PROVIDENT FUND.

New Zealand Herald, Volume LXIX, Issue 21131, 14 March 1932, Page 11

PROVIDENT FUND.

NO FRESH SUBSIDIES. SELF-SUPPORTING BASIS. CONDITIONS FOR NEW ENTRANTS. The opinion that the National Provident Fund should no longer be heavily subsidised by the Government, but should become in clue course self-supporting, is expressed by the National Economy Commission in its interim report. The Consolidated Fund at present provides £95,000 a year toward the fund, over £51,<300 being in subsidies on contributions. It i> strongly recommended that the active canvass for new members should be suspended, and the active collection of subscriptions abandoned. "If contributors will not pay their contributions except as a result of door-to-door canvass, the Government should not be expected to pay <ommission on collections," remarks the report. "Subscribers are definitely getting a handsome Government subsidy on their contributions, and if they do not display sufficient self-interest to keep np fheir payments, we see no reason why the Government should go to any expense in persuading them to do so."

The commission proposes that all new entrants, of whatever class, be admitted upon a no-subsidy basis, and that the scales of contributions and the contracts with local bodies and business firms in respect o; new contributors be revised accordingly. The report states that at the present low level of entries the saving would be only about £SOO a year, but it is important that the growth of liability should b<> checked.

The fund, the commission thinks, might be made to form a valuable adjunct to the pensions schemes of the Dominion, and in time, if put upon a proper basis, might reduce the liability of the State for oldage and widows' pensions. It considers it quite unwarranted that income from National Provident Fund benefits should be disregarded in considering eligibility for the classes of pension referred to, and has recommended that the exemptions be cancelled.

In view of the assistance given by the State to maternity through the St. Helens Hospital;), the Plunket Society and otherwise, the commission recommends that maternity allowances to National Provident Fund contributors, estimated this year at £7OOO, and to friendly society contributors, £36,500, should cease, and that the statutory provision for them should be repealed, making a saving of £43,500. Elsewhere the commission recommends that contributions by the State to superannuation funds be provided in future by way of annual vote. "In view of the actuarial unsoundness of these funds," it remarks, "it is impossible to recommend any reduction under this heading." , JUSTIFICATION OF CASE. INTEREST RATE PROPOSAL. QUESTION OF ADOPTION. ("BY TELEGRAPH.— PRESS ASSOCIATION"."I CHRISTCHT7RCH, Saturday. Commenting on the Economy Commission s report, Mr. W. Machin, president of the Associated Chambers of Commerce, said: " Quite a lot of people may object to those portions of the report which n'.ect them and curtail their privileges, or even their rights, but, once agne on the fact that our charges for taxation are much too high and cannot be met to-day without drastic economies, and yc»u give the commission its entire case.

" Tha proposals with regard to a reduction in interest rates are sound, and appeal to me, because all along I have felt that the Government bond-holders and debenture-holders would respond to an appeal for conversion at reasonably lowsr rates of interest. ■ " What, the public wants to know immediately is whether Parliament is going to put all these suggestions into force novr that they haye been made." 5 ANNUAL REVIEW NEEDED CONTROL BY PARLIAMENT. CHANGING BASIS OF VOTES. By far the greater part of the national expenditure comes under the heading of permanent charges which do not come under the annual review of Parliament, as they, are fixed by various Acts of the Legislature. ].n considering the need for reducing expenditure under numerous headings, the Economy Commission has come up against this difficulty and has recommended in tffo interests of national finance in the Dominion that permanent appropriations should be dispensed with to a very largo extent.

The appropriations for the year ending March 51, 1952, total £24,627,561, of which, the permanent appropriations account for £17,715,888, leaving only £6.911,673 to be reviewed by Parliament. The commission finds that the unduly large portion of the public expenditure represented by permanent appropriations is due to the indiscriminate introduction in financial measures of* the words "without further appropriation than this Act," which practically has had the effect of depriving Parliament for all time of tho ability to review and control the annual expenditure. It lias, therefore, recommended that many of the permanent appropriations bii brought under annual review by Parliament. This would lead to more effective control of expenditure and give to Parliament that right to the annual review of the whole of the expenditure of the country which it should assuredly have.

" A moro rigid system of control of public expenditure must be maintained," stntes the report. " We cannot help being impressed with the continued increase in the cost of Government under practically all headings. In our view, one reason to which this increase may be ascribed is the system which lias been in vogue in the past of apparently first of all estimating the expenditure and then providing revenue to meet it.

" The various departments must be told just how much money has been allocated to each, and to frame their proposals for expenditure accordingly. We believe it is only by strictly adhering to such a system that continued increases in the public expenditure and corresponding increases in taxation, can be avoided."