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Friday, 14 September 1928

Dr EARLE PAGE (Cowper) (Treasurer) . - I move -

That the bill be now rend a second time.

On behalf of the Government, I have the honour of bringing before Parliament, in the National Insurance Bill, the most comprehensive and progressive measure of social reform that has ever been brought forward in any Parliament of Australia.

The subject matter of this bill is one of very great importance, not only to the whole community in this country, but also to the whole civilized world. In all directions it is being recognized that the beneficent principles and practice of insurance should be applied not only in respect of such casualties as death, fire, ship-wreck, and accident, but also to those other more insidious, but no less serious, casualties of sickness, invalidity, and senility, which affect our. social organization and, in the absence of due provision, cause untold suffering.

The ferry disaster on the Sydney Harbour, a few months ago paralysed us momentarily with sheer horror, and then rendered us alert to ascertain whether it was not possible to render such an occurrence with its associated distress an impossibility. How many of us realize, however, that in our everyday life we have even more extensive, though less vivid, tragedies, which, if not capable of prevention, are at least amenable to amelioration with no great effort on our part by the appropriate adaptation of some of the machinery which we apply every day to the rectification of inequalities in other matters? It may, perhaps, be impossible for us to prevent the blow from falling, but we may, by appropriate organization, be able to lighten its effect upon those upon whom it falls.

Many people are apt to say that such' things should not be; and they appear to think that having said so much they have done all that could reasonably be expected of them. Their assertion may be true to some extent, but in this practical world in which we live we have to deal very largely with what is, however, much we may aspire for what should be.

It may be well here to deal very briefly with a popular misconception on the matter of insurance, especially as it has a somewhat important bearing on the question before us. In the minds of many people there is a degree of confusion between the terms " insurance " and " prevention," although they express in reality two very different ideas. Insurance invariably implies loss or injury as well as something by way of compensation to make good, in part at least, the loss sustained. In essence, however it may be administered, insurance implies a combining of the interests liable to a risk for the purpose of providing compensation to those of the constituent interests which suffer loss or injury. The man whose house remains undestroyed contributes to the replacement of the house of the man who suffers by the conflagration. The man whose motor remains undamaged contributes to make good the loss suffered by him who crashes. The man who experiences a long life contributes to the needs of the dependants of another who dies early, and so on.

The prevention of that which causes the loss is strictly no part of the insurance function. Thus, it is not an essential or usual part of the function of a life assurance office to provide medical attendance for its policy-holders. It is no part of the function of marine insurance to chart navigation routes or provide lighthouses, beacons and buoys. It is equally no essential part of the function of fire insurance to provide fire brigades, although some of the early companies did so, and many of those in the present day are compelled to contribute to . their upkeep. It is no part of the burglary insurance company to police the streets to prevent burglary, nor of the motor car insurance societies to prevent accidents to motor cars. In all these and similar cases the insurance activity commences only when loss has been suffered, and in the terms of the particular contract it provides compensation to the insured person who has suffered the loss.

I have no wish to disparage prevention or the desirability of attempts at prevention. What I wish to stress is that insurance not only differs from prevention, but that it commences to operate only when attempted prevention has failed. What we are dealing with in this measure is not the prevention of such ills as the sickness, disablement or death of the family bread-winner, nor even the restoring of him to activity, where such a result is possible. These are matters for separate consideration. We are here aiming at the furnishing of relief in respect of the distress occasioned by the occurrence of these ills.

Insurance has been defined as the provision made by a group of persons, each of .whom is in danger of some loss, the incidence of which cannot be foreseen, so that when such loss does occur it shall be distributed among the whole group. In other words, insurance is the substitution of a social co-operative provision for an individual provision by the distribution of the losses and the elimination of risk. More briefly stated, insurance is a system for pooling losses.

Mr Maxwell - It is putting into practice the admonition - "Bear ye one another's burdens."

Dr EARLE PAGE - In recognition of this principle, various forms of voluntary social insurance have been already engaged in by friendly societies and similar organizations. But this voluntary insurance covers practically only the thrifty, or the better-off section of the community who have some surplus earnings. The thriftless, and those whose present necessities are so great that, notwithstanding a desire to make provision for. the future, they have not been able to cover themselves, are not provided for. In addition, the existing systems have covered only a part of the field, such as the death of the husband or father. The imperative need of covering the whole field, especially under the conditions of modern industry, has made the movement of social insurance one of the most important world movements of our time.

The greatest advantage of insurance is that it removes the sense of personal insecurity. Even if it may be contended that insurance costs as much as it gives, or may even cost something more on account of the expenses of administration, yet the advantage arising from the absence of this sense of personal insecurity would make insurance abundantly worth while. This is specially applicable to the loss of working power due to sickness, old age, or accident. The great bulk of the workers of our country have some difficulty in providing for the whole of their necessities out of their wages, which do little more than cover current expenditure when they are working and in full employment. If those wages are barely sufficient when they are well, an interruption of their wages through any of these causes will soon lead to serious economic distress. Sir Neville Howse, Dr. Maloney, Dr. Nott, and I, as well as every other medical practitioner and honorable members generally, have had experience of the great distress caused over a wide field through no adequate provision having been made for sickness and the supply of nutritious food and warm clothing. Lack of provision in these directions frequently lengthens the periods of illness and lessens the capacity for work.

Modern industry divorces the worker from the land, so that, whether in employment or otherwise, there is a continuous outgoing for rent, food, &c. It is reasonable, therefore, to ask that modern industry should contribute to a national insurance scheme against inability to work and consequent interruption in income. This interruption may be due to any one of various causes affecting the breadwinner. Of these, the most important are temporary sickness, permanent disablement, senile decay, death, and unemployment.

Concerning the first four of these causes, there is a large amount of data available to form the basis for a scheme of amelioration. They have been the subject of intensive investigations in many countries under different conditions, and, whether in the field of appropriate statistical data or in the experience of friendly societies and life assurance offices, they have furnished a wealth of suitable information. On the basis of these results, it is possible to build with a considerable degree of assurance. The definite relations to age of sickness, disablement, senility and death, are well known, and, although not as exact as the constants of physics, chemistry, &c., they yet furnish reliable bases for the erection of social edifices which will serve to shelter the weak and the suffering.

In respect of the fifth principal cause of interruption of income - that of unemployment due to the inability to find employment because of the lack of adjustment between demand and supply in the labour market - the position is not so simple, nor has the foundation been so well laid.

In reporting on this matter, the Royal Commission on National Insurance said that there were not sufficient data in Australia on the subject to enable a suitable solution to be formulated or to allow a satisfactory scheme to be brought forward to deal with it. It suggested the creation or utilization of agencies which would enable the necessary data to be obtained, so that the problem could he seen in its proper perspective.

The other social ills enumerated can be more or less easily measured, and with some precision in terms of intensity of cause and effect; but the problem of unemployment, being based on so many and such elusive causes, has up to the present baffled the efforts made to effect an analysis of it, and an interpretation of its significance.

In several countries attempts to effect a satisfactory scheme of unemployment insurance on a local basis have been made with varying success, but until recently the only such scheme on a nation-wide basis was that of Great Britain. But the conflicting reports as to the efficacy of the scheme are such as to give pause to the reformer, desirous of providing his less fortunate fellow man with a solution of his troubles. The position is immensely complicated by the possibilities of malingering, and the complexities arising from the continual struggle between capital and labour.

In this matter we have a good example of the difference between insurance and prevention. Those disabilities which are provided for in the bill may be said to have reached a stage at which the principle of insurance can be satisfactorily applied to them with a reasonable certainty of obtaining a sound system and beneficial results, whereas the disability to which theterm " unemployment " is usually applied is at present a matter for prevention rather than insurance. The Government is now considering the means by which measures for prevention can be applied. Such measures may involve policies directed towards securing the maximum production and development of the industries of the country; increased facilities for adjusting the supply of labour, and the demand for it; increase in the mobility of capital and labour; more uniform distribution of the demand for labour throughout the year by a wise selection of industries a.nd suitable adjustment of programmes of public works over a period of years, &c. These subjects, however, are not before us at the moment. I have mentioned them in order to indicate that consideration ofthe matter of applying insurance to unemployment has not been lost sight of, but that a policy directed towards its elimination, as far as that is practicable, is being sought.

The problem of unemployment - its nature, causes and remedies - has been referred by the Government for investigation to the Development and Migration Commission, which has been asked to get all possible information and to express its views on the most satisfactory methods of dealing with the evil. A valuable report has already been furnished by the commission, and further investigations are proceeding, which, it is hoped, will lead to satisfactory results.

The recommendations of both this commission and the Royal Commission on National Insurance point to the'necessity for the following action: -

By the Commonwealth Government -

(1)   In the direction of collection of statistics and data over a wider and more comprehensive field;

(2)   By economic research into the causes of unemployment.

By the State Governments -

(1)   A more effective system of employment bureaux;

(2)   More effective vocational and technical training;

(3)   Co-operation between Government departments, public authorities, and private employers for the better regulation of demands for labour.

By Commonwealth and State Governments -

By co-operation with each other for the application of legislative remedies for defects discovered as a result of economic research.

It can be laid down as an axiom that unemployment insurance is not a remedy for unemployment. It merely affords temporary and partial relief for those who by reason of unemployment are deprived of their full wages. It is also obvious that the greatest service that can be rendered to an unemployed man is to find him work to do ; unemployment insurance will not do this.

Side by side with the collection of adequate data should, therefore, proceed those other measures of organization and research which will really grapple with the problem itself, make better provision for assisting the worker to find his job, and also to strike at the causes which are making jobs scarce. These are the lines upon which action should first he taken, and upon their fruition depends the decision as to the further step for providing for those who, notwithstanding all that can be done, are still unprovided for.

Then will come the question as to whether that can best be done by the Commonwealth or the States. It must be borne in mind that unemployment insurance should he associated with organizations for finding work, with vocational training, and possibly with some scheme for dealing with the unemployable. In these questions the States have many advantages over the Commonwealth owing to their control of lands, mines, and railways, as well as by reason of their wider industrial powers.

Leaving the solution of this problem for the moment, the Government has considered it desirable to push forward with measures relating to the other causes of interruption of income, and to apply to their amelioration those principles which have proved effective in Australia and elsewhere.With this end in view the matter has been investigated actuarially and otherwise to ascertain to what extent the workers of this country would be able to provide appropriate benefits for themselves, in their various states of incapacity, and to what extent their efforts could and should be supplemented from other sources.

The result has been the bill now before the House. It deals in a comprehensive way with the four causes of interruption of incometo which I have referred and introduces a practical scheme within the powers of industry to compass, involving as it does a contribution of no more than1s. per week from each male worker and 6d. per week from each female, which will be supplemented by contributions by employers and the Commonwealth.

The outstanding difficulty of such a scheme is the fact that we are faced by a body of workers ranging all the way from callow youth to decrepit age, and we have to provide all with the same benefit at the same price, notwithstanding the fact that the cost of providing the benefit to those in advanced age is immensely greater than in the case of the young. Sickness and disablement are much more frequent with the old than with the young, senility is much nearer, and as the proverb has it, " the young ' may ' die but the old' must '." In these circumstances it is clear that the cost of socially insuring a worker of advanced age is much more expensive than that of insuring a youth. What shall be done? Shall we charge higher contributions to the old than to the young? Clearly such a course is impracticable. In addition to his other disabilities, the older worker would be loaded with a heavier contribution to be paid by himself and by his employer if the scheme took the usual form. This would mean in many cases that the older man would lose his job and find it difficult to get another. To prevent such injustice there must be a flat rate of contribution applicable to workers of all ages with a discrimination as to sex. This is the first desideratum. Next, the rate to he paid by way of contributions, since it must come alike from all of the same sex must be of such extent that its payment does not deprive the man on relatively low earnings of the measures of comfort that are necessary toa reasonable standard of living and health, and thus force the worker below a desirable social standard. Who, then, should assist him in this assurance necessary for him to retain his sense of personal security and provide him against the interruption of his earning power? This point was fully examined by the royal commission on national insurance, which unanimously reported that there were three sections who should contribute - the State, the employers and the workers.

Mr Fenton - Did they say in what proportion ?

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