T, 15.

well in practice, should be abandoned and replaced by a pciund-for-pound subsidy system. The Commission errs gravely when it states in the same paragraph that " the Government subsidy bears no relation to the actual deficiencies in the funds." There are no actual deficiencies in the funds. On the contrary, each of the funds has actually a genuine credit balance in hand amounting to very big figures. For instance, the Railways Superannuation Fund was able to carry forward, at the 31st March, 1932, a credit balance of £1,454,173. Commission's Inconsistency. —In paragraph 1392 of the report the Commission records that the Civil Service Amendment Act of 1871 preserved the existing rights of those entitled to pensions, yet with this sound knowledge of constitutional practice in British communities in regard to matter of the kind the Commission recommends that the existing rights under the present funds should now be sacrificed ; while in paragraph 1.479 it gravely expresses the opinion that- " a second failure of the State to meet its obligations would shatter all faith in Government superannuation schemes." This extraordinary inconsistency would be very difficult to parallel in the whole history of Commission reports. The National Economy Commission desires to set a precedent in breaking State obligations, while pathetically expressing the hope that no future Commission will make similar recommendations. It creates a precedent, but warns future generations not to follow its lead. A One-sided Statement.—At paragraph 1411 the Commission reports that " the potential liabilities on the funds had been added to from time to time without provision being made to meet these additional liabilities." It does not record the fact, however, that all of these alterations were come to by mutual agreement between the employees of the Department and the Government, nor does it point out that, in return for certain advantages to be gained by such alterations, the employees agreed to disadvantages to themselves in other directions. For instance, the original agreement was for forty years' service for a superannuation of two-thirds of the salary or wages at the time of retirement; but this was altered, in return for concessions in other directions, to two-thirds of salary or wages over an average of three years' remuneration prior to retirement—a very material difference. A Fanciful Deduction. —In paragraph 1388 the Commission draws special attention to what it calls " the huge potential liabilities on the State in regard to the funds." This statement is only supported by an obviously ridiculous declaration that " taking the three funds as a whole (paragraph 1475) the present annuitants could obtain a dividend of only 12s. 9d. in the pound of their annuities or allowances, whilst contributors still in the Service would forfeit all the contributions they have paid into the funds." The absurdity of this statement lies in the fact, firstly, that there is no prospect of such a fund requiring to be immediately liquidated, and, secondly, if such a liquidation were decided upon, the obvious course would be to eliminate all present annuitants from any share in the fund if the amount they had received from it were equal to, or more than, the amount they had paid into it. Again it is necessary to draw attention to the fact that the amending Bill's present proposals are in the direction of placing the funds upon an " actuarial " basis, ignoring the fact that they were never intended to be upon such a basis, and would never have been started if such a basis had been proposed. A Great British Precedent. —In paragraph 1389 the Commission admits that some form of superannuation is necessary in any State service, and draws attention to the fact that in England as early as 1810 a superannuation Act was passed providing for free pensions to retired State employees. It should be noted that not only were no contributions required from employees under the English Act, but that no funds were required to be built up to meet the requirements of the Act. Yet, after over one hundred years' operation, the English Act, with certain amendments, is still operative, and each amendment has preserved the rights of superannuitants as provided in the previous Acts. Further, despite the great demands for reduction in the cost of social services owing to the intensely severe economic pressure of the times in England, no party has even suggested interfering with the existing superannuation rights of those in the English Civil Service. It may be mentioned, further, that the English State Superannuation Act provides for benefits at least as good as those under the New Zealand Act. Recent evidence is to hand bearing upon this point. The Commission shows Bias. —In paragraph 1390 the Commission goes out of its way to remark that " more particularly as the emoluments of the senior public servants are, as a general rule, on a somewhat lower plane than those in other callings," Government contributions must be regarded as in the nature of deferred pay in any retirement scheme. The objectionable part of this statement is the clause " more particularly the emoluments of the senior public servants." Had the Commission understood its job, and possessed the desire to state the case fairly, it would have made no such class distinction. It is thoroughly well known to all those engaged in the great business of conciliation and arbitration awards that the rates of pay in almost all sections of the Civil Service, including Railways, are lower than they are outside the Service, and those who have had the business of conducting negotiations for the various State Departments in regard to wage scales know and have recognized throughout the period since superannuation funds were created that these funds are a definite factor in explaining this disparity as between rates of pay inside and outside the Services. The distinction made by the Commission is therefore held to reveal class bias. Commission recommends Breach of British Constitutional Practice.—The Commission (paragraph 1392) mentions that the New Zealand Civi 1 Service Amendment Act, 1871, preserved the existing rights of Civil servants. This was quite in conformity with British practice. The proposals of the present amending Bill, however, depart entirely from this constitutional practice of honourable fulfilment of contracts. In paragraph 1394 the Commission refers to the Superannuation Act of 1907, and in connection with this it states that " existing rights of all contributors to the Superannuation Fund were preserved." In view of the Commission's evident knowledge of past practice in dealing with such funds, the present proposals indicate a lack of appreciation of the moral seriousness of the issue— namely, to set a precedent which initiates the practice of ignoring existing rights in connection with the State's contracts with its employees.

31