The cornerstone of the first Labour government’s welfare policies, this act introduced revised pensions and extended benefits for families, invalids and the unemployed. Some described this legislation as ‘the greatest political achievement in the country’s history’.
From the late 19th century New Zealand had gained a reputation as the ‘social laboratory of the world’. Measures such as the introduction of a pension for the elderly in 1898 saw this country lead the way in attitudes towards social welfare. This reputation was severely challenged by the harsh economic conditions of the Great Depression of the early 1930s. Successive governments cut spending in a bid to balance the books. High unemployment, work camps and queues at soup kitchens shocked many New Zealanders.
Labour won the 1935 election with a policy that every New Zealand citizen had a right to a reasonable standard of living. The community was responsible for ensuring that people were safeguarded against economic conditions from which they could not protect themselves. Labour’s ultimate response to the Depression was the Social Security Act.
The Act combined the introduction of a free-at-the-point-of-use health system with a comprehensive array of welfare benefits. It was financed by a tax surcharge of one shilling in the pound, or 5%. ‘Pensions’ were renamed ‘benefits’. The Act made qualifying conditions less restrictive and created new classes of benefits. Prior to 1938 New Zealand’s pensions were confined to the elderly, invalids, the blind, widows and miners. There was a limited system of family allowances. In extending the family benefit to all mothers irrespective of the family’s income, the 1938 Act increased the number receiving allowances from 42,600 to 230,000.
The Act also established a Social Security Department to administer monetary benefits. All medical care benefits were administered by the Department of Health.
Supporters of the scheme extolled a welfare system that now protected New Zealanders ‘from the cradle to the grave’. These policies played a significant role in keeping Labour in power until 1949. But critics complained that by increasing the range of benefits and the number of bureaucrats, Labour had created a welfare state that was too expensive to run and made New Zealanders overly dependent on state handouts.
Image: Head office of the new Department of Social Security (Te Ara)