Farmers’ Union Sets Out its Attitude to Social Security Bill

Northern Advocate, 30 August 1938, Page 5

Farmers’ Union Sets Out its Attitude to Social Security Bill

fPt” - Press Association. copyright.] WELLINGTON, This Dav. 'piK ASPECTS OF THE COST AND ABILITY 01 THE COUNTRY TO PAY ARE DISCUSSED IN AN OFFICIAL STATEMENT BY THE NEW ZEALAND FARMERS’ UNION CONCERNING THE GOVERNMENT’S SOCIAL SECURITY PROPOSALS. THE CONCLUSION IS REACHED THAT THE SERVICES PROPOSED UNDER THE BILL NOW BEFORE THE HOUSE WIIJL COST 2/8 IN THE £ OF THE NATIONAL INCOME. “The Farmers' Union regrets that the Social Security Bill is no improvement on the proposals outlined by Mr Savage to the Social Security Committee, says the statement. "The present proposals are in no sense superannuation, but are a very much extended scheme of pension. The inclusion of a so-called superannuation benefit is. perhaps, intended as a concession to Farmers’ Union opinion, but, if so, it entirely misunderstands what that opinion is. We hold that the essence of superannuation is that during the years the beneficiaries provide the funds from which the benefits are paid. Superannuation funds built up the capital of the Dominion, thereby making possible greater production and a higher standard of living. The scheme as pi’oposed will increase consumption, but will tend to decrease production, causing a strain on the resources of the Dominion.

Ability to Pay,

“The ability of the country to pay the cost of the social security scheme is the most important consideration in deciding its practicability. Included in this consideration is its effect upon

was £10,483,000. If all the incomes over £3OO a year as returned Her the income tax' year, 1936-37. wore taken, leaving nobody with more than £3OO a year, we would obtain £21,890,000. This is not enough to finance the Government’s proposals and the other £3,000,000 new being spent from the Employment Promotion Fund for employment purposes. “It is evident that the major amount of the money required must be raised from the ordinary wage-earning, small-salaried person and small business people, and the farming community. Most of the other sections can pass on a considerable amount of the increased costs, but the producer for export cannot do so. and we are very gravely concerned indeed about the effect of such huge additions to his costs, especially in view of the downward tendency of overseas markets. While most of the benefits proposed in the bill are in themselves quite laudable, they must be viewed with some regard to their effect upon the rest of the community, and it seems to us that people will bo entitled to benefit who will, in seme cases, be in a better position than many of those who will have to provide the money from which these beneficiaries will bo paid. For instance, under the widows’ benefits, it will be possible for some young women entirely without encumbrances to obtain a pension at the age of 34 or 35. Hale and hearty men of 60 in receipt of an income of £l3O a-year can obtain 30/- a week, and in addition 5/- a week for every child under 16 they mav have.

the economic life of the community, and particularly on its standard of living. Mr G. H. Maddex estimated the cost of the scheme in the form in which it was placed before him as £17,850,600. The bill provides for increases on the proposals submitted to Mr Maddex, but these are dealt with in such a way, that, while it is evident that the aggregate cost will be increased considerably, it is impossible to judge with any degree cf accuracy what these increases will be.

“In many of the benefits, after particularising certain conditions, the commissioners are given wide powers of variation. It would seem, however, that the total cannot be placed at less than £20,000,000 per annum fn the first few years, and probably' will exceed that. Two classes ‘of benefits additional to those of which Mr Maddex was informed have been added — i namely, so-called superannuation, and i what are termed ‘emergency benefits.’ The only indication of the financial . measures necessary to meet these commitments given in the bill is the pro- , vision of the social security tax of 1/j in the £ on salaries, wages and other 1 income. | Estimate of Cost. | “In Mr Maddex’s estimate, the naI tional income for the purpose of this taxation is taken as £ 150,000,000,. from which various exemptions will have to be deducted, which will certainly exceed £ 10,000,000. The total revenue from the > shilling in the £ social security tax and the registration fee would; on this basis, be £7,500,000, leaving £12,500,000 to be found from ether sources. The 1938 Budget disclosed an expenditui’e on social services of £7,450,000, which, if revenue continued as buoyant as at present, would be available for that purpose. This would leave a deficit of, in round figures, £5,000,000, to be made up from now sources. But the social security proposals make prevision for expenditure in regard to 'unemployment relief for sustenance only.

Partakers of Sustenance. “Under the sustenance proposals, an able-bodied man with a wife and four children can draw £2 15/- a week without working, while under the Agricultural Workers’ Act a farm worker is expected to work for £3 2/6 a week, and pay 3/6 a week social security contribution, and, in addition, will have to bear his share of the balance of the money required.

Available Revenue. “The revenue available to the Employment Fund last year was £3,145,000, all of which is absorbed In the Social Security Fund, so that to finance the activities for which this money was used will require the finding cf at least £3.500,000 from other taxation, making d total of new money required of £8,500,000. This, added to a Budget expenditure of £35,787,000 and a Public Works expenditure (excluding amounts from the Highways and Employment Funds) of £16,621,000, will make a total Government expenditure of £60,000,000, or 40 per cent. cf a ‘national income’ of £.150,000,000. This means that a man earning £5 a week will, out of it, have to contribute £2 a week to the State. 2/8 in the £. “Within a year or two of the coming into force of these proposals, the total liability will exceed £20,000,000 per annum, and, even assuming that the estimate cf the personal income of individuals in the Dominion of £150,000.000 is realised, it will represent, 13 1-3 per cent, of the ‘national income.’ or 2 0 in the .£. To a person earning £5 a week this means that by one means or another he will have to pay somewhere in the vicinity of 13/4 a week. It is true that the proposed social security contribution only represents a fraction over 5, - a week, but the balance of the money must be found, and there is only one place from which it can be obtained, and that is from those people who are earning. If it is obtained by means of increased Customs duties, then the cost of living will bo increased, and in dial way the ordinary person will make his contribution. Where Money W'sll Como 1 : rom. “It may be suggested that i' can lie taken from the large Incomes of the wealthy people, but. in fact, if the income tax were increased to 20 - in the £ on the whole of the income assessable for income tax in New Zealand. large and small, it would still be between £ 3,000.000 and € 1,000 otto short of meeting the whole of the requirements. The aggregate of taxable balances for the year 1030-37 as given in the February Abstract of Statistics

".An unsatisfactory feature of the bill is the number of matters which are at the discretion of the Social Security Commissioners. Very wide lie .vers cf discretion are given in regard to most of the benefits, in some cases without any definite guiding principle. A notable case of this is ■ho prevision in regard to what are called ’emergency benefits,' where the

Commissioner Vs empowered to gram pensions to anybody who would not otherwise qualify for a pension, but who is ‘unable to earn sufficient livelihood for himself.’ The amount of the pension is entirely at the discretion of the Commissioner, without oven a definite maximum. Sickness Benefits. “in regard to the sickness benefits, there is again a very wide discretion in the hands of the Commissioner. Having regard to the present form of the measure, it is certainly necessary that the Commissioner should have considerable powers, but fn this bill the Commissioner is specifically placed under the direction of the Minister of Social Security. Under these circumstances, wo fear that there will be great opportunity for the use of poh'ti-. cal pressure to influence decisions, and constituents of members of Parliament will undoubtedly be seeking their assistance and requesting them to interview the Minister in their interests when they are applying for a benefit. This will apply particularly when the Commissioner has turned down the application. This will mean a most unwholesome position, and is a strong argument for our contention that in a service of this nature the administration should be entirely independent of direct political control. Political Pressure. “We also take strong exception to the provision of clause 110, which gives the Government , power by Order-in-Council to exempt specified ciasses of persons from payment of social security contributions, but lays down on specific ground upon which exemption may be granted. No doubt this is intended to apply tc the case of the Public Service, but the opportunity' for well-organised classes of persons to bring political pressure upon the Government is not desirable. The exemption of the Public Service or of other classes of persons, if considered desirable, should be made specifically by Parliament and in the bill itself. ‘j

Universal Superannuation Supported. “The Farmers’ Union all along has contended for, and will strongly support, a scheme of universal superannuation on a proper basis. The scheme before the country is merely an extended pensions scheme. We are of opinion that a superannuation scheme securing benefits to all contributors at a reasonable age, with necessary extra benefits, can be obtained within a cost that the community can pay. It is possible .to obtain very generous benefits in a true superannuation scheme at a fraction of the cost of the proposed scheme.”