of National Insurance’, said conservative Prime Minister Joseph Lyons in
1937.^6 But the greater impetus wasfiscal rather than ideological. Old-age
pensions expenditures had been growing rapidly as the number of recipients
and life expectancy increased. By 1930 pensions had come to absorb almost all
the £11.1 million of federal direct taxation revenue; by 1935 they absorbed
almost 34 per cent of all government revenue (Watts 1980).
Under heavy pressure from officials to make pension and health expenses
contributory, the Lyons government in 1938 introduced, in the words of its
Treasurer,‘one of the most far-reaching schemes of social reform that has been
presented to the Federal Parliament’(Casey 1938, p. 793). It would oblige
workers earning less than £7 a week (around half the working population at
the time) to pay 3 shillings a week (2 shillings for women), or a little over 2 per
cent of their wages, into a national insurance fund that would pay sickness
benefits, medical benefits, and‘superannuation pensions’.^7 ‘The only effective
basis for ensuring the protection of the workers is on the principle of compul-
sory and contributory insurance’, Treasurer Richard Casey said.
The legislation passed but was never implemented. Once again it met strong
opposition from doctors, the Labor Party, and Friendly Societies,^8 fearful of
being crowded out. An unprecedented letter-writing campaign against the
proposal erupted across the east coast of Australia (Huf 2015; Coleman et al.
2006). By March 1939, with war approaching in Europe, the government
postponed the scheme indefinitely.
‘From 1937 the labour movement had campaigned against the contributory
principle as an“impost on workers”rights and an abuse of the minimum
wage’, notes Huf. Labor’s opposition to forcing the lower paid to fund
expanded social benefits would fade, however. The new Curtin government
imposed savage tax increases in 1943, justified by war expenses and to create a
National Welfare Fund that would provide old age, sickness, maternity, and
unemployment benefits. The number of low- to middle-income earners (on
less than £500 a year) liable to pay income tax jumped by a factor offifteen
times over the four years by 1943.‘The crowning irony in hindsight...was the
ALP’s role in imposing far heavier taxation on far more low-income earners
than any UAP [conservative] government would have believed possible or
prudent’, argues Watts (1980, p. 187). The Fund provided scope for contribu-
tory DB pensions to develop, but it ossified under subsequent governments
into a mere accounting device and was abolished in 1985.
(^6) http://electionspeeches.moadoph.gov.au/speeches/1937-joseph-lyons (accessed 20
November 2015). 7
In terms of retirement incomes, the scheme amounted to an exemption of all insured persons
of eligible age from the then considerable means testing of the ordinary age pension. 8
Voluntary, civic organizations with missions to pool resources to help the needy.
Adam Creighton