THE OTAGO DAILY TIMES WEDNESDAY, March 30, 1938. SOCIALISING THE NATION

Otago Daily Times, Issue 23463, 30 March 1938, Page 8

THE OTAGO DAILY TIMES WEDNESDAY, March 30, 1938. SOCIALISING THE NATION

“It has got to be a substantial beginning,” the Prime Minister remarked a few days ago with reference to the health and superannuation scheme which the Government was preparing for presentation to an apprehensive public. Mr Savage asserts that the outline of the proposals that are foreshadowed this morning is “ mere guesswork.” If, however, the guess is tolerably accurate the public will consider that Mr Savage’s declaration that “ a substantial beginning ” has to be made was an under-statement. So substantial is the “ beginning ” envisaged that the first step taken under the scheme will be to increase direct taxation so as to affect every employed person, every person with savings or other private source of income. The unemployment tax, which has stubbornly refused to recede while the Government, according to its own claims, has “broken the back” of unemployment, is apparently, like the sales tax, to become in another guise a permanent feature of our national life. Not only so. It is to be increased by one-half. Breadwinners may have to contemplate a future in which at least 5 per cent, of their earnings, which the majority of them will never even handle, will be surrendered to the State. Yet that can be only a preliminary to the really serious business of increasing taxation. At a reasonable estimate receipts from this unemployment tax, or health and superannuation tax, as it may presumably be called, will amount to about £8,000,000, while the estimated cost of the Government’s proposals is between £16,000,000 and £17,000,000. On the basis that something less than £7,000,000 is the present cost of New Zealand social services, there remains a deficiency of anything from a million up, which apparently must be obtained from the Consolidated Fund —that is, from the New Zealand taxpayers. A brief glance backward provides an interesting if melancholy general idea of what this implies. In 1914, the year in which war was declared, the revenue derived from taxation was £5,918,034; ten years later it had increased to £16,416,870; in 1934, it was £17,057,606. In the succeeding years the rise becomes alarming, the Budgetary estimate for 1937-38, the third year in which a Socialistic Government has been in office, calling for £35,518,000—and this from a Government which, through its Prime Minister, had asserted, before it gained power, that the country was heavily enough taxed. To this will now be added henceforth the millions which must be collected annually to sustain the national health and superannuation scheme. It would be hardihood to attempt an estimate of what that will be, when the far-sweeping provisions are brought fully into effect. But if any doubt still exists, outside of the minds of Government members, whether New Zealand is the highest-taxed country in the world, the adoption of these proposals must settle the question once and for all. Certain advantages, some of them considerable, others of dubious merit, are to be weighed against the enormous cost of the scheme. The cost of the scheme is not only enormous. It is also incalculable. The entire Community is to be encouraged to look forward to enjoying, from the age of 60, the privilege of receiving a superannuation allowance from the State in the same way as the public servant without, however, the rather manifest advantage the State employee has of drawing a benefit proportioned to what he has contributed, with the credit of the New Zealand public to assure that deficits in his superannuation fund are met. There lies the rock on which this experiment in socialising a nation may split. The Government Statistician had occasion to comment recently upon the fact that our economy is based on an expanding population. That expansion is not taking place. Between the censuses of 1926 and 1936 the number of children under five has decreased by 17,693, and of those between five and ten by 4407. On the other hand, the number of persons of 60 years and upwards—and therefore, under the “ guesswork ” scheme, immediately entitled to claim pensions—increased in the period by 50,304. At the present time 143,487 persons, one-tenth of the population, are in a position to qualify almost immediately as “ superannuitants ” under this scheme. This is apart from the unemployables, the unemployed (who are to receive allowances for doing nothing), and the rest of the extended body of potential pensioners. As the years go on, this army will grow steadily, but the ranks of those below pensionable age, who must contribute the funds for their support, will not exhibit a similar increase. Even if the fertility of the country increases, there must come a time, unless migration provides relief, when the groups of productive age will be lower than at present. And the only provision in the proposals to encourage fertility may be the dubious one of paying an allowance per child in lieu of the present income tax exemption. To describe such a scheme as enlightened in principle is permissible if definite reservations are made; to describe it as actuarially sound would be utterly impossible. And it is the taxpayer who will be asked to pay, not only for a year, or for a Parlia-

mentary term or so, but throughout his working life, for every miscalculation, for each too-optimistic anticipation and for every unprotected eventuality that may disrupt the grandiose vision of our first Socialist Government.