THE OTAGO DAILY TIMES SATURDAY, September 3, 1938. FINANCIAL IRRESPONSIBILITY

Otago Daily Times, Issue 23595, 3 September 1938, Page 12

THE OTAGO DAILY TIMES SATURDAY, September 3, 1938. FINANCIAL IRRESPONSIBILITY

The cynicism exhibited by the Minister of Finance in his assertion on Thursday night that he had given details of the financing of the Government's social security scheme was the more surprising in that at that very time he was devising the imposition of fresh taxation about which not a word had previously been said. Even so, the Government and its supporters in Parliament are in a spirit of levity 'committing the country to a plan which, because there is no assurance of the soundness of its financial foundations, may prove positively disastrous. The people are being deliberately encouraged to abandon the practice of the virtue of self-reliance. It is the simple philosophy of the Prime Minister that the Government has .to stop "this scratching, scraping starvation system of individual saving" which, in his opinion, "strangles the economic freedom and well-being of a nation." The Minister of Finance has expressed his adherence to this remarkable view when he has said that people " have no cause to worry about food, clothing, and shelter, for the Government will attend to all their needs for them." He would have them believe that there is some Fortunatus's purse out of which provision will be made for their'maintenance and that, therefore, there is no occasion for them to take any thought for the morrow. There is to be no rainy day against which they need make any preparation. By some design of the nature of which no hint has been vouchsafed by any of the Ministers, the Government is to "insulate" the Dominion against the effects of a depression in any other part of the world. It is a very comfortable assumption that it is in a position to do this, but it is not one that rests on any substantial basis, and the taxpayers have', in fact, sound reason for rejecting it as wholly unworth/ of serious consideration. It would be foolish on their part to imagine that New Zealand can be rendered immune from economic shocks. It would be equally foolish to suppose that she can depend upon the maintenance, of favourable markets for her products. It is, however, not only upon the ability of the Dominion to expand her production, but also upon her ability to market her products against increasing competition on satisfactory terms that the whole finance of the social security plan was originally founded. There can be no guarantee that there will be a continuous expansion of production in the country. Present indications flatly contradict the assumption of the Prime Minister and the Minister of Finance that there will be an in- j crease in the production of the future corresponding to that of the past. It was upon this assumption, and the equally fallacious assumption that the products of the Dominion can be disposed of on . remunerative terms in future in the markets of the world, in face of ever-increasing competition, that the Government relied when it submitted its proposals for endorsement by a sympathetic parliamentary committee. Upon this basis it arrived at the conclusion that a direct wages and income tax of Is in the pound, and indirect taxation yielding £2,355,000 would meet the cost of the extensions of the pensions system and of the health scheme. The security plan has developed since then, though not to the extent that was promised by the Prime Minister, and at the eleventh hour the Government added an elementary superannuation scheme. Mr Nash was carefully reticent during the second reading debate, when he should have been explicit, about the method by which it was proposed to meet this addition to the cost of the scheme. It is difficult to believe that the Government had not then decided to introduce the fresh measure of taxation, of which intimation was given on Thursday night—a tax of Is in the pound of the profits of companies, upon which a heavy burden of taxation is already placed. Mr Nash has expressed the erroneous belief that workers do not hold shares in companies, and it is an equally erroneous belief, if he enter-

tains it, that workers ar« not affected by the taxation of companies, for any such taxation is necessarily reflected in the cost of living. The imposition of this fresh tax furnishes a clear indication that the Government introduced the social security legislation without any definite con-ception-of • either the cost or the means by which the cost would be met. The amount which the country will have to find for the financing of the plan in the first year may be 16 millions or 18 millions or even more. The cost will increase in each succeeding year. In 1940 it will increase heavily. Some of its supporters have said that the scheme is to be used in order to bring about a redistribution of the wealth of the country. The plain meaning of this is, however, that the springs from which the taxation for the support of the scheme is to be drawn will be a steadily diminishing quantity. At the same time, the demands on the scheme will be steadily increasing. It is for this reason that there must be a grave danger of the plan ultimately collapsing under its own weight. In that event, those people in the community who are being attracted at the present time by the promise of financial benefits will realise that they have been grossly deceived by the Government.