THE OTAGO DAILY TIMES SATURDAY, August 13, 1938. SOCIAL SECURITY

Otago Daily Times, Issue 23577, 13 August 1938, Page 14

THE OTAGO DAILY TIMES SATURDAY, August 13, 1938. SOCIAL SECURITY

It will be realised, from a study of the summary which we print this morning, that the Government's Social Security Bill, yesterday introduced in the House of Representatives, is a measure of tremendous complexity. In the circumstances only a cursory examination of the principles on which the measure is founded is possible at this stage. There can be no denial of the obligation which rests upon a community to care for those of its members who are unable adequately to provide for themselves in emergencies resulting from ill-health, old age or general physical incapacity. The principle that the deserving aged, the infirm, and those who have, through no fault of their own, fallen by the wayside are legitimately entitled to look to the State for assistance has been affirmed in legislation which already stands in the Statute Book. Except in so far as it aims at the establishment of a State medical service, the Social Security Bill is directed to an enlargement of benefits for which provision is now made and possesses no new features. Such criticism, therefore, as the plans for social security have aroused is solely related to the ability of the country to pay for services on the scale envisaged by the Government, and does not involve in any degree disagreement with the principle on which the case for the provision of those services rests. The Bill, as now presented to Parliament, is not in the form which the public had originally been led to expect. The Government had promised a free national health service and a superannuation scheme that would be all-embracing. But the proposals that were placed before the Parliamentary Committee for examination were far from being in keeping with this conception. They did not provide, for instance, for national superannuation. While all were expected to contribute to the cost of universal pensions, it was not proposed that all should participate in the benefits to be derived. The proposals were not to be of national scope nor could they rightly be described as superannuation proposals. It is apparent, however, from the Bill which is now before the public that there is to be some effort on the part of the Government later on to redeem its original undertaking. There is to be a gradual introduction of universal superannuation, for there is provision that, as from April, 1940, all citizens • over the age of 65 years will be eligible to receive some return—albeit a modest one—from the fund which is to be created. In the cases in which the participant is not eligible for more liberal treatment there will be a pension at the rate Of £lO a year, rising by annual increments of £2 10s until the total of £7B a year is reached. That such a total will be frequently reached in circumstances which provide for the commencement of benefits at the age of 65, is doubtful, to say the least of.it, because a person would have to be 95 years of age before he could claim the full benefit. The payment of a pension of not more than £lO a year to the persons who will become entitled to it ■ under universal superannation will add well over £1,000,000 a year to the cost of the scheme in the first year and, with an ageing population, the expenditure will grow rapidly and the burden will fall with increasing severity upon a relatively diminishing number of persons of productive capacity. But the Government can at any rate credit itself with the making of a gesture in the direction of universal pensions! In the meantime it can be said that the scheme, as putlined in the Bill, corresponds closely with the outline of it that was submitted to the special committee as a working basis; and it is not without interest that the promises of enlargement of its scope, freely made by Mr Savage subsequent to the committee proceedings, are entirely ignored. The Prime Minister had stated -clearly that the income limit for married couples would be increased from £2OB to £312 a year, with the view, it was indicated, that prospective superannuitants in the Public Service, and other contributors to independent superannuation schemes, would not be affected under the State's scheme. It is clear, however, from the terms of the Bill, that those contributors will have to shoulder a double obligation—in respect of both their own particular scheme and that of the State—unless special exemption, of which the Bill seems to offer a prospect, is granted to them. In that connection the provision permitting exemptions to be gazetted by Order-in-Council cannot be described as satisfactory. If it is thought necessary to provide for exemptions at all, the nature of the exemptions should be specified in the legislation and not made virtually extraneous to it. The qualification for the receipt of benefits, so far as can be gathered, is the same as that now demanded from old-age pensioners, with the addition of the means test which is one of the least palatable features of the social security plan. So far as the national health service is concerned, the Bill closely follows the lines that were previously indicated and that are regarded by the medical profession as objectionable. As was emphasised in the report of the minority section of the Parliamentary Committee, it is difficult to see how the contemplated service can be described as " free," since the finance of the social security plan, of which it forms a part, is based on the payment of a registration fee and of the special social security tax and whatever other taxation may be required to

meet the cost of the scheme. The registration fees are fixed at the rate of 'five shillings a year for women and all other persons between the ages of 16 and 20 years, and five shillings a quarter for men. The charge on salaries and wages and other income, as is well known, is to be at the rate of one shilling in the pound, and is to be exacted from women, irrespective of the amount of their income, as well as from men.

Finance presents itself as the crux of the whole problem. The Government bases its calculations on the over-optimistic expectation of a continuously expanding national income. But, as the report, of the minority in the Parliamentary Committee has stressed, there are surely no justifiable grounds for assuming that the national income will rise from its present record level of £150,000,000 to something like £216,000,000 in the next ten years —which is calculated in that report as being the amount involved in the assumption that the scheme can be made self-supporting. The national income bears a very close relation to production, and exports are a reflection of the volume of production. If the export statistics are studied they will be found to show very considerable fluctuations in value over a period of years. In 1919, for example, our exports were valued at nearly £54,000,000. In 1926 they were worth approximately £9,000,000 less than that amount. In 1929 there was a recovery to nearly £55,000,000, and thereafter a continuous decline to £35,609,000 in 1932. After that again there was another recovery to the high level of £66,713,379 in 1937. For the first six months of the present year the value of exports was £37,306,891, representing a decrease of nearly £5,000,000 as compared with the first six months of 1937. If, therefore, national production can be closely identified with exports on the one hand and with the national income on the other, it becomes apparent that the dependability of the financial basis of the entire social security plan is at once suspect. If it is the intention to lay the foundation for social services on a scale of unprecedented liberality, then the greatest care must be taken to ensure that that foundation is solid enough to withstand the shocks of economic change. Parliament will do less than its duty if it does not look at the important measure now before it and the country in the sober light of reality rather than through the deceptive mists of idealism.