The Southland Times SATURDAY, APRIL 1, 1939. The Risks Of Social Security

Southland Times, Issue 23782, 1 April 1939, Page 6

The Southland Times SATURDAY, APRIL 1, 1939. The Risks Of Social Security

/THE Social Security Act, which -> comes into partial operation today, will mean different things to different sections of the community. For persons of 60 years and over who are not debarred by the means test it will mean new pensions or an increase in the existing rates. Many middle-aged men and women will regard it as a guarantee of a modest income for their later years, and in the meantime as an insurance against injury and loss of work. Younger people, to whom old age seems comfortably remote in the future, may be excused for thinking of it primarily in terms of a further tax on their wages. The large number of persons who expected a universal practitioner service will wait hopefully, or with growing scepticism, for the Government to complete negotiations that should have been carried through with the doctors before the Act was framed. They will now pay “contributions” which were to entitle them to health, as well as superannuation, benefits. This partial application has been dictated by necessity, and is preferable to a hasty attempt to establish the total scheme. But it is typical of the patchwork nature of Social Security. A Weighty Burden

It is not unnatural that at the inception of the scheme the majority of people should prefer to think of what they will receive from it rather than of what they will have to pay to keep it going. But the cost *ef the scheme must be faced very soon. For Social Security is financed by the People themselves, and it is a great mistake to imagine that their commitments end when they have paid their registration fees and the weekly tax of one shilling in the £l. A large subsidy from the Consolidated Fund will be required to supplement the wage tax before the benefits can be provided even in the first, and cheapest, year of the scheme, and no provision—apart from the hopelessly inadequate amount of £l,500,000, earmarked for sustenance —has been made for unemployment relief. This would not matter so much if there were no longer a seridus unemployment problem in New Zealand. But on the basis of figures for nine months of the financial year which ended yesterday the year’s total charge on the Employment Promotion Fund will be not far short of £6,000,000. Thus in addition to the extra demand on the Consolidated Fund for Social Security benefits, it may be necessary to provide anything up to £4,000,000 for relief subsidies and payments. These new requirements will have to be added to an already swollen Budget. Where can the money be obtained —except from the people’s pockets? Based on Conjecture

Nor is that the end of the story. Up to the present the Government has failed to produce a reliable balance-sheet for the Social Security scheme. The entire plan was based on an estimate of the nation’s income which was mainly conjecture. After the British actuary had made his report new benefits were announced and different figures were used as the basis of the Government’s calculations. Nobody knows the exact amount of the national income, or can predict it over a period of years. The actuary left no doubt of his belief that the Government’s estimates, based on the assumption that the value of the country’s production would increase as rapidly in the future as in the past, were unduly optimistic. In spite of warnings from experts whose opinions were entitled to respect, the scheme was evolved on the lines of what was likely to hold, and win, votes rather than of what was within the country’s means. The result is that the Act comes into operation at a time when production is declining, State revenues are falling, the Government is badly in need of money to support its other extravagances, and defence measures are clamouring for belated —and costly—attention. It is doubtful whether Social Security on the scale planned by the Government could be supported even in the most prosperous times. How it is to be carried on under the conditions that threaten the country in the near future is a question for which the Government so far has been unable to find any but the vaguest answers. Meanwhile the time has come for everyone to begin a long series of payments in advance for what is likely to become a very doubtful measure of security indeed.