SECURITY COSTS

Wairarapa Times-Age, 17 August 1938, Page 5

SECURITY COSTS

SUM OF £15,000,000 NEEDED IN FIRST YEAR MR NASH’S ESTIMATE CONTRIBUTION TO YIELD £8,500,000 MR HAMILTON’S CRITICISM (By Telegraph—Press Association.) WELLINGTON, This Day. The manner in which the Government's social security plan is to be financed and the basis on which he estimated the cost of the scheme were explained by the Minister of Finance, the Hon W. Nash, when moving the second reading of the Social Security Bill in the House of Representatives last night. The Minister said the Government had no doubt that the country could build up the whole of the income necessary to carry the proposals.

“What will the scheme cost?” the Minister asked. “The cost estimated by the British Government actuary, Mr G. H. Maddex, who was a very fine man if a little wrong in his outlook at times, was, £.17,850,000, which included war pensions and war veterans’ allowances. We can justifiably take those two items away from ordinary social security because they are a charge on the whole of the nation for services rendered. The cost of those items is £1,790,000, and if we deduct that from the total estimate it is reduced to £16,060,000.” Mr Nash said that since the original estimate had been prepared the Government had decided to increase the benefits for the wives of pensioners where they were younger than their husbands, and this would cost an additional £450,000. The extension of widow's benefits would cost another £lOO,OOO, so that the total cost for 193940, on that basis, would be £16,610,000. From a close survey of ‘the costs he had come to the conclusion that that sum could not come to charge next year and had arbitrarily reduced the figure to £15,000,000. ESTIMATED RETURNS “Against this we estimate a return of £500,000 from the registration levy and £8,000,000 from the wage tax of Is in the pound,” the Minister continued. “That will be based- on the national income available now, which, I do not doubt, will not be less than £174,000,000. Mr Maddex’s estimate of the national income was £150,000,000, although he did not accept responsibility for it and made it clear that he based it on figures supplied to him. I have no doubt, on the evidence of progress in the past few years, and with the addition of incomes that are not declared at the present time, that the figure of £174,000,000 to £175,000,000 will be reached. “From that sum I have taken away £14,000,000 for the value of benefits in the Bill not chargeable to the contributors,” Mr Nash said. “That leaves £ 160,000,000, which, as Is in the pound, yields £8,000,000, bringing the total income from contributors, with the levy, to £8,500,000.

“The sum to be found now is £6,500,000. From the present revenue, for the benefits as proposed in the Bill, there is already a charge of £5,135,000, which leaves £1,365,000 to be found. I have no doubt that if our figures are correct our ordinary natural income will expand to an extent that will enable the necessary money to be found without any increase in taxation in the ordinary way.” The Minister said that the Government proposed to bring in a Bill to restore soldiers’ economic pensions from 25s to 30s, with a possible extension in special circumstances for both the man and his wife. There would also be an amendment to the Social Security Bill to ensure that even though exsoldiers might be receiving a war disability benefit of 17s 6d a week, they woul<| still be qualified to receive unemployment benefits. UNPROVIDED BALANCE? As against the Finance Minister’s estimate of £1,365,000 still to be found, the Leader of the Opposition (the Hon A Hamilton) contended that altogether provision would have to be made for £6,000,000 for which the Minister had not estimated.

Today New Zealand was spending £7,500,000 on pensions, £5,000,000 on unemployment, and when £8,500,000 was added for pensions and health the total next year would be £21,000,000, and that did not include superannuation, Mr Hamilton said. General taxation had brought in £7,500,000 and unemployment taxation £5,000,000, Mr Hamilton said. This was a total of £12,500,000. Therefore the new money required to make up the £21,000,000 was £8,500,000. The extra 4d in the pound on the social security contribution would bring in £2,500,000, leaving a balance of £6,000,000 still unprovided for. The world’s economic system was made up of trade cycles, causing prices to rise and fall. The Governnment was building up a huge scheme of expenditure and commitments. When the Government came into office commitments were £26,000,000, Mr Hamilton said. Taxation had increased by £10,000,000 and the scheme in a very few years would cost another £10,000,000, making a total of £46,000,000 without the unemployment tax. Today exports were round about £65,000,000. but a few years ago they were £35,000,000. What would happen if prices fell again? ' Mr Hamilton asked. Wool was down by from £6,000,000 to £7,000,000 and butter production had increased by 11,000 tons, but costs continued to soar. The Leader of the Opposition said he felt he would be failing in his duty if he did not direct public notice to the fact that the only provision being made for unemployment was £1,500,000. The Minister of Labour, the Hon H. T. Armstrong, had told the House the other day that more than 35,000 men were receiving their income from the fund. If the Government intended to use any of the unemployment funds for paying pensions then nothing was more certain than that increased taxation would be necessary.