benefits.

47.  As noted, the subject matter of the right is important.  One is here concerned with the right to social welfare, which, by definition, comprises more than one element, in order to cater for different needs of different members or classes of members of the society at different times.  As was pointed out by Poon J in the recent case of Fok Chun Wa v The Hospital Authority HCAL 94/2007, 17 December 2008, a case concerning charges for obstetric services provided in public hospitals to “non-eligible persons”, an effective social welfare system must evolve with the times.  As far as resources permit, the system must be able to react to the changing social, economic conditions and public needs and to meet adequately the challenges and pressures exerted on the system: para 101.  Failure to act and change when necessary would be tantamount to allowing old policies to lock social welfare into a “reliquary”, an expression first used by Hartmann J (as he then was) in Lau Kwok Fai v Secretary for Justice HCAL 177/2002, 10 June 2003, para 68, in relation to public service, and borrowed by this Court in Catholic Diocese of Hong Kong v Secretary for Justice [2007] 4 HKLRD 483, 515, para 119 (a case on education policy).

48.  Once one accepts that the system of social welfare is subject to change to meet changing circumstances, one must further accept that the changes may go either way.  They may lead to a more generous social welfare system, or depending on the circumstances that require the changes in the first place, a more restrictive one.  In the latter case, another way of putting it is that one’s “right” to social welfare is restricted. 

49.  In terms of interpretation of the Basic Law, quite apart from the subject matter of the right, one finds the express provision in article 145 of the Basic Law which, as described, permits, and indeed obliges (“shall”) the Government of the Special Administrative Region to formulate, on its own, policies on the “development and improvement” of the “previous social welfare system”, “in the light of the economic conditions and social needs”.

50.  In my view, all this is conclusive on the question of whether the right to social welfare can be restricted.  Article 145 specifically envisages making changes to the existing social welfare system in the light of the prevailing economic conditions and social needs.  As economic conditions and social needs may change towards different directions at different times, the resulting policies on social welfare system could, quite conceivably, lead to a reduction in, and in that sense, a restriction on, social welfare benefits.

51.  For these reasons, I am of the firm view that the right given under article 36 to social welfare is not an absolute right but one that may be restricted.  To be fair to counsel, he has not sought to seriously argue otherwise.

Making changes to the social welfare system

52.  As to the test for scrutinizing any purported change or restriction, I am again of the view that on the proper interpretation of the Basic Law, the answer lies not in any expanded concept of “in accordance with law” or “prescribed by law” (phrases found in articles 36 and 39(2)) or in the general concept of proportionality as such, but in article 145 itself.  Article 145, in my view, sets out the formula for making changes to the pre-existing social welfare system. First, the right and duty to make changes lies with the government, and no one else.  Certainly, those changes are not to be imposed on the Special Administrative Region by the Central Government on the Mainland, where the socialist system and policies are practised – article 5 of the Basic Law specifically says that the socialist system and policies shall not be practised in Hong Kong, and the previous capitalist system and way of life shall remain unchanged for 50 years.

53.  Secondly, any policy formulated by the government must be on the “development and improvement” of the pre-existing social welfare system.

54.  Thirdly, and this distinguishes article 145 to some extent from article 136 concerning education policies on which this Court has given a similar construction in Catholic Diocese of Hong Kong, supra, at paras 120 to 122, the policies shall be formulated “in the light of the economic conditions and social needs”.

55.  Thus in terms of the content of a new policy that can be made to change the pre-existing system, it must be a policy that would serve to develop and improve the pre-existing system, and it must be one made in light of the prevailing economic conditions and social needs.

56.  In relation to these matters, in my view, the courts should be very slow to interfere with the government’s judgment and decision, as a general proposition.  What constitutes development and improvement of the pre-existing social welfare system is best judged by the government, subject to the scrutiny of the Legislative Council.  What the prevailing economic conditions and social needs are, and what new policy, if any, they dictate, in terms of changes, if any, that should be made to the pre-existing social welfare system, are again matters for the government to decide, subject again to the scrutiny of the Legislative Council, where appropriate.

57.  Constitutionally and institutionally, the courts are not well^-placed and equipped to deal with or adjudicate on these matters.  R v Director of Public Prosecutions, ex parte Kebilene [2000] 2 AC 326, 381F, Lau Cheong v HKSAR (2002) 5 HKCFAR 415, 447-449, paras 101-105; Fok Chun Wa, supra, at para 76 citing Stec v United Kingdom (2006) 43 EHRR 47, para 52 (a case on margin of appreciation under the Strasbourg jurisprudence).

58.  But this is not to say that the government, acting under article 145, can ignore constitutional rights otherwise guaranteed to residents of the Special Administrative Region.  As this Court pointed out in the analogous situation relating to article 136 of the Basic Law in Catholic Diocese of Hong Kong, supra, at p 531, paras 204-207, a newly formulated policy pursuant to article 136(1) on education policy could possibly be struck down if it should infringe any other constitutionally protected rights of religious organisations.  Likewise, a newly formulated policy under article 145 of the Basic Law, even if it should otherwise satisfy the internal requirements for the content of the policy, may still be challenged for infringing other constitutionally guaranteed rights under the Basic Law or the Hong Kong Bill of Rights. 

59.  One pertinent example would be a policy that results in unequal treatment amongst residents of the Special Administrative Region that cannot be justified, in other words discrimination.  This, in my view, indeed forms the crux of the present challenge, which I will presently turn to.

60.  However, absent any such infringement of other constitutionally guaranteed rights, the content of the newly formulated policy is only restricted by what is set out in article 145 itself. 

61.  Mr Pun seeks to argue that since a newly formulated policy under article 145 cannot infringe any other constitutional rights guaranteed under the Basic Law, and since article 36 guarantees the right to social welfare, a newly formulated policy cannot have the effect of restricting one’s right to social welfare.  I am afraid this is a circular argument.  As I said, on the proper interpretation of the Basic Law, article 36 must be read together with article 145.  The fact that the two articles are found in different parts of the Basic Law makes no difference. 

62.  Mr Pun’s next point is that the new residence requirement is not a change that would serve to “develop and improve” the pre-existing system.  It is in fact a retrograde step.  Mr Pun acknowledges that a mere reduction in the level of social welfare benefits is not necessarily objectionable.  After all, article 145 speaks of development and improvement of the system of social welfare only.  Rather, Mr Pun’s point is, in essence, that a new policy that seeks to change the pre-existing system by means of discrimination against an underprivileged class of residents of the Special Administrative Region can hardly be regarded as a “development and improvement”.

63.  I am prepared, for the purposes of this judgment, to accept this general proposition.  In other words, a policy which unconstitutionally discriminates against a class of residents of Hong Kong in terms of their entitlement to social welfare, can hardly be regarded as a policy on the “development and improvement” of the pre-existing system, and is liable to be struck down, for that reason, as a policy not formulated pursuant to article 145.

64.  Therefore, as I have already alluded to, the present case boils down to the question of discrimination.  It is quite plain from the rather long narrative about the history of the social welfare system in Hong Kong and the changes that have been made throughout the years, including the latest change that is under challenge, that there were very substantial social and economic considerations behind the system itself and the changes made to it.  In particular, the 2004 change that is under attack was made in direct response to mounting pressures exerted on the pre-existing social welfare system in the light of the then financial situation in Hong Kong and the rapid ageing of Hong Kong’s population.  It was designed to render the system sustainable in the long term.  It was made after detailed discussion and consultation within the government and by the legislature, as well as in the society generally.

65.  Leaving aside the question of discrimination, one simply cannot say, and certainly it is not for the Court to conclude, that the resulting change that was made as from 1 January 2004 was not a change designed to develop and improve the pre-existing social welfare system, in response to the prevailing economic conditions and social needs.

Art 25 and discrimination

66.  The crux of the present challenge therefore lies in discrimination.  This takes me to the second point run by Mr Pun on behalf of the applicant.  Mr Pun’s case is based on article 25 of the Basic Law, which provides that all Hong Kong residents shall be equal before the law.  Similar protection is given under article 22 of the Hong Kong Bill of Rights (which is based on article 26 of the ICCPR).

67.  Mr Pun’s argument is again straightforward.  The seven-year residence requirement discriminates against those residents of Hong Kong who do not meet the requirement.  Both articles 25 and 36 apply to all Hong Kong residents without distinction.  Singling out those residents in Hong Kong who have not resided in Hong Kong for seven years for unfavourable treatment is discriminatory.

68.  Mr Pun accepts that an unequal treatment can be justified.  But he submits that the test for justification is strict. 

69.  He correctly refers this Court to the leading case on the subject, the Court of Final Appeal’s decision in Secretary for Justice v Yau Yuk Lung (2007) 10 HKCFAR 335, which was a case on homosexual buggery otherwise than in private.  The general principles can be found in the judgment of Li CJ at pp 348-349:

“19.   In general, the law should usually accord identical treatment to comparable situations.  As Lord Nicholls observed in Ghaidan v Godin-Mendoza [2004] 2 AC 557 at p 566C:

Like cases should be treated alike, unlike cases should not to be treated alike.

20.    However, the guarantee of equality before the law does not invariably require exact equality.  Differences in legal treatment may be justified for good reason.  In order for differential treatment to be justified, it must be shown that:

(1)   The difference in treatment must pursue a legitimate aim.  For any aim to be legitimate, a genuine need for such difference must be established.

(2)   The difference in treatment must be rationally connected to the legitimate aim.

(3)   The difference in treatment must be no more than is necessary to accomplish the legitimate aim.

The above test will be referred to as “the justification test”.  In the present case, the Court has had the benefit of submissions on its appropriate formulation.  There is no material difference between the justification test and the test stated in R v Man Wai Keung (No 2) [1992] 2 HKCLR 207 at p 217 which was used by the Court in So Wai Lun v HKSAR (2006) 9 HKCFAR 530 at para 20.

21.    The burden is on the Government to satisfy the court that the justification test is satisfied.  Where one is concerned with differential treatment based on grounds such as race, sex or sexual orientation, the court will scrutinize with intensity whether the difference in treatment is justified.  See Ghaidan v Godin-Mendoza [2004] 2 AC 557 at p 568G (Lord Nicholls).

22.    In requiring differential treatment to be justified, the view has been expressed that the difference in treatment in question is an infringement of the constitutional right to equality but that the infringement may be constitutionally justified.  See the Court of Appeal’s judgment in the present case at p 208B-C (Ma CJHC) and in Leung v Secretary for Justice [2006] 4 HKLRD 211 at p 234G-H.  This approach is not appropriate.  Where the difference in treatment satisfies the justification test, the correct approach is to regard the difference in treatment as not constituting discrimination and not infringing the constitutional right to equality.  Unlike some other constitutional rights, such as the right of peaceful assembly, it is not a question of infringement of the right which may be constitutionally justified.”

70.  Mr Pun argues that the differential treatment of non-permanent residents of Hong Kong in relation to CSSA (which is what the seven-year residence requirement amounts to in practice) cannot be justified.

71.  He submits that using permanent resident status (or the lack of it) as criterion for deciding whether somebody is entitled to social welfare is an inherently “invidious” or “suspect” ground of discrimination, which attracts the courts’ scrutiny with intensity.

72.  Mr Pun heavily relies on the South African case of Khosa v Minister of Social Development 2004 (6) SA 505 (CC) and the US Supreme Court cases of Shapiro v Thompson 89 S Ct 1322 (1969) and Saenz v Roe 119 S Ct 1518 (1999) in support of his argument.  He also draws the Court’s particular attention to the Strasbourg Grand Chamber decision of Andrejeva v Latvia (application no 55707/00), 18 February 2009 as well as the earlier decision of the European Court of Human Rights in Gaygusuz v Austria (1996) 23 EHRR 364, amongst other authorities he cites.

73.  In essence, his point is that like sex, sexual orientation, race and religion, a ground of discrimination based on permanent residency is inherently invidious and suspect, and attracts the closet scrutiny by the courts.  Here, mere rational justification is not sufficient.

Two categories of grounds of discrimination

74.  Before turning to these cases, and before applying the test of justification enunciated by the Chief Justice in Yau Yuk Lung, it is pertinent to refer to what Lord Hoffmann has said in R (Carson) v Secretary of State for Work and Pensions [2006] l AC 173, about what discrimination is and the two categories of grounds of discrimination.  Carson concerned the right of UK citizens resident abroad to receive an annual cost of living increase as part of their retirement pensions.  At p 182, Lord Hoffmann explained the meaning of discrimination in the above context:

“14.      ….  Discrimination means a failure to treat like cases alike.  There is obviously no discrimination when the cases are relevantly different.  Indeed, it may be a breach of article 14 not to recognise the difference: see Thlimmenos v Greece (2001) 31 EHRR 411.  There is discrimination only if the cases are not sufficiently different to justify the difference in treatment.  The Strasbourg court sometimes expresses this by saying that the two cases must be in an “analogous situation”: see Van der Mussele v Belgium (1983) 6 EHRR 163, 179-180, para 46.

15.        Whether cases are sufficiently different is partly a matter of values and partly a question of rationality.  Article 14 express the Enlightenment value that every human being is entitled to equal respect and to be treated as an end and not a means.  Characteristics such as race, caste, noble birth, membership of a political party and (here a change in values since the Enlightenment) gender, are seldom, if ever, acceptable grounds for differences in treatment.  In some constitutions, the prohibition on discrimination is confined to grounds of this kind and I rather suspect that article 14 was also intended to be so limited.  But the Strasbourg court has given it a wide interpretation, approaching that of the Fourteenth Amendment, and it is therefore necessary, as in the United States, to distinguish between those grounds of discrimination which prima facie appear to offend our notions of the respect due to the individual and those which merely require some rational justification: Massachusettes Board of Retirement v Murgia (1976) 427 US 307.”

75.  His Lordship went on to explain the two categories of grounds of discrimination and the significance of thecategorisation (at pp 182 –183):

“16.      There are two important consequences of making this distinction.  First, discrimination in the first category cannot be justified merely on utilitarian grounds, eg that it is rational to prefer to employ men rather than women because more women than men give up employment to look after children.  That offends the notion that everyone is entitled to be treated as an individual and not a statistical unit.  On the other hand, differences in treatment in the second category (eg on grounds of ability, education, wealth, occupation) usually depend upon considerations of the general public interest.  Secondly, while the courts, as guardians of the right of the individual to equal respect, will carefully examine the reasons offered for any discrimination in the first category, decisions about the general public interest which underpin differences in treatment in the second category are very much a matter for the democratically elected branches of government.

17.       There may be borderline cases in which it is not easy to allocate the ground of discrimination to one category or the other and, as I have observed, there are shifts in the values of society on these matters.  Chaidan v Godin-Mendoza [2004] 2 AC 557 recognised that discrimination on grounds of sexual orientation was now firmly in the first category.  Discrimination on grounds of old age may be a contemporary example of a borderline case.  But there is usually no difficulty about deciding whether one is dealing with a case in which the right to respect for the individuality of a human being is at stake or merely a question of general social policy.  In the present case, the answer seems to me to be clear.”

76.  The claimants in Carson failed in the English courts and the matter ended up in Strasbourg (application no 42184/05).  By a judgment handed down on 4 November 2008, the European Court of Human Rights, sitting as a Chamber, held that there was no violation of article 14 of the European Convention in conjunction with article 1 of Protocol No 1 (about equality).  The case has been referred to the Grand Chamber for decision, and the Court is given to understand that a hearing will be held on 2 September 2009.

77.  In my view, permanent residency, or length of residence in the Special Administrative Region, as a ground of discrimination, does not fall within the first category of grounds of discrimination described by Lord Hoffmann.  It is of a nature quite different from what that category comprises, such as sex, sexual orientation, race, political views and religion.  Rather, it sits more comfortably with the second category comprising, for instance, ability, education, wealth and occupation.

78.  As I see it, the classification does not turn so much on whether the ground is something that the person in question can change.  Whereas sex and sexual orientation are matters that, generally speaking, are difficult if not impossible to change, political convictions and religious beliefs are matters that are capable of change.  Yet they all fall within the first category.

79.  Rather, to my mind, grounds that would probably fall within the first category are matters that go to the very make up or identity of the person in question as an individual; something that is basic, essential or fundamental to him/her and that goes to the core of his/her being as a human being; something that defines the person physically or intrinsically.  For other grounds, they would likely fall within the second category.

80.  I do not pretend that the above is a perfect attempt to define the two categories.  As Lord Hoffmann has observed, there is usually no difficulty about deciding whether one is dealing with a case in which the right to respect for the individuality of a human being is at stake or merely a question of general social policy.  The context, the subject matter and the circumstances will normally dictate a particular answer.

81.  For my part, I have no doubt that length of residence, or for that matter, permanent residency as a convenient shorthand, falls within the second category.  It is not something intrinsic to a person.  It merely describes the length of his residence in Hong Kong.  It cannot possibly be equated with discrimination based on, say, race or sex.  There is simply no comparison between them.

South African jurisprudence

82.  The cases relied on by Mr Pun do not advance his argument that one is concerned with a ground of discrimination falling within the first category in the present case.

83.  The South African case of Khosa, supra, must be understood in terms of the Constitution of South Africa, which gives “everyone” the right to have access to social security, including, if they are unable to support themselves and their dependants, appropriate social assistance.  The Constitutional Court had no difficulty in concluding that limiting such social assistance to citizens and excluding permanent residents of South Africa from enjoying social assistance was unconstitutional.  It took the view that the exclusion of permanent residents from the welfare scheme under attack was likely to have a severe impact on the dignity of the persons concerned, who, unable to sustain themselves, had to turn to others to enable them to meet the necessity of life and were thus cast in the role of supplicants (para 80 at p 539).

84.  The first point to note is that this South African case concerned exclusion of permanent residents of the country from the benefits in question to which only citizens were entitled.

85.  From the judgment, the holder of a permanent resident permit has all the rights, privileges, duties and obligations of a citizen, save for those rights, privileges, duties and obligations which a law or the Constitution explicitly ascribes to citizenship (para 57 at pp 531 to 532).  No relevant rights, privileges, duties and obligations that were so excluded were specifically mentioned in the judgment; apparently none was material.  It was in those circumstances that the Court found that the distinction between citizens and permanent residents in terms of the right to receive the welfare in question was quite unsustainable.

86.  I have great reservation as to whether that distinction finds any proper analogy in Hong Kong.  The ground of differentiation in the present case is seven years’ residence.  The ground itself contains the very essence of the difference between the two groups of residents – those who have resided in Hong Kong for seven years or more, and those who have resided here for less than seven years.  In terms of their connection, contribution (financially and intangibly) and commitment to Hong Kong, length of residence does have a bearing, speaking generally.

87.  But more importantly, the context is entirely different.  In Hong Kong, for almost 20 years prior to the promulgation of the Basic Law in 1990 and 16 years before its coming into force in 1997, Hong Kong had had a one-year residence requirement for eligibility to social welfare.  Prior to that, it had been five years and before that, ten years.  This is an important context that cannot be ignored, and renders the South African case quite irrelevant.  Given the general theme of continuity underlying the Basic Law, and given the specific reference to formulating policies to develop and improve the “previous social welfare system” in article 145, one must approach any allegation of discrimination based on length of residence from the pre-existing requirement.

88.  In other words, the reference to the previous social welfare system in article 145 acknowledges that under that system, there was already a residence requirement.  Unless one were to say, as Mr Pun sought to do during submission, that in fact the Basic Law intended to out law the one-year residence requirement the moment it came into effect in 1997, an argument which I have no difficulty in rejecting given the theme of continuity and given the express wording in article 145, one must start from the basic premise that it is constitutionally acceptable to differentiate residents by reference to their length of residence in Hong Kong, when it comes to the question of entitlement to social welfare.

89.  No such complication was present in the South African case.  Moreover, whereas in South Africa the right to social welfare would appear to be subject only to reasonable restrictions, in Hong Kong, the right to social welfare in article 36 is, as I have already concluded, subject to changes that may be made by the government pursuant to article 145.  Not only is the right not absolute, the changes that can be made are those that are required to be made in response to the changing economic conditions and social needs.

90.  Three other points, all mentioned by Mr Joseph Fok SC (Mr Abraham Chan with him) for the respondent are as follows.  First, unlike the South African government, the SAR government has no control over new arrivals from the Mainland under the one-way permit scheme, subject to the agreed quota of 150 persons per day.  Thus, in the South African case, the Constitutional Court was able to say that if the government does not want any immigrants who cannot support themselves but might resort to social welfare for their subsistence to come into South Africa, they can be refused entry.  But once allowed in, the government cannot discriminate against them (paras 64 and 65, p 534).  The same thing cannot be said in the local context.  Whether one is well to do or is destitute, once a one-way permit is obtained, one is entitled to migrate to Hong Kong, and the SAR government has no choice to refuse entry.

91.  Secondly, the South African government has, apparently, offered no justification for the distinction employed in the relevant legislation.  In the present case, the Director has put forward his justification, which I will turn to shortly.

92.  Lastly, it would appear from the South African law report that the South African scheme had no discretionary element.  There was no power to waive non-compliance with the citizenship requirement.  In the present case, the Director of Social Welfare has a discretion to waive the residence requirement.

US jurisprudence

93.  The American cases relied on by Mr Pun are, on final analysis, quite unhelpful.  Very briefly stated, they concerned state (as opposed to federal) legislation limiting state benefits to those who had resided in the state for a period of time.  The legislation was struck down.  They are unhelpful because the decisions involved the infringement of rights of those discriminated against to inter-state travel within the United States constitutionally guaranteed, as was explained by the Supreme Court itself in the subsequent case of Mathews v Diaz 96 S Ct 1883 (1976), 1894-1895.

94.  Likewise, Mr Pun’s reliance on Graham v Richardson 91 S Ct 1848 (1971) is, with respect, misplaced.  Graham concerned another state welfare scheme which restricted the relevant welfare to citizens and aliens who had resided in the United States for a specified number of years.  The Court said that the distinction based on alienage was an invidious one.  Mr Pun seeks to argue that, likewise, the ground of discrimination in Hong Kong based on permanent residency is invidious also.

95.  A proper way to understand Graham can again be found in the subsequent Supreme Court case of Mathews, supra at pp 1893 to 1894, where the distinction between a federal scheme and a state scheme of welfare wasemphasised:

“Insofar as state welfare policy is concerned, there is little, if any, basis for treating persons who are citizens of another State differently from persons who are citizens of another country.  Both groups are noncitizens as far as the State’s interests in administering its welfare programs are concerned.  Thus, a division by a State of the category of persons who are not citizens of that State into subcategories of United States citizens and aliens has no apparent justification, whereas, a comparable classification by the Federal Government, is a routine and normally legitimate part of its business.  Furthermore, whereas the Constitution inhibits every State’s power to restrict travel across its own borders, Congress is explicitly empowered to exercise that type of control over travel across the borders of the United States.”

96.  Indeed Mathews concerned a federal scheme which restricted medical benefits to citizens and permanent residents of the United States for at least five years.  The Supreme Court had no difficulty in upholding the distinction.  Apart from distinguishing its own earlier decisions on state welfare schemes (as already described), the Supreme Court pointed out that in the United States, a host of constitutional and statuary provisions rest on the premise that a legitimate distinction between citizens and aliens may justify attributes and benefits for one class not accorded to the other, and the class of aliens is itself a heterogeneous multitude of persons with a wide ranging variety of ties to the country (pp 1890 – 1891).  In particular, the fact that Congress has provided some welfare benefits for citizens does not require it to provide like benefits for all aliens (p 1891).  The real question is not whether discrimination between citizens and aliens is permissible; rather, as the Supreme Court sees it, it is whether the statutory discrimination within the class of aliens – allowing benefits to some aliens but not to others – is permissible (p 1892).  At p 1893, the Court went on to say:

“We may assume that the five-year line drawn by Congress is longer than necessary to protect the fiscal integrity of the program.  We may also assume that unnecessary hardship is incurred by persons just short of qualifying.  But it remains true that some line is essential, that any line must produce some harsh and apparently arbitrary consequences, and, of greatest importance, that those who qualify under the test Congress has chosen may reasonably be presumed to have a greater affinity with the United States than those who do not.  In short, citizens and those who are most like citizens qualify.  Those who are less like citizens do not.

The task of classifying persons for medical benefits, like the task of drawing lines for federal tax purposes, inevitably requires that some persons who have an almost equally strong claim to favored treatment be placed on different sides of the line; the differences between the eligible and the ineligible are differences in degree rather than differences in the character of their respective claims.  When this kind of policy choice must be made, we are especially reluctant to question the exercise of congressional judgment.  In this case, since appellees have not identified a principled basis for prescribing a different standard than the one selected by Congress, they have, in effect, merely invited us to substitute our judgment for that of Congress in deciding which aliens shall be eligible to participate in the supplementary insurance program on the same conditions as citizens.  We decline the invitation.”

97.  Of course, there are many differences between the United States setting and the local setting.  What is important to note is that the Supreme Court in Mathews did not consider the length of residence in the case of aliens to be an invidious ground of discrimination in a federal context.  It further recognised that in fact a host of constitutional and statutory provisions rest on the premise that a legitimate distinction between citizens and aliens may justify attributes and benefits for one class not accorded to the other.

98.  This brings me to one important point made by Mr Fok in his submission, namely, that the Basic Law itselfrecognises a legitimate distinction between permanent residents and non-permanent residents in terms of the rights and obligations that they have.  More specifically, as explained, article 36, when read together with article 145 and construed in the context that a residence requirement has existed in Hong Kong since day one, leads one inevitably to conclude that our constitution recognises length of residence, or for that matter, the status of a permanent resident, as a legitimate distinction.  Or put the other way round, such a distinction is not an invidious or suspect ground of differentiation.

European jurisprudence

99.  The two European cases cited by Mr Pun simply do not help.

100.  Andrejeva, supra, concerned the unique situation faced by former USSR citizens resident in Latvia after the break up of the former USSR, whose pension rights were at risk because they did not acquire Latvian citizenship afterwards.  The case concerned Latvian citizenship and has little bearing on the present case which turns on the length of residence.  Likewise the earlier European case of Gaygusuz concerned a peculiar piece of Austrian legislation which restricted welfare benefits to Austrians.  The European Court observed that any ground of distinction based on nationality would require “very weighty reasons” to justify (para 42 at p 381).  The Court pointed out that both Austrian and non- Austrian workmen had to paid the same contributions to the unemployment insurance fund (the subject matter of dispute) on the same basis and there was no objective and reasonable justification for discriminating non-Austrian workmen on the ground of their nationality (see paras 43 and 50 at pp 381 and 382).

101.  No such ground is in issue here.  What is in issue in the instant case is the length of residence.  Far from being an arbitrary and irrelevant ground, it is a pertinent ground of differentiation in the context of social welfare entitlement.  Generally speaking, the longer the length of residence, the greater the resident’s connection, commitment and contribution to the society, and vice versa.

Present case belongs to the second category

102.  For these reasons, I do not accept Mr Pun’s argument that what is involved in the present case is an invidious or suspect ground of discrimination.  Rather, it is a question of social or economic policy that one is concerned with.  And as I have mentioned, in this area, the courts would be very reluctant to substitute a judicial view for that of the legislature or the executive or a properly authorized administrative body.  Apart from the cases already mentioned above, Wilson v First Country Trust Ltd (No 2) [2004] 1 AC 816, 844, para 70 (Lord Nicholls); R (RJM) Secretary of State for Work and Pensions [2008] 3 WLR 1023, 1040, paras 54 to 57 (Lord Neuberger), Mellacher v Austria (1989) 12 EHRR 391, 411, para 53; R (Pretty) v Director of Public Prosecutions [2002] 1 AC 800, 823, para 29 (Lord Bingham) and Evans v United Kingdom (2008) 46 EHRR 728, 755, para 89 are additional authorities, all cited to me by Mr Fok, to the same effect.

The local context

103.  Mr Fok has, in his submission, highlighted five matters that are significant in the local context, some of which I have already alluded to in the above discussion.  First, the Basic Law treats different categories of residents differently.  This is plain from Chap III of the Basic Law.  Whilst on the fact of it, article 36 is not a provision in the Basic Law which differentiates between a permanent resident and a non-permanent one, yet when read together with article 145 and bearing in mind the reference in the latter article to the previous social welfare system in Hong Kong, the distinction between on the other hand, permanent residents and residents who have resided in Hong Kong for a specified period of time, and on the other non-permanent residents who have not resided in Hong Kong for that particular period of time, is implicitly recognised in the Basic Law. 

104.  Secondly, the government is entitled to have regard to economic conditions.  It is specifically mentioned in article 145.  This is, I accept, also a valid point to bear in mind when applying the justification test.

105.  Thirdly, imposition of the residence rule ensures benefits are targeted at those who have contributed to Hong Kong over a sustained period.  This is a self-evident proposition.  In Carson, supra, Lord Hoffmann put a similar point this way (at p 183):

"18    …Social security benefits are part of an intricate and interlocking system of social welfare which exists to ensure certain minimum standards of living for the people of this country.  They are an expression of what has been called social solidarity or fraternite; the duty of any community to help those of its members who are in need.  But that duty is generally recognised to be national in character.  It does not extend to the inhabitants of foreign countries.  That is recognised in treaties such as the ILO Social Security (Minimum Standards) Convention 1952 (article 69) and the European Code of Social Security 1964.”

106.  Any harshness that adoption of the new rule of residence may entail is to a significant extent alleviated by two factors.  First, it has no retrospective effect and it does not apply to those under 18.  To this latter extent, it constitutes a relaxation from the previous rule because the non-application of the new residence rule does not revive the old one-year residence rule in relation to this class of residents. Secondly, potential immigrants to Hong Kong are warned before they decide to give up their residence on the Mainland to come to live in Hong Kong that they will not be entitled to seek CSSA until after seven years’ residence.

107.  Whilst it is true, as Mr Pun has argued, that many of these immigrants have no practical choice but still to come to Hong Kong for the purposes of family reunion, yet, on the other hand, the government has no choice either but to welcome them, given how the one-way permit system and the daily quota of 150 persons work.  The two tend to cancel each other out.

108.  Mr Pun makes the point that new arrivals from the Mainland have to give up their household registrations on the Mainland in order to come to Hong Kong.  They cannot, as a mater of general rule, return to reside on the Mainland without such household registrations.  Therefore Hong Kong is really their home and it has the obligation to look after their welfare.  This may be so so far as it goes, but it does not advance the applicant’s case on discrimination at all.  It does not follow from the argument that Hong Kong is therefore obliged to provide to these new immigrants the same level of social welfare benefits enjoyed by permanent residents of Hong Kong who are in need of help.  Moreover, given that even under the new residence requirement, the Director of Social Welfare has a real discretion to exercise in relation to waiving the requirement in appropriate cases, much of the force of Mr Pun’s argument is lost in terms of Hong Kong’s duty to look after these new immigrants who have nowhere else to turn to.

109.  Indeed the fourth point made by Mr Fok is that the seven-year residence requirement is not an absolute rule.  He refers to the discretion on the part of the Director of Social Welfare to waive the requirement in cases of “genuine need”, the exercise of which is governed by established guidelines already set out above.

110.  Mr Pun has criticized this discretion to waive the requirement in case of genuine need as incomprehensible because those who turn to CSSA for help are, by definition, in genuine need in the first place.

111.  I do not think there is any real point in arguing about semantics.  What the Director means by ‘genuine need’ can be seen from the guidelines governing the exercise of discretion.  It is to be noted that there is no general challenge against those guidelines, nor is there any specific challenge in relation to the Director’s refusal, in the case of the applicant, to exercise his discretion to waive the residence requirement.

112.  Mr Pun makes the point that when the Basic Law gives Hong Kong residents a right to social welfare, it is objectionable to downgrade the right to a discretionary entitlement.

113.  But that does not, in my view, deal with the core question, namely, whether the restriction can be justified.  Rather, the real point is that in determining whether the differential treatment can be justified, one bears in mind that, unlike the apparent situation in South Africa, there is indeed in place an ultimate safety net by way of the discretionary power of the Director to waive the residence requirement.  I believe this is a relevant context to take into account in determining whether the justification test is fulfilled.

114.  From the materials available, the discretion is a real one, and a significant proportion of those who applied for a waiver received a favourable decision.

115.  Lastly, Mr Fok refers to the fact that there are other welfare benefits available.  That these other benefits are available is not in dispute.  But, to be fair, they are not entirely comparable to what an eligible resident can obtain under the CSSA scheme.

116.  Apart from these five specific points, I wish to stress, at the risk of repetition, several matters.  First, as mentioned more than once, Hong Kong’s welfare system has always contained an element of residence requirement.  I do not believe the Basic Law intends to do away with that requirement.  In other words, application of the justification test must start from the premise that such a requirement, and the entailing differential treatment, is not per se objectionable.  Lengthening the residence requirement is, to a certain extent, a matter of degree, involving no question of principle.  But of course, if the new length of residence to be imposed is substantially longer than the previous one, which is indeed what has happened in the present case, what would otherwise have been a matter of degree had the increase in length been less drastic might become a matter involving questions of principle.

117.  Secondly, since no invidious or suspect ground of discrimination is involved, as I have concluded, and since the subject matter in question involves questions of social and economic policies, a substantial degree of deference must be accorded to the government.  After all, article 145 specifically provides that it is for the government of Hong Kong Special Administration Region, “on its own”, to formulate policies to improve and develop the pre-existing social welfare system.  The responsibility has been entrusted to the government, not the courts.  The courts only play a supervisory role in the matter.

118.  Thirdly, whilst very understandably, the whole case has been argued on the basic of the rights of the applicant and other residents in similar positions, to social welfare provided under article 36, one must not lose sight of the fact that by the nature of things, other rights of other people are necessarily involved.  Given that financial resources are finite, any relaxation or restriction in terms of social benefits would entail a corresponding decrease or increase in resources available for other uses, which may involve other constitutional rights of residents in Hong Kong.  So for instance, money saved up from a more restrictive social welfare system could be made available for the provision of education, medical care and other public services or works, benefiting residents of the society or a particular class thereof.  In short, one is involved in an area of competing interests and competing rights.  By definition, a balance has to be struck.  And again by definition, striking that balance is by nature a political job for the government and the legislature with the involvement of public opinion.  In matters of the present sort, courts must be very slow to interfere.  Telescoping on one particular right in one particular article in the Basic Law runs the danger of missing the wider picture, which involves many other competing rights enjoyed by many other people.  Likewise, one must keep a broad enough timeframe in mind.  Focusing only on the social welfare benefits that may be enjoyed by Hong Kong’s residents for the time being would make one lose sight of the long term effect of not curbing social welfare expenditure on the society’s ability to meet the social welfare needs of the future generation.  As described, sustainability of the system in the long term is at stake.

119.  As Lord Hoffmann has remarked, social security benefits are part of an intricate and interlocking system of social welfare (para 18 at p 183 in Carson).  In my view, the system of social welfare in Hong Kong itself forms part of an intricate and interlocking system of social and economic structure of the society.  Constitutionally and institutionally, fine-tuning that structure or any element comprising that structure is, prima facie, the job of the government, the legislature and indirectly, the electors and the general public.

120.  Fourthly, and this is a point I have already mentioned, whilst fairness does not come into play directly in the justification test as such, I do think the fact that the new rule does not apply retrospectively to those who have already become residents of the Special Administrative Region before 2004 is of some significance.  In other words, the rule only applies to those who came or will come to Hong Kong after 2004.  According to the materials available, the new rule has been well publicised.  It is safe to assume that before the post-2004 arrivals decided to migrate to Hong Kong, they knew well (or ought to know) about the new rule.  It was their choice to come to Hong Kong despite it.  The same applies to future arrivals.

121.  In my view, it has a bearing on the question of whether the new rule is a necessary response to the legitimate aim that the government seeks to achieve by the rule.  Coupled with the inability of the government, under the one-way permit scheme, to turn away any person who has managed to obtain such a permit, I would be slow to conclude that the government cannot impose a new residence requirement in the CSSA scheme, which is Mr Pun’s primary position.

122.  Having said all that, I would turn to the application of the justification test.

Application of the justification test

123.  On behalf of the Director, Mr Fok submits that the legitimate aim of the seven-year residence requirement is to adopt a proper basis for the allocation of finite public resources in the light of rising social expenditure so as to ensure the long term sustainability of the provision of social security benefits to the society as recommended by the 2003 Taskforce on population. 

124.  I find that this is an aim fully borne out by the materials placed before the Court.  I also find that it is a legitimate aim.  The long term sustainability of the social welfare system is something that the government must ensure, particularly in the light of its constitutional obligation under article 145 to develop and improve the pre-existing social welfare system.

125.  Mr Fok submits that the policy was rationally connected to the legitimate aim in that it requires that a particular, expensive benefit is confined to those who have been part of the community of Hong Kong for a sufficient length of time to establish that they are contributing to that community in one of a variety of ways (such as financial or social).  As a general proposition, I accept the submission.  There are bound to be odd cases.  But, in my view, in applying the justification test, one should not be over concerned by odd cases, unless the number is so substantial that it begs the question of whether there is any rational connection at all between the aim and the measures sought to be adopted.

126.  Incidentally, Lord Hoffmann has explained in Carson, supra, that the use of a dividing line is not objectionable per se, even though there are bound to be odd cases on either side of the line (at p 188):

“41    Mr Gill emphasised that the twenty-fifth birthday was a very arbitrary line.  There could be no relevant difference between a person the day before and the day after his or her birthday.  That is true, but a line must be drawn somewhere.  All that is necessary is that it should reflect a difference between the substantial majority of the people on either side of the line.  If one wants to analyse the question pedantically, a person one day under 25 is in an analogous, indeed virtually identical, situation to a person aged 25 but there is an objective justification for such discrimination, namely the need for legal certainty and a workable rule.”

127.  Thirdly, as regards whether the policy was no more than necessary to accomplish the legitimate aim, it must be firmly remembered that one is here concerned with a discretionary area of judgment enjoyed by the government in relation to social and economic matters.  As I have emphasised, this is not a case concerning a ground of discrimination falling within the first category of cases enunciated by Lord Hoffmann in Carson.  It does not require stringent scrutiny.  Rather, a substantial degree of deference is due to the government’s judgment and decision.

128.  In the present case, as counsel has submitted, to provide CSSA to persons who do not satisfy the seven-year residence requirement would be more expensive and would necessarily mean that there would be less money available to provide for these benefits for other residents of Hong Kong, or to provide for other welfare benefits, unless taxation were to be increased or other sources of revenue were found.

129.  As I said, starting from the premise that Hong Kong has always had a residence requirement in its social welfare system which is recognised by the Basic Law, increasing the length of residence is really a matter of degree, and it is a discretionary area of judgment that the government enjoys.  Whilst there can be no doubt that the lengthening of the requirement from one year to seven is substantial if not drastic, I take the view that looking at the matter in the round, this is not something that the courts are constitutionally entitled, and institutionally equipped, to interfere with.  In short, it is really a matter of politics for government officials and politicians, not for the courts and judges.

130.  It is particularly so, when the background here is nothing other than social and economic conditions and needs.

131.  In Raza v Chief Executive-in-Council [2005] 3 HKLRD 561, 593, para 118, a case involving the imposition of a monthly levy on employers of foreign domestic helpers and a corresponding reduction in the minimum wages by the same amount, the Court recognised that the scheme under attack was based on socio-economic needs, which are constantly evolving and that the administration was best placed to make the necessary assessment on those needs and to formulate policies which would meet them.  In respect of socio-economic matters, the Court noted, our courts would give greater deference to the administration’s judgment than they would in respect of immutable, fundamental right such as the right to freedom of religion or to fair trial.

132.  Likewise, in Clarken v Ontario Health Insurance Plan (General Manager) (1998) 52 CRR (2d) 74, 88, the Ontario Divisional Court has observed that where the context of the case is the distribution of social benefits, and where there are competing demands on scare resources, the Supreme Court of Canada has stated that the courts must afford legislature deference when considering the justifiability of relevant government measures.  It is legitimate for the government to make choices between disadvantaged groups and that it must be provided with some leeway to do so.  If the legislature has made a reasonable assessment as to where the line is most properly drawn, especially if that assessment involves weighing competing scientific evidence and allocating scare resources on this basis, it is not for the court to second guess.

133.  One other matter to firmly bear in mind is the discretion, which is a very real one, to waive the requirement in case of genuine need.  As I said, the relevant guidelines are not challenged, and in any event, exercise of the discretion is subject to the supervision of the court.  Since what is involved is a constitutional right in article 36 (as read together with article 145), the exercise of discretion according to the guidelines, and indeed the guidelines themselves, are subject to the court’s supervision with a suitable degree of intensity.  However, as I have pointed out, this case does not involve any challenge against the guidelines as such, or their application to the applicant’s case.  No such question arises for decision.

134.  The very existence of the discretion and the guidelines, and that of the court’s supervisory role of review with an appropriate degree of intensity, are also relevant matters to bear in mind in determining whether the policy is no more than necessary to achieve the legitimate aim in question.

Conclusion

135.  Having considered the matter carefully, I have come to the conclusion that the new residence requirement satisfies the justification test.  In other words, the differential treatment is justified and there is no discrimination within the meaning of article 25 of the Basic Law and article 22 of the Hong Kong Bill of Rights (article 26 of ICCPR).  For the same reasons, the policy embodied in this new residence requirement constitutes development and improvement of the pre-existing system in the light of Hong Kong’s prevailing economic conditions and social needs, and therefore is one properly formulated under article 145 of the Basic Law.  In the circumstances, Hong Kong residents’ rights to social welfare guaranteed under article 36 must be read in the light of this new policy.  No breach of article 36 is involved.

136.  In conclusion, I find that the new requirement has not infringed the relevant articles.  The application for judicial review is dismissed with costs to the respondent, the parties having agreed that costs should follow the event.  I certify for two counsel.  I also order legal aid taxation in relation to the applicant’s own costs.

137.  I thank counsel for their assistance.