Some Aspects of Social Security Monetary Benefits in New Zealand

Abstract

Although the present social security system has been operating in New Zealand for nearly thirteen years there is still a decided lack of comprehensive literature on the subject. Nearly all discussions, including the Social Security Department's admirable book, "The Growth and Development of Social Security in New Zealand", do not cover much more than the mechanical details, while leaving many important issues untouched or dealt with in a cursory way. This present work is not intended to provide such a comprehensive study or to be in any way exhaustive but is confined to a consideration of certain aspects which are generally overlooked but are important to an understanding of the objectives which the scheme aims to achieve, the problems involved in the costs which have been and are likely to be incurred and the economic effects of the very large outlay on benefits. The question of cost is of the utmost importance for any avenue of public expenditure especially for social security benefits since these form such a large part of all government outlays, and now a major function of government in New Zealand. The popular idea, however, that expenditure of this kind is in some significant way a real cost to the community is only a half-truth since cash benefits simply transfer command over goods and services already produced from one group of individuals to another. The only 'burden' involved is the real cost of providing the administrative services, the manpower and materials, to carry out this redistribution. Some regard the whole of the expenditure on benefits as an additional burden placed upon the community but they fail to see that in the absence of social security benefits some other provision for the dependent, such as support by relatives, where transfers are still involved, would need to be made, but in this instance less equitably. This problem of the cost and financing of monetary benefits is the thread which links up the various parts of this study, and while the theme is somewhat subordinate in the first two chapters which are largely of an historical and descriptive nature, it is aimed to show in what way the burden of supporting the dependent part of the population was borne prior to the advent of modern social security systems. Chapter III is concerned with an analysis of the primary determinants of the level of money outlay involved (a) the means test, and (b) the rate of benefits fixed; while Chapter IV contains a survey of expenditure so far with same indication of what it is likely to be in the relatively near future. Finally, the issues involved in financing the benefits together with some more general considerations are discussed in the last two chapters. It will be noted that no mention is made of the medical benefits payable under Part II of the Social Security Act, or of war pensions. The former have been excluded largely on the grounds that they are not strictly speaking in the same category as the monetary benefits and a different approach would be necessary to deal adequately with them. On the other hand, war pensions are very similar to monetary benefits in that both are transfer payments, although the reasons leading to the payment of this type of pension have a different justification and origin. However, time and space considerations prevent their inclusion.