GOVERNMENT INSURANCE

Evening Post, Volume CXI, Issue 92, 20 April 1931, Page 6

GOVERNMENT INSURANCE

THE FINANCE 'BILL

(To tho Editor.) Sir,—As a policy holder in the Government Insurance Department, I desire to make tho strongest possible protest against certain provisions in the Finance Bill now before Parliament. The proposal, inter alia, is that the 10 per cent, "cut" in the salaries of the officers of that Department shall be applied, not to reduce the expenses o£ the Department in question, but to increase the . Consolidated Fund, the alleged excuse being that it is to compensate the Government for the guarantee, which it gives for the fulfilment of the Department's life policy contracts. It would perhaps have been better if the excuse had hot been put forward. The Department has now been in operation for over sixty years, and it is surely very late in the day now for such a question to be raised, and moreover no valid reason has been given for raising it. The Government of the Day can exercise complete control over the Department and its affairs and to ■ require payment for its guarantee seems to imply that it is doubtful of its ability to manage it. The Department lias been of material assistance to the Government in the past by taking up large loans in Government securities. It entirely pays its own way. Its accounts are subject to audit by the Controller and Auditor-General, for whose services the Department pays; and its expenses are subject to Parliamentary review in tho Estimates. Surely this is sufficient. The "State Guarantee," though useful for advertising purposes and for easing the minds of those who do not understand balance-sheets, is for all practical purposes entirely supererogatory. In all its sixty years the Department's financial position has never given cause for the slightest uneasiness, and, as an instance, was able to- meet its heavy death claims arising out of the war and the succeeding influenza epidemic without so much as "the flutter of an eyelid." _ I speak from forty-two years' experience in its service. There is, however, another aspect. The post-war conditions which led to material increases in salaries generally/ affected the Department in common with other trading concerns, but with the difference that the increased expenses could not be passed on by the Department to its customers, the policy holders. Now that a "cut," however regrettable, has had to be made, surely the Department's funds are now entitled to the benefit. There seems little doubt that in the near future the Department's competitors in the life insurance field, in common with what has already been done or is being done by many trading companies, will reduce then: salary charges, and thus the Government Department 'Will be placed in an unfair position through having in effect to continue payment of salaries on the old scale. And this through the action of those who should jealously guard its interests. Even if it were necessary to establish a guarantee fund (which I do not for a moment admit) the proper course would be to pay the amount into a special account where it would accumulate with interest. The intention, however, is apparently to use it for ordinary revenue and thus dissipate it. In effect it will impose a special and unfair tax on what has developed into a highly successful and excellently managed institution. On the strength of ■' its existing legislation the Department has widely advertised, "All profits belong to the policy holders." The present proposal seems io me to constitute a distinct breach of faith.—l am, etc., GEO. W. BARLTROP, Formerly Deputy Commissioner, GovernV. ment Insurance Department.