An immense burden on public finances is expected unless changes are made to the Old Age Allowance, Secretary for Labour & Welfare Matthew Cheung says.

He gave the warning in a television interview this afternoon on the Chief Executive's 2008-09 Policy Address. He said the Labour & Welfare Bureau plans to forward a detailed proposal for introducing a means test, which is aimed to ensure an effective allocation of resources, by year's-end.

Annual spending on the allowance has reached $3.8 billion, equivalent to 2% of recurrent expenditure. Mr Cheung said unless changes are made spending will surge to $9.7 billion in 25 years when there will be one 65-year-old for every four residents, and to $14 billion should the allowance be raised to $1,000.

However, he stressed the revamp will not affect the existing 470,000 allowance recipients, adding the existing means test for those aged 65 to 69 is lenient.

Meanwhile, Mr Cheung said he expects the Minimum Wage Commission to start work early next year, and the Census & Statistics Department will collect data so the commission can study minimum wage levels towards the end of 2009.

At the same time the Labour & Welfare Bureau, with the Department of Justice, will prepare a draft bill to be submitted to the Legislative Council within the current session.