Cash Sharing Scheme

‘The cash sharing scheme is a political issue in Macau and not just a budgeting issue.’ Do you agree with this observation? Discuss and give examples to substantiate your arguments.

Welfare services provided by the Macau government remained at a flat level before and after the handover of sovereignty in December 1999. This situation changed when the gaming industry was expanded from one to six licensed gaming operators and the revenue from gaming tax began to increase year-on-year. Economic efficacy has grown rapidly since the first casino opened in September 2004; it took less than one year to earn back the invested capital. This effect leads more people to develop in the gaming industry. Although the Macau government benefitted from gaming revenue, it did not increase welfare expenditure or raise the basic salary of the civil service.

Starting from 2008, Macau government adopted a new policy --- cash sharing scheme. It is a policy about sharing money with the holders of permanent and non-permanent Macau Resident Identity Cards. Due to the weak community has no ability to earn money, such as old, weak and disabled need help from the government. Therefore, the aim of the policy is to share the result of the economic development in Macau and provide financial help for the low-salary citizens. In 2008, the holders of permanent Macau Resident Identity Cards can get $5000 and the non-permanent Macau Resident Identity Cards also can get $3000. After the scheme was announced, more than 11,000 people who qualified for Macau Resident Identity Card, wanted to apply for one and hoping to receive money. The amount of applications is 10 times more than the normal time. In the following years, the amount of money sharing is increasing or decreasing due to the economic development. Until now (2014), the holders of permanent and non-permanent Macau Resident Identity Cards can get $9000 and $5400 respectively. No one would disagree with this policy after receiving the money. However, there are many different elements and problems of this policy.

‘The cash sharing scheme is a political issue in Macau and not just a budgeting issue.’ I absolutely agree with this statement. The cash sharing scheme does really act as a stimulant in functioning political affairs. This cash sharing scheme aims at maintaining the economic stability of Macau’s society as it symbolizes that the government of Macau has excessive financial resources to share with its citizens. One of the major characteristics of this scheme is to increase the popularity of the Macau government. The sharing money acts as an aid to the poor as they can gain access to receiving a large amount of capital immediately. This then can narrow the discrepancy between the rich and the poor. Besides, it can also alleviate the social conflicts that caused by the increasing income disparities. Moreover, this can also enhance the economic development of Macau. Due to the above aims of the cash sharing scheme, the Macau government can then establish a successful image to the citizens. Thus, leads to a higher prospect of the Macau citizens towards the future development of Macau.

Compared to Hong Kong and other city, Macau is really a better city. Macau citizens can receive the money sharing every year. The unemployment rate and population in Macau are also less than others. The living standard in Macau is also better than Hong Kong or other countries. It seems that Macau is the best city in the world. However, this kind of better conditions in Macau may not be advantaged for the Macau citizens. Macau citizens started to satisfy with all the things or policies of the government. They seem not to think about anything and care less about the development of Macau as their satisfaction is very high. They just care about their own welfare and wealth. The cash sharing scheme seems like a payment to the Macau citizens in order to ask the citizens to agree with all the things, like policies etc. They started not to think about the result, even the policy is bad for them. Unlike Hong Kong, the citizens in Hong Kong always think a lot about the new policies. Although they also care about their wealth or welfare, they will care about the development of their own city. When there are some new policies adopted, if the citizens in Hong Kong disagree with those policies, a protest demonstration among them may be occurred. For example, there is an event ‘Occupy Central’ happening in Hong Kong. It is a civil disobedience movement which began in Hong Kong on September 28, 2014. It calls on thousands of protesters to block roads and paralyze Hong Kong's financial district if the Beijing and Hong Kong governments do not agree to implement universal suffrage for the chief executive election in 2017 and the Legislative Council elections in 2020 according to international standards. In this protest demonstration, it is not just adults joining the events. Many teenagers and students also joined. The citizens in Hong Kong fight for their rights and freedom. It shows a big difference between Hong Kong and Macau.

The cash sharing scheme is obviously beneficial to the Macau citizens. The citizens can receive a large amount of money immediately and improve their living standard. They can buy a lot of things instantly, such as wallets, shoes etc. However, this policy can only solve your short-term problem. During the long-term, this policy caused a lot of bad effects. The most serious one is inflation. Due to the improved living standard, the demand of the citizen increase because of the cash sharing scheme. The citizens need to bear the result of the cash sharing scheme. The aim of the cash sharing scheme is to fight against inflation. But why does inflation become a problem in long term? Although every $1000 cash only affects less than 1.5% of the inflation, it can be a serious problem in the long term. The inflation rate will be increased year by year. After a long period of time, this effect will become a big problem. For example, the price of housing in 2008 compared to 2014, there is a big discrepancy between these two years. Nowadays the citizens cannot afford the price of the housing. They can just wait for the allocation of the free housing from the government instead of buying their own house. It can be proved that the cash sharing scheme affect the inflation a lot during the long term. However, that is not meant that inflation can be solved in the short term. You cannot consider that all the sharing money would be spent in the local (Macau). Some people may just save the money by themselves or spend overseas. It is useless for solving the problem of inflation. It seems that the inflation’s problems cannot be solved and become more serious. If the sharing money did not spend in Macau but spend in other places, it will lead to more currency of Macau (MOP) outflow to other countries (such as HKD and RMB). That’s really a warning to both Macau and the citizens.