yes you are correct and quite a valid point actually... However, a lot of the CEP were actually born or brought up elsewhere. The only reason why they're on local terms is because they have HK residency. NOT because they joined through the cadet program as there are couple "direct entry" pilots who were basically told by the company that they're considered local because of their HK ID card.
Expats chose to base in HKG and are getting housing and education allowance as compensation because they're not in their own countries, which I don't think ANYONE (including the CEP's) would object is a fair deal. So logic would indicate if an CEP who chooses to be based anywhere outside HKG should be getting housing and education allowance as compensation as well because in that case they would be out of their own country (HKG). I bet you all bases will be filled up within seconds.
With international cadets just around the corner, we're gonna start seeing non-HK ID holder signing onto local contracts. The fact that Mr. Rhodes has been constantly probing the question of "how long does one take to become a local", I really wonder what he got up his sleeves for the next COS.