At the 75th anniversary of social security, the system needs improvements, writes Margaret McClure.

The passing of the Social Security Act on September 14, 1938, was a great moment in New Zealand's history. It made free healthcare and a decent standard of living for everyone the symbols of a civilised society, and renewed New Zealand's reputation as a social laboratory. The public welcomed the legislation with such excitement that one civil servant likened the occasion to the Second Coming.

The impetus for the Social Security Act 1938 derived from Labour Party principles and the public visibility of poverty in the harsh Depression years. The first Labour Government's slogan, "From each according to his means, for each according to his needs", made sense when the chanciness of life was clear, and the scale of the Depression took the personal blame away from poverty.

The large number of people who had to resort to charity proved that this recourse was demeaning, haphazard and insufficient. Only the state could provide a solution that was centralised, efficient and comprehensive. The Social Security Act guaranteed in law that certain needs would be matched by regular payments and provide dignity for recipients.

Michael Joseph Savage provided a benign face for reform that involved a fairer redistribution of the nation's wealth. When he spoke of a better deal for "the Bottom Dog" or called social security "applied Christianity", people envisaged security rather than revolution, and lost their fears of what a Labour Government might do.


Social security extended the earlier pension system to embrace a wide range of financial hazards: sickness, invalids', deserted wives' benefits; it increased assistance for families, the aged and the unemployed. The new legislation provided equal benefits for Maori (although this took time to work out in practice), and included Lebanese, Chinese and Indian citizens who had been excluded before.

Labour's brilliant move was to include universal benefits along with means-tested benefits, thus gaining the approval of the whole community. It meant superannuation for all (though it was meagre at first) and a more generous universal family benefit from 1946. The Government could boast that social security was enjoyed in every household.
Savage was blithe about the costs of such a comprehensive scheme, telling anxious Treasury officials that "the sun still shines". John A. Lee urged the Government to "print and print and print" the money to fund it all.

Meanwhile, Finance Minister Walter Nash negotiated with bankers in London to underwrite the legislation. New Zealand was fortunate that the high production achieved in the war years gave social security an affordable base.

Savage's death in 1940 gave social security a legendary quality. The train bearing his body from Wellington to Auckland for burial stopped at every station, and was met by crowds paying homage to his vision.

Today critics of welfare cuts decry the current "dismantling" of Savage's welfare state. There are certainly dangers in current welfare rhetoric and policy, but no era of social security provisions got it all right. The original Social Security Act met the needs of men more readily than women, while later assistance failed to match the inflation of the 1970s.

The system was extended and cut back in turn, and often distorted by the claims of competing groups in the community - young and old, male workers and mothers, or one and two-parent families.

Missing today is a sense of realism about the risks of the workplace. Tough measures against the unemployed fail to acknowledge the scarcity of jobs. The manufacturing of Toyota cars and Bendon bras has long gone from country towns. Government departments and private companies continue to cut back the numbers they employ. The queues of hundreds of people waiting to be interviewed for jobs when a new supermarket opens are a powerful reminder of people's willingness to work when there is work available.

Social security has become a system that is unfairly weighted towards the old. Although policy-makers scrutinise the rising costs of universal superannuation (approaching half of the Government's spending on social assistance), the old are confident of their rights and immune from the distrust we feel about the unemployed and sole parents.

There's no public call to replace cash payouts with food vouchers for the old.


Meanwhile, we refuse to grant the full amount of "working for families" tax credits to beneficiaries, to assist 230,000 children living in New Zealand's poorest families.

Welfare issues have always been difficult. We can take pride in New Zealand's landmark social security legislation, but don't need to sentimentalise an ideal past. Instead, this occasion should spur us to re-examine current policies, and gauge not only whether they are affordable, but whether they promote the values of a civilised community.

Margaret McClure is the author of A Civilised Community: A History of Social Security in New Zealand 1898-1998.