SOCIAL INSURANCE.

Otago Daily Times, Issue 19477, 12 May 1925, Page 6

SOCIAL INSURANCE.

Since Mr Seddon carried his Old-Age Pensions Act in New Zealand in 1898, public opinion nearly everywhere has moved a long way, and the reasonableness of the State assuring a minimum income to its aged citizens is now questioned by few. In Great Britain, however, in recent years social reform has moved chiefly in the direction of scnemes of contributory insurance—a principle originally worked out in Germany—and it has been suggested that a ' comprehensive scheme should be organised to cover all the risks of industrial life, embracing unemployment, accident, ill-health, and old age. Insurance for all and everything was among the proposals ‘ by which the Liberal Party tried after its election disasters to elaborate a distinctively Liberal programme. But insurance of some sort was a part of the programme of all parties, and it would be unfair to suggest that in his Budget Mr Churchill has adopted the policy of running away with the Liberals’ clothes.' It is difficult to picture anyone leading a crusade with Insurance bodly emblazoned on his banner. The subject- is unexciting, and most people have their own ideas of more constructive methods of reforming the world. In the meantime, however, the pressure of want is urgent, and we cannot wait until we can set right the root of the matter. Three defects in the 'existing British system have been attacked as demandingl immediate attention, these being the high age limit of 70 years -for oldage pensions, the so-called thrift disqualification, and the absence of any provision for widows with young children. Mr Churchill has attempted to deal with each of these points. Oldage pensions wilt now be payable at the age of 65; deductions to counterbalance pensioners’ private income are eitlier abolished or reduced; and widows of insured persons will receive a weekly payment of 10s, with a further allowance for children. The scheme covers practically the same people as the' existing Unemployment Insurance scheme. Financial difficulties have hitherto stood in the way of these extensions, but the only new burden now imposed on the Treasury will be the temporary provision of funds to make the scheme immediately operative. Otherwise, payments of both old-age and widows’ pensions will Jbe made from a fund to which employers and workmen will make regular weekly contributions. These will be additional to those already due for unemployment and health insurance, and the whole will apparently become a common fund. • * ' * It is on this point that the Labour Party will join issue with the Conservatives and the majority of the Liberals. The Labour view is that the contributory principle has already been carried too far, and that any extension of pension of insurance benefit should be met by direct taxation. When unemployment returns to its normal level, the insurance fund will be able to repay all the Government advances, and accumulate a substantial surplus, and Labour opinion, holding that the surplus should not b© diverted to any but its original purpose, believes that the compulsory contributions should then be diminished. Widows’ pensions, so far as they are paid to women with young children, and old-age pensions rest, from this point of view, on slightly different bases. The principle of the widows’ pension is fundamentally the same as that of unemployment insurance, which is paid because it is as uneconomic to refuse to keep men in good condition as it would be to neglect horses or machines during periods of temporary idleness. Similarly, the case for pensions for widows is strongest when it is based 7 on the importance of their work in training the next generation of producers, and many Liberals would agree that if it were financially feasible these payments should not be dependent on a contributory fund. Oldage pensions are defended on more altruistic grounds. Old age can scarcely be snammed', and, provided private income is not deducted from the pension, the discouragement to thrift is practically negligible. The pre-war German plan of insurance, which Mr Churchill’s new scheme resembles, paid no atten tiou to the pensioner’s private income. It has, however, been criticised as inan enormous amount of bookkeeping and. very expensive and cumbrous administrative machinery. (The amalgamation of the new British fund and the unemployment insurance fund would weaken these objections, which nevertheless make the case for free insurance a fairly strong one, provided the financial difficulties are not insuperable. The equality of the contributions of employer and workman is indeed to a large extent illusory. The employer is the channel through which flow payments to the fund, but his contributions are in effect similar to a tax, and will probably be borne in the long ’ run partly by consumers and partly by wage-earners. In view of the difficulties of determining exactly where the burden of these payments rests, the case for collecting them directly through 'taxation is considerably strengthened. But many people who have an ineradicable objection to increased taxation feel much easier in their minds if the tax is imperceptibly mingled with the prices they pay, and governments that care much for popularity often prefer on this account to. mask the real nature of thejr exactions. Mr Churchill’s proposals will no doubt cause some rumblings .of discontent among those who value highly the bracing effects of poverty, but they will scarcely be loud enough to remind us of the revolutiouay change which the last few years have made in the traditional Conservative outlook. Supporters of the Labour Party have some excuse for maintaining that their influence is to be traced not only in the number of their own members, but also in the programme of their opponents.