CAN IT BE PAID?

Evening Post, Volume CXXVI, Issue 79, 30 September 1938, Page 10

CAN IT BE PAID?

• COST OF SECURITY

MR. HOLLAND'S CHALLENGE

A TREASURY REPORT?

A searching analysis of the Government's social security plan was made by Mr. S. G. Holland, National candidate for Christchurch North, ..in a speech at Christchurch on Wednesday evening. Mr. Holland devoted particular attention to the financial side of the scheme and .charged the Minister of Finance (the Hon. W. Nash) with having made a guess of the cost involved and of the ability of the country to carry the scheme. He stated further that the Opposition' representatives on the Parliamentary Committee which investigated the plan had reason to believe that the Treasury had submitted to the Government a report "of a most disquieting nature,'" dealing with the country's capacity to meet the burden involved and this had .been pigeon-holed. He challenged the Government to deny this. The' view of the National Party was that the first charge on the State was the care of the aged, the sick, and the poor, but Mr. Holland raised the following points against the social security scheme of the Government: — No satisfactory explanation from the Government of the financial side of the scheme. The Opposition requests for evidence during the investigation of the scheme were refused. The scheme was opposed by the Di-rector-General of Health, Dr. M. H. Watt. Extra taxation to meet the scheme would be necessary. The medical profession could not remain happy under the Government's scheme. The scheme would result in a poorer service. The existence of the specialist was threatened. There was great anxiety for the fate of the private services. The existe'hce of friendly societies was threatened. "At the very outset I want to repeat what I've said so many times before —the National, Party stands for the maintenance of the social services of the country, at a standard fully adequate for the requirements of the people," Mr. Holland said. '^Moreover, we wili expand and widen the scope of those services as found necessary and as can be afforded by the country. We have provided for that in our policy." There were some derisive cries when Mr. Holland said that the days of pensions cuts were over. It was fundamentally unsound to base pensions on record income, however. What people had to be careful of was not to be carried'off their feet with nice-sounding phrases and promises of something for nothing, with nothing to back it up; Dealing .with the financial aspects of the scheme, Mr. Holland declared that the Labour Party was. "not a happy family." He admired their loyalty to the scheme, but said that there had been a definite. cleavage—the left wing versus the rest. The left wing wanted costless pensions—pensions from printed purchasing power. The orthodox ones said—if you can print pensions, why stop at 30s? OPPOSITION MEMBERS BLOCKED. Referring., to the work of the Select Committee which investigated the scheme, Mr. Holland said that it had been obvious that the Opposition had no say. The witnesses of the Government were called, and the requests of the Opposition representatives refused. "We had reason to believe that the Treasury (a very important Department of State) had submitted an important report. I challenge the Government to deny this. The report was of a most disquieting nature, dealing with the country's financial capacity to meet the burden involved. We have reason to believe that the report is in the pigeon-holes of the Department of Finance. We asked the responsible officer to be called, and we had a right to ask; but the moment we asked for the report, which might have been a great embarrassment to the Government, we were blocked." Mr. Holland showed the audience the following table of social service expenditure:— Year ending. Amount. £ 1935 7,144,000 1936 7,756,000 1937 9,912,000 1938 11,872,000 1939 12,774,000 1940 24,000,000 Mr. Holland explained that the final figure included £1,500,000 for unemployment. Superannuation was extra. "APPLIED LUNACY." "Mr. Savage says his scheme is applied Christianity. I say, on the present basis, it is applied lunacy, if we embark on a scheme like this without the fullest inquiry. There is this fundamental difference in the policy of the Labour Party and the National Party. They say—spend your money —and live on a pension. They say—a good spender is better, than a good saver. Mr. Savage says that private savings must cease. We disagree. We say that thrift is an attribute, that it has built up our population into a free, independent, and industrious people. Our pioneers taught and practised thrift and today thrift is sneered at and penalised in every direction. Thrift should be encouraged, to reduce the need for pensions to the minimum." There was no provision for raising the money and even more taxation would be certain. When Mr. Holland critised the fact that the superannuation would not be fully payable until 1967-68, he was applauded. In 1940-41 the beneficiary would get 3s lOd a week; in 1941-42, 4s 95d a week; each year the amount increased by ll^d a week. He quoted the following table of the superannuation benefit incidence: — ■ Age Year Vresent Pays in when he when he age. for. gets 30s. gets 30s. 20 .... 45 05 19SS • 30 .... 35 05 1973 40 .... 25 69 19(i8 50 .... 15 79 19(33 CO .... 5 89 1968 G5 .... — 94 1968 70 — 99 19G8 THE COST INVOLVED. "Before we adopt a superannuation scheme the public has a right to know what it will cost in various years," Mr. Holland said. "We have a right to know how the scheme^ is to be financed, what additional taxes'are involved, and what groups of people are added to the list of taxpayers." He also quoted morbidity tables to show the number of persons capable of receiving the benefits. In 1936, he said, the average age of death was 57£- years; 6807 people died before reaching 65; 6249 people died after the age of 65. Examining the figures of the Minister in estimating the cost of social security, he said that Mr. G. H. Maddex, the British actuary, had estimated a figure of £17,850,000. Additional benefits added were £550,000, making a total of £18,400,000. Deducting soldiers' pensions, amounting to £1,790,000, a total was left of £16,610,000. A sum was deducted of an amount not expected to come to charge, leaving a final total" of £15,000,000. Explaining where the

money would come from, Mr. Nash had said that existing taxation, less the amount of soldiers' pensions of about £2,000,000, would bring in £5,000,000 and the wages tax £5,000,000. That sum (the total existing taxation for these services) was £10,000,000 in all. The extra wages tax of 4d in the £ would bring £3,500,000, and an extra amount of £1^500,000 would come from the Consolidated Fund. The total revenue, then, was £15,000,000. Mr. Nash salid that increased revenue would make increased taxation unnecessary^ Yet Mr. Nash in his own Budget forecast a reduced revenue of £214,000. The 1938 Budget showed an actual revenue in 1937-38 of £36,059,000, and estimated the revenue for 1938-39 at £35,845,000. The statement was not consistent with the Minister's own Budget. ACTUARY'S ESTIMATE. But the actual bill of costs, on the I estimate of Mr. Maddex, ■ was £17,850,000. Since Mr. Maddex left, an additional £550,000 was added in new benefits. The total, then, was £18,400,000. Extra provision for unemployment totalled £3,500,00. The total costs for the first year would be £22,000,000, after five years £24,500,000, and after 10 years £26,000,000. There were no financial provisions in those figures for superannuation. New taxation in the first year of the scheme would be £10,000,000, made up by the revenue from the 4d in the £ additional to the wages tax and the £6,500,000 extra from the Consolidated Fund. Present taxation would bring £12,000,000, so that the total bill from taxation would be £22,000,000. Total new taxation in the fifth year would be £12,500,000, and in the tenth £14,000,000. Superannuation was not provided for in those figures. New classes of taxpayers (based on the Year Book for 1938) would be: Persons under 20, £200,000, relief workers, £180,000; domestic workers, £75,000; other income of women, £225,000. CAN NEW ZEALAND PAY? Discussing the capacity of the country to pay for the scheme, Mr. Holland said that during the last five years the value of exports was £50,000,000 a year. The social security scheme would cost 8s in the £ of our export in the first year, 9s 9d in the fifth, and 10s 3d in the tenth. To meet the first year's expense it would take 8 all our exports of frozen * lamb, valued at £8,956,000; all of the exports of cheese, at £5,282,000; pork, £1,630,----000; frozen mutton, £1,500,000; gold, £1,378,000; sausage casing, £750,000; tallow, £709,000; frozen beef, £540,000; fresh apples, £457,000; chilled beef, £426,000; dried milk, £193,000; preserved milk, £120,000. These totalled £22,000,000. Mr. Nash, Mr. Holland said, had estimated the national income | at £175,000,000. Mr. Maddex had made) the estimate £150,000,000. But Mr. Nashj had said in the House that Mr. Maddex i had a narrow outlook. Mr. Nash's figure was a guess, for which he had no authority.