YES OR NO?

Auckland Star, Volume LXIX, Issue 208, 3 September 1938, Page 14

YES OR NO?

SECURITY PLAN.

CAN COUNTRY AFFORD IT?

MODIFIED SCHEME URGED.

(15y the ASSOCIATED CHAMBERS OF COMMERCE.) The social security proposals of the Government in their final form, as contained in tlie bill now before the House, do little to remedy the serious weaknesses, dangers and injustices in the plan to which attention has been drawn previously (says a statement by the Associated Chambers of Commerce of Xew Zealand). Xeither does the speech made in explanation and justification bv the -Minister of Finance, in inaugu; rating the second reading debate °on the bill, dispel fhe grave fears that exist that the economy of the country cannot sustain the enormous strain which the Government's scheme will place upon it—-fears which are increased because of the extensions and additions the Government has made to its scheme. No Proof Produced. Desirable as many of the proposed benefits may be, there is no question that the crux of the whole subject is finance. The Minister of Finance rightly and admirably stated in his speech that the justification for the Governments scheme depended on the answer to the question whether the benefits provided in the bill could be paid for out of the production of this country, without ill effect on any major portion of the public. He said he believed the answer was yes. We believe the answer is no. At one as we are with the <"• vernmont in its desire to promote the national well-being by such social measures as the country can afford, we have waited to hear Mr. Nash state the case of the Government before making any comment on the bill. Unfortupatelv the Minister has produced no evidence whatever that would establish a sense of reasonable anticipation that the country can afford to maintain' the scheme not only' without injury to the major portion of the public but also without injury to prospect that is held ou,t to beneficiaries by the Government that it really will be able to pay the benefits in full within the lifetime of .the beneficiaries.

Mr. Nash expresses his recognition of tjie, fact that the Government must prove that the production of the country is so great that all the benefits, plus others, can be given. He says he believes that that can easily be proved, but it is a most extraordinary thing that he stops at that and produces no proof. It is true that the Minister talked in broad terms of (1) the building up of.a greater internal production, and (2) the consumption by Great Britain of infinitely more of our products than she consumes at present. As regards (1) the Minister overlooked the .fact that greater production is "being seriously prejudiced by higher working costs, heavier labour charges, shorter working hours and higher taxation, together with reduced output per man-hour in different industries, all of which hamper existing industry and deter new enterprises. As regards (2) the question whether Great Britain will take infinitely greater quantities of our produce than she does at present, is a matter which Great Britain herself will decide. We recall that the British Government rejected an offer by the present New Zealand Government to devote the whole of our surplus credits to buying British goods in return for a suitable quid pro quo by Britain as regards the purchase of New Zealand produce. This Dominion has heard more of the application of quotas and levies to our primary produce thart it has heard of the willingness of Britain "infinitely to expand" her consumption of our produce. " Reckless Assumption."

If the grounds which the Minister of Finance has indicated are those on which the Government relies, and on which it assumes the Dominion will have the capacity to support its grandiose social insurance scheme, then we consider the reliance to be. based on shifting sands, and its assumption to be reckless. It is equivalent to a man going out and spending beyond his income in the belief that his employer ought to (and in the hope that his employer will) give him an increase in wages. In fact, it is equivalent to a man making financial commitments beyond his capacity when his employer has already warned him that his wages may be reduced. In view of the very insecure grounds which the Minister has advanced, we become confirmed, in our view that the scheme is financially unsound, and. is one which, owing to economic circumstances, may well break down of its own weight, and ultimately have to deny to beneficiaries the benefits which to-day it proposes to provide. In the matter of the detailed costs of the scheme, the Minister handles these in an extraordinary manner. He takes the estimates of costs given by the eminent British actuary, Mr. G. H. Maddex, condemns Mr. Maddex's outlook, arbituarily reduces Mr. Maddex's estimates, inflates the national income by the sum of £25,000,000, which the Minister says represents "progress" and also incomes that he claims are not declared! at the present time, and then naps this with his personal opinion that the ordinary natural income of ihe country will expand to an extent that will enable the necessary additional money for the scheme to be found with- | out any increase in taxation in the ordinary way. The whole of this figuring is so flimsy as to be positively alarming when one considers the farreaching implications of the social insurance scheme. Proper Investigation Urged. With all respect for the capacity of the Minister of Finance, we are astonished at the manner in which the figures of an impartial and qualified actuarial officer have been disregarded. We do not suggest that sound actuarial methods have been subordinated to the scheme the Government wants to see put into effect, but, in such an importUnit matter as this, we do consider it imperative that, since the scheme has been altered and added to from the time that Mr. Maddex first reported oii it, it should now, in its amended form, be made the subject of full investigation and report by a qualified actuary, whose report should, be published in detail for the general information of the public before the bill is proceeded with any further. The cost as originally tabulated by Sir. Maddex "was staggering, but, except for the barest details of initial additional costs, given by Mr. Nash, the country is being asked to enter blindfold into an extended scheme which is strewn with unknown commitments. Such a course does not induce a sense of social security. _ The cost, for instance, of the additional benefits to the wives of pensioners Mr. Nash gives as £450,000 for the first year, awf- the-eoat of- nSoW-eztaded

benefits at £100,000 for the first year, but he gives no indication of how these costs are going to grow in succeeding years, what the estimated cost will be of the limited benefits that are to be made available without a means test, or what will be the nature and cost of the measures that will be necessary when calls fjr unemployment purposes exceed the £1,500,000 provided for this purpose.

It is most disquieting for the Minister to depreciate the personal outlook of Mr. Maddex. That gentleman was brought to New Zealand to report 011 facts, not to give opinions. However.he was pressed during his evidence to express an opinion on whether the scheme was financially sound or not, and he replied that the question of finance seemed to him to depend not only upon the maintenance of production but also upon the maintenance of markets and prices. Because his personal opinion would not allow him to support the Government's the Minister now says he has the wrong outlook. This supports the view that the Government is basing its case not upon sound facts but merely upon its own opinions.

We again urge on the Government that it shelve the bill and investigate the possibility of a modified scheme of health insurance and superannuation along the lines of those schemes in operation in England and Australia, embodying true insurance principles. On all the evidence, the present scheme is inequitable and beyond the capacity of the country.