A DESPERATE GAMBLE

Evening Post, Volume CXXVI, Issue 89, 12 October 1938, Page 8

A DESPERATE GAMBLE

The true financial implications of the social security plan which the Government is asking the electors of New Zealand to endorse are revealed in the article by a politically-unbiased and highlyqualified financier which we publish today. In its effort to win popular support, the Government has painted the social security picture in glowing and outwardly attractive colours. Emphasis has been laid on the benefits which the Act provides, but the real issue—whether the resources of the country can stand the strain which the scheme will undoubtedly impose—has been sidestepped in such a way as to leave the impression in the public mind that a deliberate attempt II3S been made to lull the electors into a sense of security which cannot be justified. To ihe taxpayer who must foot the bill it is not sufficient that the Prime Minister or the Minister of Finance should say: "It can be done." The whole facts must be revealed. The Government has'not done this, and it has taken such liberties with the actuary's estimates that its figures of cost cannot be accepted with any degree of confidence. The article which we publish today estimates that the full scheme, without any allowance for universal superannuation (which does not operate until April, 1940) will necessitate taking £8,000,000 from the taxpayers, in addition to the direct social security contribution. The two forms of taxation, it is pointed out, will equal 2s in the £on the national income. But even that does not tell the whole story. Inevitably the cost of social security will increase as the years go by and as the cost increases so must the taxation increase to meet it. Yet the Government is telling tne electors that the extra cost of the benefits which they are /.to receive under the Act will be 4d in the £! Obviously the price will far exceed this and the electors must decide whether the country can carry the burden. In an endeavour to encourage the public to clear the financial hurdle, the Minister of Finance has arbitrarily revised the estimates, both as to cost and revenue, placed before the Government by the British actuary, Mr. Maddex, but up to the present he has not supported this arbitrary revision by evidence which can be substantiated. Nor has Mr. Nash yet shown the source from which approximately £2,500,000 at present expended annually from the Employment Promotion Fund to provide men and women with full-time employment is to be raised when the Employment Promotion Fund disappears. Mr. Nash, in avoiding these and other issues, has invited the public to take a desperate gamble on the future.

The Government has made the claim that its policy is aimed at a redistribution of income, bu£ as has been pointed out by the Canterbury Chamber of Commerce, there is a grave danger that such a policy may defeat its own end by seriously impairing the sources from which ithe income' to be distributed is drawn. Already a policy of high costs and high taxation has restricted the normal development of industry and further imposts, such as the social security scheme will bring about, must have a serious effect on production. And yet the Prime Minister at Auckland last night stated that the success of social security depends on one thing—the production of the country. How can there be greater income for distribution (millions of it) when costs kill production?