A LEVELLING MEASURE

Evening Post, Volume CXXVI, Issue 3, 4 July 1938, Page 8

A LEVELLING MEASURE

Many aspects of the Government's social security plan were dealt with by Dr. McMillan, the Government member for Dunedin West, when he initiated the Address-in-Reply debate last week, and in some respects new light was thrown on the proposals to be contained in the Bill shortly to make its appearance in the House of Representatives. For instance, Dr. McMillan made it plain that eligibility for superannuation is to be on the same basis as eligibility for the old age pension. That means that a married couple, on reaching the qualifying age, can possess their own home, a private income of £1 a week, and (between them) a capital of £1000 and still qualify for superannuation payments of 30s a week each, although, of course, any interest earned on capital would be taken into account as income. These provisions, together with the announcement by the Prime Minister that the income limit

is to be fixed at £312 instead of £208, have had the effect of liberalising the scheme to a considerable extent, but the basic objection remains. The plan is not yet universal. It demands from all a payment of Is in the £ and from many an additional amount, so farundefined, to make up the balance between the wage-tax revenue and the ultimate cost of the scheme, but it does not ensure for all an equitable return in superannuation benefits. In fact, the plan may be regarded as another instalment of the Government's levelling policy, a policy which contemplates that all shall enjoy the same standard. Incomes from salaries and wages in New Zealand show a great range —from the basic wage to £1000 a year and more. That means, in effect, that prior to the age of retirement, at least, there are varying deIgrees of living standards in the comjmunity. Some people, by virtue of | merit and responsibility, receive a greater monetary reward than others and consequently are able to provide themselves with a higher living standard. The Government itself recognises the principle. Under the social security scheme, however, a principle recognised before the age of retirement is not to be recognised after the age of retirement. The higher-paid civil servant, for example, retires, say, at the age of sixty and he receives from one or other of the State Superannuation Funds an allowance of £300 a year. This automatically debars ' him from receiving any superannuation benefit from the social security fund, although he has not only contributed his Is in the £ but has also made heavy graduated payments by way of income tax in order to subsidise the fund. Mr. Savage is apparently seized of the injustice ("stupidity" was the word he used) of a £300 limit for the retiring allowance of a civil servant when there is no limit to contributions, but this limit is at least not subject to a further means test. If the civil servant can make^ further private provision his superannuation is not reduced proportionately. Under the national plan, the more the provident person strives to make provision for himself, the more he reduces his possible pension benefit.

The Prime Minister has given no indication up to the present of the increased cost that will be involved in the liberalising of the social security benefits. It is obvious, howover, that the increase will be considerable. As we have pointed out previously, the revenue from the tax on wages cannot be expanded if the contribution is to remain at Is in the £, and that means that the balance — or subsidy—must come from the Consolidated. Fund. , That, in turn, means increased contributions from income tax, the source of which must be those on the higher salary levels who can expect little or no return in superannuation benefits. They will be handicapped more than ever in trying to maintain in retirement something approaching the level which their industry and ability have enabled them to reach in their working life.