I. —15.

Subclause (3) of Section 4: This paragraph is contradictory, a breach of contract, and unfairly discriminatory. It proposes to provide that when a contributor retires before completing his full period in the Service, the computation of allowance should be projected forward to arrive at the average amount which the contribution might have earned during the last ten years of Service. To reduce this average —as is proposed in the last four lines of this subclause —to make it the average of the last three years in the Service, would be unfair discrimination as compared with the position of the man who had an opportunity to complete his service, because the actuarial calculation (as indicated in the first part of this clause) has already taken the ten-year period into account. The only possibility of the first part of subclause (3) of section 4 becoming operative would be in the case of an employee having his wages reduced during the last three years of his service. In such a case it would be used to make his retiring-allowance less than it would be if based on the average of his earnings during the last three years of service. Nor would voluntary contributions on a higher basis save him. The inequitable effect of this clause can only be ascribed either to careless drafting or to a deliberate design, under an appearance of fair-dealing, to rob superannuitants of their contracted rights. The remaining clauses of the Bill are all designed to carry out, in their worst form, the recommendations of the National Economy Commission, and do not require special comment here, as they have been dealt with in our previous statement upon the Commission's report. There are two sections of the Bill, however —namely, sections 37 clause (5), and 39, which must be given special mention. These are the clauses designed to cancel 119 and 125 of the Government Railways Act of 1926 —clauses which were essential parts of the original Government Railways Superannuation Act of 1902. The clauses which it is now proposed to repeal read as follows : — " 119. (b) If the Minister of Finance is satisfied that the deficiency exists and that provision should be made therefor, there shall, without further appropriation than this section, be paid into the Fund out of the Working Railways Account a sum sufficient to meet the deficiency." " 125. The rights and benefits provided for by this Part of this Act shall be subject to all such modifications as may be provided by any Act hereafter passed in amendment or repeal of this Act: Provided that all benefits under this Act shall be conferred upon any person who has actually contributed, and shall remain in force, and shall not be prejudicially affected by the amendment or repeal of this Act : Provided also that nothing in this section shall affect any payments actually made to any member or other person under this Act prior to the passing of such amending or repealing Act." These clauses represent the foundation upon which the Railways Superannuation Fund was built. They have no counterpart in the foundation Acts of either of the other State Superannuation Funds. They provide a State guarantee for the stability of the Fund, in lieu of a year-by-year State subsidy, to supplement the payments to the Fund made by employees. It was this guarantee which made the establishment of the Railways Superannuation Fund possible. By these clauses the State guaranteed the benefits of the Fund, to the extent nominated in the 1902 Act, to all those employees who were willing to join the Fund at that time and to all who might be required by the terms of their engagement to join the Fund in subsequent years. It was a definite pledge, made by the State, with a protection that, so far as those who joined the Fund while these clauses were in force were concerned, no subsequent variation of the Act could take away the rights so secured to them. It is questionable if this can now be done constitutionally, as witness the recent decision upon the point by the Full Court of the High Court of the Commonwealth of Australia. If ever a State guarantee was binding, this was binding. The State gave its word and its bond that the employees coming under the protection of this clause of the Act would be guarded, while honour in the State lasted, against any subsequent interference with the rights so secured to them. The proposal now to cancel this clause, and thereby to make it non-effective so far as present employees and annuitants of the Railways are concerned, would, if carried into effect, place the last seal of infamy upon the Government which forced such a measure through the House. Faith in the State, faith in the British Empire, faith in constitutional Government under the British flag, would all be destroyed should this proposal be carried out. We, the Amalgamated Society of Railway Servants of New Zealand, confidently appeal to the members of this properly constituted Select Committee of the Parliament of New Zealand to realize the effect of this proposal for a repeal of the most vital clause in the original Act, to weigh up the apparent advantages of repeal against the real blow which would be given to the stability of the State if a State guarantee is to be treated as so much waste paper, and to decide that, while law and order, and not anarchy and bankruptcy, are the characteristics of Government in New Zealand, they will be no parties to setting so dangerous a precedent in the management of affairs of the State. There should be no need for State employees to call for an observation by the State of its contracts. The Empire went to war because of the failure of Germany to observe its written contract regarding Belgium. Sir Joseph Ward and Mr. William Ferguson Massey said that New Zealand would give the last man, and spend the last shilling, to guarantee that no nation ever again broke contract in this way. Speaking on the same subject, Mr. Asquith said, "Ifl am asked what we are fighting for I reply in two sentences : In the first place to fulfil a solemn international obligation, an obligation which,

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