Wairarapa Times-Age THURSDAY, AUGUST 18, 1938. MUCH TAKEN FOR GRANTED.

Wairarapa Times-Age, 18 August 1938, Page 6

Wairarapa Times-Age THURSDAY, AUGUST 18, 1938. MUCH TAKEN FOR GRANTED.

♦ ROVING the second reading of the Social Security Bill in the House of Representatiyes on Tuesday evening, the Minister of Finance (the Hon W. Nash) gave only a rather sketchy outline of the- financial basis of the social security scheme. From that outline, however, one or two leading facts emerge dearly. The principal of these is that the Minister counts upon a continuous increase in the national income from its present high level. While Mr Nash’s own estimate of the annual cost of the benefits provided in the Bill is £16,610,000, he declared himself confident (on grounds not explicitly stated) that the total amount to be provided in the first year would be. only £15,000,000. Of this amount, he said, £8,500,000 would come from the shilling in the pound tax and levy. A further amount of £5,135,000 would balance pension and other charges that are being met out of existing revenue, leaving £1,365,000 to be found. On the Minister’s own showing, this leaves an amount •of approximately £3,000,000 “to be found” as soon as the social security scheme is in full working operation. In addition to this, however, disbursements from the Employment Promotion Fund last year totalled £4,239,000. Sustenance payments are provided under the social security scheme, but these absorbed last year only £1,349,000. No apparent provision is made meantime, in the Government’s plans for next year, for payments out of the Employment Fund which last year absorbed close on three millions. Looking at these facts, the Leader of the Opposition (the Hon A. Hamilton) seems to have been well within the mark when he said that expenditure amounting to £6,000,000 was still unprovided for. It is even more important, however, that Mr Nash’s calculations avowedly are based upon an assumption that our national income “will not be less than £174,000,000.” Any drop from this figure would reduce correspondingly the yield from the shilling- in the pound tax and from the levy and would make it necessary either to draw "more heavily bn general taxation or to cut doWn social security benefits. Everyone would be pleased to share the Minister’s optimistic belief that the national income will not be less than £174,000,000, but the fact stands that the figure in question—that of the aggregate of private incomes—was estimated to be 150 millions in 1936-37, and as recently as 1932-33 only 90 millions. - The figure of aggregate private incomes moves.in a sympathetic relationship with those of the aggregate value of material production and of exports. The estimated value of material production, was 136.1 millions in 1936-37, but' in 1932-33 was only 83.8 millions. Exports were valued last year at 65 millions, but the exports of 1931 were valued at under 35 millions. Anyone who gives even slight attention to these pertinent facts will be bound to conclude that the Minister of Finance is taking a tremendous amount for granted in assuming that the aggregate of private incomes will not now drop below 174 millions. At best, on the figures now presented, at least several millions of general taxation in addition to the 31.7 millions at present being levied will have to be imposed in order that social security demands may be met. Should the national income fall, as it has in the past and easily may again, problems will arise which may bring dismay even to a financier as optimistic as Mr Nash. With a reduction in national income, the yield from social security contribution and the possibility of supplementing that yield would be cut down simultaneously. Taking account of normal and usual fluctuations in the world trade on which we are so heavily dependent, it, is merely ridiculous to claim that the social security scheme, as it is at present planned, rests upon a firm and assured foundation. Under the guidance of Mr Nash and his colleagues, the Dominion is gambling upon the continuance of a level of income and prosperity that may or may not be maintained. It materially affects the position that the outlook in world trade is not at present by any means as favourable as it might be. It is, of course, perfectly true, as the Finance Minister contended on Tuesday evening, that this country would benefit greatly from an expansion of internal production and exchange and the establishment of a more balanced economy. An enlarged and sustained consumer demand is also very desirable. At present, however, the expansion of industry in New Zealand is hampered and handicapped to a serious extent, and not least by a crushing burden of taxation. It is one of the most obvious conditions of a balanced economy that reasonable 'limits should be set to present taxation dem’ands.