The Press THURSDAY, MARCH 23, 1972. Shortcomings in Social Security

Press, Volume CXII, Issue 32873, 23 March 1972, Page 12

The Press THURSDAY, MARCH 23, 1972. Shortcomings in Social Security

Anyone who hoped that radical proposals would come from the Royal Commission on Social Security will now be disappointed. The commission did not discover any widespread desire for radical change and it did not find, during its own examination of the system, reasons for making any sweeping changes. Not surprisingly, in view of the scope of the social security system and the fact that it is Interwoven into the whole fabric of New Zealand’s social structure, the report is voluminous. It has three main features: it redefines the system and its social purposes; it discusses with textbook clarity the working of the system, possible alternatives, and the arguments for and against possible changes; and It proposes a number of amendments to the system, none revolutionary, but most of them essential if the system is to fulfil its defined purpose. Although the commission regards the system as fundamentally

sound, it finds that in many respects its application has serious shortcomings.

Two declared ideals shape the form of the report The commission has defined the object of a social security system as: “To ensure, within limitations “ which may be imposed by physical or other dis- “ abilities, that everyone is able to enjoy a standard “of living much like that of the rest of the com“munity, and thus is able to feel a sense of partici- “ pation in and belonging to the community ”. Second, notwithstanding theoretical objections to means testing, the commission believes that the system must be founded on the relief of need where the need is greatest Although the commission wants to retain what it calls “ a mixed bag of selective and "universal benefits”, it has very properly tried to steer the system towards greater selectivity. It is a pity that it did not go further in this direction, though it supports the greater use of supplementary benefits when the need for them is shown. It is a direct result of this realistic approach that the recommendations made by the commission would not be unreasonably expensive to implement Any other course leading towards greater universality of benefits would not only be costly but would call for substantial and cumbersome changes in the structure of taxation. It is surely more sensible to give benefits where they are needed rather than elaborate the tax system to recover, or reduce the effect of, benefits that are not needed.

The commission no doubt would have preferred to apply the same principle to family allowances; but there are obvious practical difficulties in such a course. The commission recommends increasing the family allowance and ending the tax exemption for dependent children. Equally wisely it recommends

that an increase in the medical services benefit should be accompanied by some control of doctors’ fees. The most striking section of the commission’s report concerns the proposed domestic purposes benefit This concerns solo parents, women required to care for sick or infirm persons, and women whose previous domestic commitments have affected their ability to obtain employment The proposal is notable for the clear light it throws on the needs of people who, because of the burden they carry in caring for others, are unable to earn an adequate living for themselves.

This is one of the commission’s most welcome conclusions. On two other matters of importance the commission has made no positive proposals but points the way to possible further action. One concerns sickness benefits that are related to lost Income. The commission has preferred to retain flatrate benefits and challenges the “equity” principle —“ the greater the loss the greater the need ”. There can be equity in preserving differences in income only if there is equity in those differences themselves, says the report The commission, of course, had the accident compensation scheme in mind when considering this question. It has found that, as incomerelated benefits would be paid only to earners, any scheme to compensate for lost income should be administered separately from the social security system and as an addition to the compensation scheme for personal injury. The commission has not been persuaded that a State allowance should be paid to all mothers of young children. That priority should be accorded to adjusting the family benefit can hardly be disputed. A recommendation that the level of benefits be related to selected ruling wage rates should not delay efforts to gather information on household expenditure and living standards that would assist in making the inescapable “value “judgment” on what is “adequate”. How to determine the "adequacy” of benefits not unexpectedly proved the greatest problem confronting the commission. It does not pretend to have found a satisfactory answer. Adjustments to benefits according to changes in the price index assume that the original benefit was adequate and that the community’s standard of “adequacy” has not changed. Neither assumption is safe. The commission says frankly that there is not suffident information on which to determine the adequacy of benefits. It is a shortcoming that should be repaired without delay.