STATE INSURANCE FUNDS

Evening Post, Volume CXI, Issue 93, 21 April 1931, Page 8

STATE INSURANCE FUNDS

(To the Editor.) Sir,—The Government Life, Stale Fire, and State Accident Insurance Departments wore established under separate Acts, wherein it was distinctly laid down that all funds were the property o£ tho policyholders. All salaries, wages, and other expenses of these Departments arc paid out of the departmental funds, consequently all savings effected in the way of cuts in wages, etc., must necessarily represent savings to the particular Department concerned, and to no one else. I notice, however, that Mr. Forbes proposes to transfer any salary cuts in these Departments to the Consolidated Fund, taking authority for such action in the Finance Bill No. 2, now before the House. The utmost that any previous Premier, including Sir Julius Vogel and Mr. Seddon, ever dared do was to influence the investment of departmental funds in certain directions; aud it has been left for the present Government to depart from the recognised sound policy. Hitherto the heads of these Departments have been able to proclaim, in prospectuses and elsewhere, that "all funds are trust funds, protected by law, and the absolute property of policy-hold-ers"; but in future they will be'compelled to issue this warning to existing and prospective clients: "The Department's funds are subject to be raided by any hungry Treasurer who is hard up and can persuade a complacent House into passing the necessary authorising legislation." No doubt the "Prime Minister may urge that it is a case of dire necessity. True, but was not the same argument put forward by the starving man who snatched a loaf from the baker's counter?—l am, etc.. POI/ICr-HOLDER. (To Jhe Editor.) Sir,—l. notice in the No. 2 Finance Bill, recently brought down in the House, that special provision is made to transfer to the Consolidated Fund the proceeds of the 10 per cerjt. cut from the salaries of the employees of the Government Life Insurances Office and the State Fire Insurance Office. This, it appears, amounts at best to a special tax on the policy-holders in these two offices. Surely the saving made by the cut in these two offices belongs to the policy-holders, and should be used either in maintaining the present rate of bonus or in reducing premiums. In common with every other policyholder in the Government Life, I invested my savings iii that office because I understood' that the funds were to be applied for our mutual benefit. I am sure no policy-holder expected his funds to be seized by the State to bolster up its revenue in good or bad times. The Government is, no doubt, finding it more than difficult to procure money to carry on the services of the State and pay interest on borrowed money, but that is surely no' reason why it should resort to such a questionable policy.—l am, etc., ANOTHER POLICY-HOLDER: (To the Editor.) Sir,—l think the attention of the 70,000 persons who hold policies in the Government Life Insurance Department should be drawn to the proposed raid on the moneys of that institution under Section 5 of the Finance Bill, 1931 (No. 2). The Government Life Insurance Act gives no power to the Government to take any part of the profits of the Department, and for over half a century this principle has been rigidly adhered to. Further, with the .sanction of the Ministers in charge from time to time, the feature that all profits belong exclusively to the policy-holders has been made a leading feature in the ( advertisements aud literature issued for the purpose of inducing people to insure in the Department. On the pretext that the State is under some liability notwithstanding the £8,000,----000 of funds held by tho office, the Government proposes to take 10 per cent, of the salaries of the officers of the Department for the benefit of the Consolidated Fund. In other words, tho salaries shown in the accounts are to be some fictitious amount in excess of those actually paid, and tho balance is to go to the expenses of the General Government. The Department, like other insurance offices, will bear its share of the increased postage charges and taxation, and if any special reduction of salaries is made this should belong to the policy-holders in'the same manner as it would in a private office. If the measure becomes law, it will only serve as precedent for additional charges, and the large annual profits distributed to policy-holders— £214,188 for the year ended 31st December, 1929—wi1l form an irresistible temptation for further exploitation as has proved to be the case in regard to life insurance in Australia.—l am, etc., P. MDTEB, F.I.A. Late Actuary to the Government Insurance Department.