announced that he had appointed the following members to constitute with him the Committee on Standing Rules and Orders of the House of Assembly: The Minister of Transport Affairs (Leader of the House), the Minister of Constitutional Development and Planning, the Minister of Foreign Affairs, the Minister of Home Affairs and of National Education, the Minister of Finance, the Chairman of the Ministers’ Council for White Affairs, the Chairman of the House of Assembly, the Chief Whip of Parliament, the Chairman of Committees of the House of Assembly, the Chief Whip of the Majority Party, the Chief Whip of the Official Opposition, Mr C W Eglin, Mr J H Hoon and MrBWB Page.

announced that vacancies had occurred in the representation in the House of Assembly of the following electoral divisions:

1. (1) Primrose, owing to the resignation, with effect from 19 September 1984, of Dr the Hon P G J Koornhof, DMS;
2. (2) Parow, owing to the resignation, with effect from 19 September 1984, of the Hon S F Kotzé.

announced that, in terms of section 70(2)(c) of the Constitution, he had fixed Thursday, 20 September, at 14h00 as the time, and the Main Auditorium of the Hendrik Verwoerd Building as the place, for the nomination by the opposition parties of the House of Assembly of six persons for appointment by the State President to the President’s Council.

Mr Speaker, I announce that a proclamation will be issued tomorrow to prorogue Parliament and to summon it to meet on 18 January 1985 for the dispatch of business.

Mr Speaker, I move without notice:

Agreed to.

Mr Speaker, I move:

Question put,

Mr Speaker, I move the motion printed in my name on the Order Paper, as follows:

This is of course the first debate under the new Constitution, and it is significant that the first debate under the Constitution should be on economic affairs. Secondly, I think it is a debate in the course of which we shall all be put to the test, the Government and the Opposition alike. That the country faces a serious economic crisis is, I believe, beyond dispute. However, the question that has to be posed here today is what style of debate we are now going to have on this particular occasion and what style of debate will be the significant feature of Parliament in the future. Is it going to be a confrontational debate in which debating points are more important than solutions or are we going to have debates which are active and constructive solution-seeking? Are these going to be debates in which problems are going to be identified, in which the errors that have been committed are clearly admitted and in which answers are sought? We who have initiated this debate are going to choose the constructive role and we are going to endeavour to test whether there is a possibility of consensus on economic affairs under this dispensation. Perhaps we should also state how we see the new style of financial debating and financial discussion. One need only refer to the last budget debate—and I have the Hansard here—in order to see how there was vilification and criticism which could not be accepted, how there was a reaction when a budget was clearly deficient and when there was no desire to listen to any form of constructive suggestion at all. In fact, we can now say with some degree of satisfaction—if it could mean satisfaction to us—that unfortunately we have been proved right.

Let bygones be bygones.

I am going to ask the hon Minister to do that in just a moment. However, when one talks about consensus it does not mean that one does not highlight problems and point out errors, because if one does not do that and one is silent when errors are being committed and the wrong policies are being applied, then apart from creating a problem which one is not solving one is creating a further problem because one is not criticizing and not pointing out the mistakes when they occur. When we see wrong policies being applied, we will not be silent. When we see menacing threats from unemployment or from inflation or from other sources we will let our voices be heard. It is our duty—and I want to stress it—to deal with these issues forcibly and effectively. We will try in the spirit of what has been said to do so constructively and to offer alternative solutions. However, it is not enough if we in the Opposition try to practise consensus because it also needs to be practised by the Government. We need to find out how the Government sees consensus and how it sees consensus in financial affairs. Does it mean that consensus is only to be sought among the three majority parties in the three Houses, or does it mean that the Government has also to seek consensus with the Opposition? Consensus does not mean just agreeing with what the Government wants. It does not mean just being consulted and the Government then going off and doing on its own what it wants to do. If one intends merely discussing things with people and then going on to do what one intended doing in the first place, there is no point in consultation. In the economic sphere it also does not, in our view, mean that there should be consensus between the politicians only. I believe one must bring the public and the private sector together in a national effort in order to solve problems which require a national effort for them to be solved. In this case the economy does require a national effort for the problems to be solved. Real consensus, however, means participation and not, as I have said, mere consultation, nor does it merely involve the minority agreeing with the majority.

So, while we approach this debate in, I hope, the correct spirit and perhaps in a new spirit, let us be frank and quite open about it: We adopt this approach at a time when it would be much easier for us to follow a destructive and confrontational line. We do it at a time—and I think that the hon the Minister of Finance and the public must know it—when we believe the Government is most vulnerable. It is most vulnerable on the issue of its past policies and finds its budget lying shattered around it. Yet, despite the fact that we believe we have been proved right, at a time when the country as a whole stands disillusioned and frustrated and there are threats all around us, we say we are in fact offering to participate in the finding of a solution and, as the hon the leader of the House said, let bygones be bygones; let us try to solve this problem and let us see if there is a genuine effort on the part of the Government to see that there is consensus here.

Inflation, the problems of the balance of payments, unemployment, bankruptcies, falling living standards, a statement by the most senior official in our Department of Finance that technically we are in fact virtually bankrupt—all those things, with the rand debased in the international market and with shock therapy having been applied in order to stop a deterioration of the position, now face the country, and that at a time when expectations are rising and when demands for non-discriminatory social services and for high living standards are potential threats to stability if they cannot be satisfied. While we believe that short-term solutions must be found for immediate problems, we are of the firm conviction that now the best brains in the country are needed and must be applied to the solution of the long-term problems. The best brains in the country are, with great respect, not necessarily in this House, but they are elsewhere as well. [Interjections.] Of late Government speakers and most recently the hon the State President in his address have stressed the limited nature of the country’s resources and its inability to provide for all the needs required. The State President said in his address:

The needs he referred to were the following:

That is how the State President put the matter when he addressed the three Houses in the joint sitting.

I may say that it might in fact be worth considering having a debate in future on the State President’s address, as one finds it done in other countries. Here, however, we can talk about the economic issues. I want to point out to the hon the State President that, while it is correct to point out the realities and that reasonable expectations cannot be met overnight, it should in fact not be stressed that those expectations can never be fulfilled, because we believe that South Africa in fact has the potential to satisfy the legitimate economic aspirations of all its people.

It has that potential; it may take a little longer than people would like but we can do it. I believe we can create the jobs which are needed. I believe that we have the resources which can be exploited, whether they be natural resources or manpower resources or in any other form. I believe that it is not necessary for anyone in South Africa to be satisfied with the crumbs of the economic cake in the long term. I believe that we can make the economic cake larger in South Africa so that everyone can have a fair slice of it. I also believe that, while—as the State President said—we should take the realities into account and determine our priorities, we must in fact make it clear that there is hope for a better life for everyone in South Africa and that that hope must not be lost, even in a time when there is an economic crisis.

Mr Speaker, Government expenditure has been the subject of much debate of late, and the inability of the Government to keep public expenditure within reasonable limits of accuracy as budgeted has been very clearly demonstrated over many years. We have pointed out repeatedly that the Government cannot ask consumers to cut back expenditure and reduce their living standards without the Government setting an example. While the Government expends money in many ways which we regard as wasteful, unnecessary and purely politically motivated, we believe that there are other directions in which the Government has failed to satisfy legitimate and reasonable aspirations in order to ensure stability.

We have called for a proper system of both priorities and sound management. We welcome the creation of a council to determine priorities, but we find it difficult to under stand that the Government believe that national priorities can be adequately determined without co-operative input from the private as well as the public sector. If consensus is the name of the game, why should the Priorities Council not go across party barriers and include both the public and private sectors in order to include everybody in that field? [Interjections.] I want to make an appeal to the State President today: I want to ask him to reconsider this issue in order to broaden the whole basis of this council that is to determine priorities in South Africa.

When we look at public expenditure, a distorted picture has to a considerable extent been presented to us. As the Government is hiving off budgets to the South African Transport Services and the Post Office, allowing the Housing Commission to raise loans independently and treating public corporations such as Escom, Iscor and the SABC, who borrow locally and abroad, as separate entities, the true borrowings of the Government, in the broad sense are not seen, and a distorted picture of Government expenditure is presented when public judgment is made in this regard and in regard to priorities. Therefore, we believe that we should have a completely new look at the role of the Government as a whole in the economy to examine what is and is not and what need and need not be Government expenditure and what should or should not be privatized in South Africa. We also need to have a more efficient management of and more effective control over the whole domain of the public sector. We believe that, in looking at cutbacks in Government expenditure, there should not be, as has been reported, merely a broad across the board instruction to cut back by a given percentage. Instead, we believe that a special group of experts, drawn from both the public and private sectors, should examine and evaluate the relationship between the needs of the various departments on the one hand and the effectiveness of the way in which money is spent on the other hand, in other words, do not just cut across the board in so far as expenditure is concerned but deal with each individual need separately as it is required and as the priority is determined.

We believe that the degree to which functions, presently performed by the State, can be rendered more cost effectively by the private sector needs to be looked at, and that the degree of privatization which is practical and desirable should be examined by a team of experts from both the public and the private sectors. We believe that there needs to be a removal of duplication of bureaucratic processes and structures due to artificial divisions. Essentially, the same functions are often being duplicated, because they are being performed in more than one manner in our bureaucracy. We have to say that the efficiency and efficacy of the decentralization processes, particularly in regard to the existing infrastructure and its extension as opposed to creating new infrastructure in new areas, needs to be looked at again. We also have to say that we need to review the aid to neighbouring states to ensure that the money that is given by South Africa is spent effectively and, where possible, that the assistance that we give to neighbouring states is of a project aid nature where the project is essential for the state concerned.

We also believe that greater control over the individual expenditure of this State department needs to be exercised, with an insistence on adherence to budget and the elimination of unnecessary expenditure. I only have to remind the hon the Leader of the House of his public relations activities relating to toll roads to give an example as to what we can do without. We only have to deal with the innumerable publications that seem to appear from nowhere. We are like a paper mill producing more and more paper and we are duplicating things all the time. We only have to refer to the Auditor-General’s reports and the inadequate stock control that exists to show where inefficiency in fact exists in a State department and where we can cut back on unnecessary expenditure. We do not contend and we have never contended that the State has no role to play in the economy, neither do we believe that essential services should be abandoned or security and stability endangered. However, the present situation cannot be allowed to continue.

We also cannot believe that we can stand by callously in South Africa while the unemployed and the impoverished struggle to exist. Social services need to be provided and reasonable expectations need to be fulfilled. We have to work out the priorities but we need to do so, as the State President said, by team work. Team work means that no one has the monopoly of skills or talents but that we have to use the best that are available in South Africa.

What concerns us is not only the short-term situation in South Africa, but also the direction in which the country is heading. Are we heading for inflationary conditions where we might find ourselves in three figure inflation? Here I quote the hon the Minister of Finance, as reported. He said the following:

I do not believe we will have an inflation rate of 400%, but if we continue to follow policies which we have followed in the past, and if we find ourselves following policies which a country such as Chile followed, we have to realize that instead of our lifting the Third World people in this country to First World levels we are going to reduce First World people to Third World standards. That is something nobody in this House wants. If that is where we are going, why is it that we are repeatedly told at the highest level in South Africa that there is insufficient co-ordination between fiscal and monetary policy? Why should that be? Why should we allow that situation to exist? Why should it be that in retrospect it is repeatedly admitted that monetary policy has been too accommodating in the past? Why is it that we do not get to grips with the structural problems which cause inflation in South Africa? Why are we afraid to tackle the real structural problems of inflation? Why is it that we do not learn the lessons from the past and stop just waiting for rain and an increase in the gold price to solve our problems instead of setting about building a sound economy based upon the vast resources of both labour and minerals which this country has, and also utilizing the management skills which we have? Why is it that we allow short-term political considerations to influence economic policy with long-term adverse and sometimes disastrous effects? The hon the Minister of Constitutional Development and Planning, who is looking at me so carefully, will remember how a speech was changed last year because of a political consideration when in fact there was going to be action in order to deal with the economy and it was not done.

It must never happen again, because one cannot put short-term political considerations above the long-term economic needs of the country. Let me put a question to the hon the Minister of Industries and Commerce. Why is it that we so carefully nurture industries in order to create jobs that we need so desperately, and then expose them to the gales—not the winds—of international competition, which many of them are not able to withstand, thus allowing economic conditions to come about as a result of which we have an increasing number of firms going bankrupt and being placed in liquidation, destroying the very businesses and the jobs that have been so carefully created? [Interjections.] We have said repeatedly that if medicine is administered to a patient in the early stages of a disease, the treatment need not be as harsh as it needs to be if one allows the disease to develop. Now, in fact, we have a situation in which the disease has been allowed to develop necessitating large and drastic doses of medicine. [Interjections.] In fact, one has to apply shock therapy for what is taking place. [Interjections.] The question that has to be posed about this shock therapy that we have to employ is: How long can this economy actually stand up to the shock therapy that we are administering? What will happen if the judgements that are being made about what is going to happen to the dollar, what is going to happen about inflation and what is going to happen to the gold price are wrong? What if, in point of fact, we find countries overseas being subject to recessionary conditions at the very time when we want to embark on an upswing and we then have a prolonged recession? One cannot budget merely on what is going to happen outside South Africa. One also has to look at what is happening inside South Africa. We have to get away from this concept of waiting for rain and waiting for the gold price to go up. We have to substitute good management and efficiency. Those are the things we need to do.

Let me present hon members with a list of 21 items, issues which I believe we should deal with. Savings are at the lowest level imaginable, but there are inadequate incentives to save, even with high interest rates, because one cannot talk about real returns without taking tax into account. If one wants people to save, one must in fact give them an incentive to save, because even Treasury Bonds, at the present increased rates, do not offer real returns. Secondly …

Mention the incentives.

Give a return which is a real return on tax-free investments which the Treasury can issue, a real return in inflationary terms.

Secondly, let me come to administered prices. The hon the Leader of the House, sitting there knows that we have to deal with an increase in the bread price. Does he think this is the right time for the South African economy to have a massive increase in the bread price? Does he think so, Sir? I do not believe that that is the case. I believe that we have to deal with administered prices more circumspectly.

Thirdly, there are lobbies for all kinds of industries and activities in this House. Let us not pretend otherwise. One only has to think of the question of wine to know about the lobbying that takes place. I think there ought to be a lobby to keep businesses and industries going, businesses and industries which are threatened by the present economic position and which could prosper when we enter upon better times. I think we should give assistance to those businesses so that those jobs are not lost forever.

Fourthly, I want to appeal to the hon the Minister of Finance not to deal only with the short-term problems relating to inflation but to look at the real structural causes of inflation, the question of the bottlenecks that exist in the sphere of skilled labour, and the question of influx control and its effect on that. The question that arises every single time we deal with any kind of upswing is the availability of skills. I also want to appeal to the hon the Minister of Finance to look at relief measures for the unemployed and the impoverished clustered in poverty throughout South Africa, and to deal with the creation of jobs in depressed areas to create infrastructure, to get us more of the pick-and-shovel jobs that will enable people to survive and allow them to feel that they are working and are earning enough to keep body and soul together. That is what we need in this kind of situation.

I think we need a committee of experts to look into the question of privatization. We need a review of Government expenditure, as I have said, on a scientific and not an ad hoc basis. As I have indicated to the State President, we need to deal with the Priorities Council. We need to mobilize industry, commerce, finance and organized labour into a co-operative effort to deal with the economic crisis. We need firmer methods to deal with consumer exploitation and to ensure competitive market conditions. We need firmness in respect of the control of the money supply and we need to have targets set in respect of the money supply. We also do not always need to say in retrospect that we have been too accommodating.

We need absolute strictness in regard to adherence by Government departments to their budgets. We need to remove unnecessary bureaucratic duplication. We need to deal more effectively with incentives and to encourage productivity and planning. We need more realistic planning in respect of job creation in the light of the demographic realities of South Africa which are about to overtake us. We need what was announced I think only this morning, namely an investigation into our whole taxation system in order to ensure that we have equity in taxation but that the incentive to work remains.

I believe that we need greater concentration on the local beneficiation of our natural resources. We need to review the protection needed by local industry and the nature of local content programmes. In fact, we need to look at greater incentives for overseas equity investments in South Africa as opposed to merely borrowing money overseas. We need to differentiate in the dampening of demand for local products as opposed to imported products because the real issue is to safeguard the balance of payments. Above all, the hon the Minister needs to correlate fiscal and monetary policy in such a way that they both deal with the problems that face us.

I believe I have tried to adopt a constructive approach to these issues. I also believe that the ball is now in the Government’s court. There is a crisis and it has to be dealt with. It is a serious crisis. Do not imagine that the present unrest in South Africa is entirely politically motivated. There are also economic causes that can be exploited by those who want to use them for their own purposes. I appeal to the hon the Minister of Finance and the Government, if they really believe that they want a consensus form of government to get the public and the private sectors together, to get all the people of goodwill together who believe that it is necessary for South Africa to prosper economically so as to get political problems solved. If all these people are brought together so that there can be, as the State President said, a team effort, there is hope that South Africa’s economic problems will be solved and that we will weather this crisis. We will then be able to provide in the long term for the aspirations of the people of South Africa which are reasonable and can be fulfilled.

Mr Speaker, before I reply to a few of the aspects raised by the hon member—naturally one can only reply to them very sketchilly because the hon member raised so many matters—I should like to deal with a more formal aspect of this debate. Arrangements have been made to hold a press conference tomorrow, after talks with the members of the private sector in which politicians were also to have participated. But now that we are conducting this debate the need to have politicians, and therefore members of the Opposition, present at that conference falls away. Consequently I should like to make a few announcements, and I shall then deal with certain aspects of the hon member’s speech.

Following in-depth discussions at the end of July between monetary and fiscal authorities the SA Reserve Bank, as is well known, took action at the beginning of August and implemented certain monetary measures. These resulted in certain interest rate adjustments and were concerned with the control of the money supply. The results of these measures look promising, but there is not one of us on this side of the House who is not aware that they have been accompanied by great sacrifices. We realize that only too well. However, there is no medicine that helps for an ailment and is pleasant to take. On the same occasion when the announcement was made, and subsequently as well, repeated reference was made to parallel fiscal measures which would be adopted to curb the tendency to overspending on the part of the authorities.

Naturally this exercise took up a considerable amount of time, but it has now been finalized and I am able to announce certain particulars in this connection. Certainly in regard to this matter ought now to contribute to greater stability in regard to economic variables. There was a good deal of speculation, sometimes of an astonishingly uninformed and naïve nature, which had a detrimental effect on expectations, but facts in regard to this matter ought now to have a stabilizing effect. In addition the tax payer in South Africa has every right to know what the present position is in respect of Government spending in this country.

When the exercise to prune expenditure began, more than four months of the current fiscal year had already elapsed. In other words, the cuts that could be made, would have had to be made in the remainder of the financial year and would actually have been applicable only to the second half of the fiscal year.

Following a Cabinet directive the Director-General of Finance convened a meeting of the heads of all State departments and other bodies being financed through the State budget and pointed out to them the serious nature of the economic and fiscal position, and requested them to make appreciable cuts in expenditure for the remainder of the present fiscal year. They were all requested to determine their own priorities.

At the same time special efforts were made on the revenue side to speed up the issuing of tax assessments and the collection of outstanding amounts. These efforts are producing very good results, and will provide us with a revenue in excess of what we budgeted for in March.

Certain exceptional factors for which acceptably accurate provision could not be made in the Main Budget or even in the Supplementary Budgets have meant that Government expenditure this year has risen beyond the budgeted levels. This process began in April and there were early indications that the additional expenditure for the present financial year could amount to as much as R2 450 million if it was not curbed in time. Examples of this are additional drought aid, further food subsidies, the return where now practicable of certain expenditure which had up to this stage been excluded from the Main Budget, namely the so-called excess-commitment authority in respect of the South African Defence Force, as well as indeterminable expenditure arising from the substantially higher levels of interest rates, particularly the increase in the cost of servicing the public debt and housing subsidies.

The co-operation of all departments, however, has succeeded in preventing nearly R650 million of this expenditure. It is now expected that the Additional Budget can be restricted to a level of approximately R1 800 million, excluding discounts on the sale of government stock, because it is merely a contra-entry. Earlier this year the hon member for Yeoville argued about this for a long time. This is admittedly still a high figure, but one that is inevitable under present circumstances when regard is had to the programmes and services involved and to the exceptional factors referred to.

On the revenue side the increase in GST that came into operation in July, the higher rand earnings of the goldmining industry, which forms the basis of their tax liability and the acceleration in tax collections by Inland Revenue will lead to an expected increase in State Revenue of approximately R1 500 million over the figure furnished in the March Budget Speech.

The gross additional expenditure therefore amounts to R2 180 million, comprising the supplementary expenditure of R380 million already approved by Parliament and the estimated additional expenditure of R1 800 million, to which I have already referred. Taking into account the expected increase in revenue of R1 500 million, the total nett additional financing requirement therefore amounts to R680 million. The result of all these developments is that the deficit before borrowing for the full fiscal year will now rise from just under R3 000 million to approximately to R3 600 million, ie from about 3 percent of the expected gross domestic product to some 3,6 percent. This additional financing requirement can comfortably be accommodated by the local capital market.

The Government’s activities on the local capital market during the remainder of the current financial year will therefore be limited to the conversion—the roll-over—of stock amounting to R350 million which matures during this period, plus sales of new stock of approximately R400 million.

I am convinced that this information will contribute to stability on the capital market. I want to point out to the hon member for Yeoville that the State President did not say, in his Opening Address yesterday, that we could not satisfy the needs of the people in South Africa. I quote what the State President said, as follows:

†I should welcome it very much, Mr Speaker, if, where we are now entering a new era of consensus politics, we will also be able to count on the finance and economic affairs spokesmen of the Official Opposition to help us increase the productivity of workers in South Africa in general.

*Furthermore I can also mention—and I shall come back to this later, although my time is very limited—that the State President has already decided to revise the structure of the Economic Advisory Council and consequently that this matter will be clarified before the end of this year so as to obtain more dynamic inputs in the short term.

†The hon member for Yeoville said that the rand was debased in international markets. Does the hon member agree that the DM, which is a currency of the highest repute, was also debased?

Yes, but … [Interjections.]

Thank you.

[Inaudible.]

We do find ourselves in rather good company in current world economic conditions because one of these days, should things continue to be what they are now, the British pound will be on a par with the American dollar. That is of course adding insult to injury. Moreover this is a fact with which we have to deal. We do know that the value of the rand has declined in relation to other currencies. We know that, and it saddens all of us. It does, however, benefit some of our exporters, and they had better get moving in order to exploit the current situation.

An important fact is, however, that during the month of August, following our very strict monetary measures, the value of the rand increased by 5% against all other currencies, including the American dollar. What is more, we are dealing now with external factors influencing our internal economic position and which certainly make it extremely difficult for us to maintain a strong rand value. We must also remember, however …

[Inaudible.]

Mr Speaker, the hon member for Yeoville has had his chance. We can discuss these things later, on some other occasion. [Interjections.] The fact is that we have been able to cushion the disastrous effects of world economic conditions by way of a gradual depreciation of the South African rand through natural adjustments in the market.

The hon member for Yeoville talked about the expectations of people in South Africa. Those expectations can certainly be met but then only by way of sound investments in the long term in certain infrastructures. Furthermore the hon member referred to depressed areas and also to the development of those depressed areas. I want to ask him whether he is in favour of the decentralization policy of the Government. Yes or no?

Yes, if it is done on a sound economic basis.

If we do it on a sound economic basis. I can only point out that we on this side of the House have the best possible advice at our disposal. I can only refer to the people by whom we are privileged to be surrounded. There is no department able to boast of being surrounded by people of better quality than the Department of Finance. We have at the Reserve Bank excellent people, recognized in world financial circles for their excellent abilities. We also have the Economic Advisory Council, which is also about to be revamped by the State President. We also have individuals sufficiently interested to make them visit our offices in order to offer their services either spontaneously or by invitation. I have had many of them visiting my office, and I maintain an open-door policy as far as that is concerned. I listen to everybody. I do not listen only to them. I listen to everybody and I approach the Cabinet with a condensation, as it were, of the impressions gained from what I am told by these people.

The fact is that our decentralization policy does exactly what the hon member for Yeoville wants it to accomplish. That is certainly one way in which we can increase employment opportunities.

The hon member also talked about social services to be provided. He then also said that there should be an incentive to the saver. I presume that he was talking about the savers in the 50% tax bracket, those in the higher percentage tax bracket. It is only when one gets into the higher tax brackets that current real interest rates really come into operation as far as tax is concerned because there we have, relatively speaking, a very high real savings rate for the investor; in other words, if I read the hon member correctly, I assume that he is suggesting that we ought to give tax incentives to savers on a wide scale. At the same time, however, at the beginning of this year he advised against the increase in GST as well as against an increase in income tax. I should like to ask the hon member please to come forward in a next round of debate to tell us where his priorities lie in so far as the generation of revenue is concerned according to a process of elimination, and in the past few days I have read every word he has said so far this year. The fact is that that hon member has preached expenditure. From morning till night he has preached a more conservative or beneficial tax structure in South Africa in favour of the taxpayer, and I should like to see him meet these ends. The argument that he and his colleagues have always used is to say that the Government is always incurring expenditure to meet its ideological ends, but I say that this has never been quantified. What they do is to take decentralization and the expenditure thereon, and they term this an ideological type of expenditure, yet at the same time they preach the creation of employment opportunities and development in depressed areas. For the life of me I do not see how he can get those things together in his mind when he discusses these aspects. [Interjections.] The hon member asked how long we could stand this particular shock treatment.

*What I am now going to say, pertains to the hon members of the CP’s bankrupt party who are walking around in Primrose, saying that the GST is going to be increased before the next budget. That is absolute nonsense, and we have said so repeatedly. [Interjections.] We shall have to continue with the present measures without a tax increase until the next budget, and this will require certain sacrifices. It necessitates a high interest rate for the present, and a high interest rate structure is not only something that hurts, it is also a bonus to all the rentiers, to the pension funds and to those who have saved. What we have at present is nevertheless a harsh discipline.

Yet we are quite confident that a turning point in the interest rate structure will come. In fact, it should already have occurred, but unfortunately we have recently been experiencing unrest. There are threats of strikes in the mining industry. In addition there are other factors that are placing international political pressure on us and affecting the rand. So far these factors have brought about a rigidity, an inflexibility in the interest-rate structure.

Nevertheless we are still fully confident, and we shall take every possible step to arrange our government finances in such a way between now and the end of the financial year—at which time there will of course be a new start—to force the interest rate structure down as far as possible.

This entails two aspects. It is no use forcing down the interest rate while the inflation rate remains high. Our policy package will therefore have to be aimed at eradicating inflation. What is deadly in this country is the expectation that inflation will continue to escalate. It is true that in the short term there will be a marginal increase in the inflation rate, partly as a result of the drop in the value of the rand internationally, so that we will have to pay for certain imported commodities with a rand of lesser value.

There is no doubt, however, that this will only be the case in the short term and that the rand will in due course increase in value too. There is no doubt that we will in fact bring about a turning point. We shall find it extremely difficult to get it through certain lowest limits during the next financial year. I think that hon members and public in general should know that monetary and fiscal authorities in this country will make every possible effort to rectify this matter and to place our economy on a sound basis.

All that we can do at this stage in regard to the high interest rate structure and when one experiences certain problems with such a broad policy package, is to make every possible effort to help people out of their dilemma in certain sectors, for example agriculture and the small business world. As the hon member for Yeoville said, there are indeed people who are suffering hardships, and there are also people going hungry. We know this, and we shall therefore make every effort to keep prices as low as possible.

If matters should develop into a real crisis, one could even try to apply other emergency measures. However, it is no use as a result of the distressing result of one’s policy, changing the whole policy. One should rather see where the greatest need is and try to bring relief. This is the course we shall try to follow, and I am certain that we shall in that way place the South African economy on a sound basis. There is one final idea I should like to add.

†The hon member referred earlier to the fact that we have exceeded our budget every time. I want to say to him that there are two aspects to his statement. The first aspect concerns the overspending by the particular ministry. I have no doubt in my mind that there is currently a concerted effort among Cabinet colleagues to limit expenditure to agreed upon and published figures. That is the one aspect of it. The other aspect is the fact that one cannot always be accurate in one’s budgeting, and from that point of view we are doing everything within our power to arrive at accurate figures so that we can in fact present a completed budget for our fiscal year which is as accurate as possible.

Mr Speaker, may I ask the hon Minister what he thinks would have happened to the Budget this year if he had not taken the measures to cut back on expenditure which he announced at the beginning of his speech. What would have been the result?

Mr Speaker, that is a very interesting question from various points of view. The fact is that if the Government curtails spending to a greater extent even more businesses will go bankrupt. [Interjections.] Oh yes, we also have to keep that in mind. If the Government is overspending, this has a variety of detrimental effects on the economy, the worst of which is that the overall market does not know what the Government expenditure will be and then there is undue pressure on the capital market. That is the answer to the hon member’s question.

Mr Speaker, after only the second speech in the first debate of the new dispensation, a great truth has already revealed itself. In a quite idealistic way the hon member for Yeoville made an offer in the direction of consensus, and that offer is in ruins after only the second speech. In the first sentence which the hon the Minister uttered after he had made his announcement, he differed vehemently and cruelly with the hon member for Yeoville. [Interjections.] Mr Speaker, I can assure you that no observer will be able to observe any difference in the style of these two speeches made so far in the debate, in comparison with what it was in the previous dispensation. The style is precisely the same, and this confirms one aspect we have always emphasized, which is that there can only be consensus if people agree out of profound inner convictions, and hold the same convictions. If people do not do that, there can be no consensus. We have now ventured into the economic sphere, and so far hon members have not been able to reach any consensus in that sphere. But I think the chances of this happening are greater in the political sphere, because the Government has moved very quickly and very strongly in the direction of the official Opposition, and therefore something like this might be possible.

We shall study the announcement made by the hon the Minister of Finance, because all measures aimed at improving the situation are of course welcomed. At first glance it seems to me that, after these savings and increase in revenue announced by the Minister, the deficit before borrowing is still greater than envisaged by the Reserve Bank in its annual report. In other words, the net result of all these things has not yet made a dent in the basic problems of the economy.

Who is the fiscal authority in this country? [Interjections.]

The fact of the matter is—and the hon the Minister cannot deny it—that the economy of South Africa is at this moment in the most critical situation since 1933. Since 1933 there has never been such a situation in the economic sphere.

It is worse.

It is worse, yes. Since 1933 the country has never experienced anything like this. I tried to verify this—perhaps other statements were made—but never since 1933 has the chief executive officer of the State made the statement that the State was technically bankrupt and that the work-force in certain departments may perhaps have to be pruned. Never since 193 has a statement like that been made.

Volkshandel, a traditional supporter of the Government and the mouthpiece of the Afrikaanse Handelsinstituut, says our economy is sick. The hon the Minister, and yesterday the State President in his Opening Address, said that the inflation rate was rising again after there had been a levelling off for a short period. It is now rising again. In comparison with our trading partners, the situation looks critical. In this way we are pricing ourselves out of the world market. Between the first quarter of 1980 and the third quarter of 1983, the value of export goods declined by 8%, but the volume of exports during that period declined by 37%.

The hon the Minister said that we were now in the company of other currencies that had depreciated, but the rand not only weakened against the dollar, but against other currencies as well.

We did not deny it.

But it is no use saying that we are in good company because others are also deteriorating, for we are deteriorating even more than they are. Not many years ago the rand was worth DM 5. Yesterday, or the day before yesterday, it was worth DM 1,1.

The hon the Minister said that it was not pleasant to take medicine, but I want to tell the hon the Minister this: If a patient takes too much of a certain kind of medicine, he may die as a result of it. The prime interest rate in South Africa is now 25%. In the USA, which is still maintaining its strict measures, it is 13%. In the United Kingdom it is 10,5%. In Japan it is 7,9%. In West Germany it is 5,5%. We are going through a period in which the revenue of the State from personal income tax is increasing by 32% per annum. All these things are having an effect on the individual. To take just one example: Since the time of Jan van Riebeeck until 1978 the price of brown bread rose to 16 cents. From 1978 until the present it rose to 37 cents under the regime of the present State President.

The hon the Minister, other hon members and other spokesmen of the Government are now explaining the causes of the technical economic bankruptcy of South Africa. The gold price and the drought are being advanced as causes. However, the rand price of gold has not dropped during the past year. As a result of the weak rand it has risen from R456 in the fourth quarter of last year to R521 in July this year. The rand price of gold has consequently not dropped, but has risen.

What does that mean?

Surely the hon the Minister knows that little more than a decade ago the gold price was pegged at $38 per fine ounce. Therefore I now want to tell him that it is not correct to state now that the gold price is the cause of South Africa’s economic bankruptcy. [Interjections.] It is not the gold price; there are other causes.

Furthermore the Government states that the drought and the critical financial situation in which the farmers have found themselves, is another cause of this situation. I want to say that the Government therefore knows in what kind of financial position the farmers find themselves. Now I want to tell the hon the Minister of Finance this: With the present interest rates—the medicine which he has now administered—the grain farmers in the summer rainfall areas are not able, with a record harvest and an increased maize price, to pay their interest next year. He is killing the agricultural sector. He is administering too much of this medicine to this sector, which simply cannot endure it. [Interjections.] However, that is not the only debt the farmers have; they also have debts at the commercial banks and as a result of hire purchases, etc. If one adds up the total debts one will see that they are not able to pay the interest on those debts on their own. [Interjections.] I therefore maintain that there are other important causes for this economic situation in which we find ourselves. The first is—and this was mentioned by the hon member for Yeoville—excessive Government spending. At the present stage Government spending is 28,8% of the gross domestic product. In 1960 it was 13,1% of the gross domestic product. This demonstrates that the Government is overspending. Secondly, the Government is at present consuming 30% of South Africa’s total production, and in 1960 the figure was only 16,5%. It is estimated that the Government will have a deficit of R2 000 million on its current income this year. These figures which the hon the Minister announced, threw no light on how that situation could be improved. The Government will have a deficit of R2 000 million on its current income, and it will have to finance its current expenditure by means of loans. At this stage the State’s deficit before borrowing is 6,9% of the gross domestic product. In 1980-81 it was only 0,9% of the gross domestic product. Government debt is increasing to an alarming extent and added to that we have the phenomenon that the fixed investment of the Government is declining; in other words, the effect is that what should generate prosperity and income—I have a suspicion that a large part of the pruning measures now announced by the hon the Minister will affect fixed investment—will result in the capacity of the economy in future, from which the tremendous debt has to be paid, being detrimentally affected.

In addition we have seen that productivity is declining. According to the report of the Reserve Bank productivity declined by an average of 0,3% per worker in terms of the gross domestic product in 1983. It declined by 0,9% in 1982. Government expenditure is increasing; productivity is declining. These two things, overspending by the Government and the decline in productivity can be traced back directly to the narrowing of the wage gap without relating it to productivity. The hon the Minister’s predecessor said a year or two ago in Toronto, Canada: “The narrowing of the wage gap is adding 50% to South Africa’s inflation rate”.

Now the simple fact of the matter is this: The most effective instrument which the State has to influence productivity positively, is the salary package. This is the most effective instrument, and it is not being utilized. It is not being utilized at all, and consequently I want to tell the hon the Minister that if he does not…

Mr Chairman, may I ask the hon member a question?

The hon the Minister wants to ask me whether I did not also do so when I was Minister of Education and Training. [Interjections.] I shall reply to him. [Interjections.] I shall reply to that question, and then we can see how much time I have left over at the end.

I want to tell the hon the Minister that it is not enough to take only qualifications into consideration without also taking productivity into consideration. The hon the Minister will not be able to have this matter rectified. The hon the Minister is now asking why I did not do so as well. It is in fact true, but I have now realized that I made a mistake. [Interjections.] Since that time the country has gone bankrupt. At that stage the country was not yet technically bankrupt. One must now ask oneself what has caused this. I want to tell the Government what the trouble is. The Government is persisting with the same mistake. In spite of the fact that the country is technically bankrupt, the Government is prepared to persist with that mistake. That is why we do not have a good government today. The Government is not prepared to rectify mistakes which it made, but continues blindly to make the same mistakes. [Interjections.]

There is a second reason as well for this bankruptcy in which South Africa has found itself, namely the unwritten policy of redistribution of income. I want to tell the hon the Minister that there is no reason why transportation, housing and certain other services for people of colour in the former White areas of South Africa, under the old dispensation—after all there is no White area now—should be subsidized so excessively. [Interjections.] Transportation subsidies amount to as much as 75%, and housing subsidies to as much as 90%. No economy in the world today can afford that. Two things can be done. The narrowing of the wage gap should be related to productivity and the excessive subsidies, which counteract the Government’s own decentralization policy, should be discontinued. The Government now has to grant exceptional concessions in border areas and other states to achieve a slight effort at decentralization. If these subsidies can be reduced, greater results can be achieved in regard to decentralization and fewer decentralization incentive measures would be required. [Interjections.]

There is another important reason why the economy is in this state. It is because political stability in South Africa has been undermined by the Government. In his opening address yesterday the hon the State President said that there could be no economic stability and growth in a situation of political instability. This is precisely what the Government has done with its about-face and somersault away from the policy of separate development to power-sharing, integration, consensus and consociational democracy. With that about-face alone, the Government has undermined confidence. The Government’s previous statements, when it still advocated separate development, confirmed this lack of confidence. The hon the State President, in his former capacity, said the following in 1980:

A political dispensation in which conflict and strife are inherent, now has to create economic confidence.

The progress of this entire constitutional development has confirmed all these things. The Government is still making statements as if its policy were still separate development. As the Government said with the policy of separate development, which brought stability, prosperity and peace, that there would again be an economic revival and prosperity, so the Government is continuing to do so now. The hon the Minister must watch out: Two years ago already his predecessor was expecting an economic upswing. He subsequently postponed it for six months. Now the hon the Minister is expecting a drop in interest rates.

We had an economic revival at the time.

The revival was so small that no one noticed it. [Interjections.]

Now there is something I want to tell this hon Minister. I hope this drop in interest rates is as great as the economic upswing which occurred, for then he could easily become the expectant Minister. [Interjections.] The Government is making the same land of statements it made in the past. Since a start was made with this system, none of these statements of the Government have become a reality. The hon the Minister’s predecessor said, as he himself also said today, that taxes would not be increased. He said this only last year. He said that sales tax would not be increased. He said it at the Natal congress. His words had hardly left his lips when that tax was increased I do not know how many times. The hon the Minister said that interest rates would not rise. If only the people would vote yes, interest rates would not rise.

Who said that? [Interjections.]

The State President did. It was said that if the people voted no, interest rates would rise, but if they voted yes, interest rates would fall. Not one of the hon the Minister’s statements became a reality. And this is undermining confidence in the economy of South Africa. The hon the Minister said that peace would prevail in South Africa. But what is the situation in the country today? The hon the Minister said that democracy would be broadened. The democracy has not been broadened. We now have a situation in which 83 000 Indians, who voted for the House of Delegates, have precisely as much say in this legislative body as two million Whites, who participated in a referendum last year, have. A total of 350 000 Coloured and Indians, who voted in their elections, participated in the election of the State President. However, 553 000 conservative people had no participation in the election of the State President. [Interjections.] In future the important decisions are not all going to be taken by this House. In the final instance, they are going to be taken by a nominated President’s Council. This is called a broadening of democracy, but democracy in South Africa has been violated. The statements of the hon the Minister have not become a reality, and this in itself is undermining confidence in the economy. We have always said that integration and power-sharing is the breeding ground of radicalism. It is the breeding ground of radicalism, and we are seeing this in South Africa today. In the Black communities the radicals are being activated and polarized. [Interjections.] [Time expired.]

Mr Chairman, the background of this debate is an inflation rate running at three or four times that of our trading partners, a balance of payments performance that is totally unsatisfactory, a depreciating rand and a failure to achieve any growth over a five-year period. I think that we are all aware, however, that these are symptoms, not the actual problems. The hon the Minister, quite rightly, identifies, behind these symptoms, Government spending as a major problem, but I just want us to be careful before we grow too complacent at the figures given. [Interjections.]

Order!

Thank you, Sir. The effect of a net increased burden of R850 million per annum is not to be underestimated. The deficit before borrowing of 3% to 4% is a highly suspect figure. The hon the Minister will probably have seen the effects, will probably have seen the calculations, which point to the invalidity of that figure because of the amount of State borrowing that has been pushed downstream into subsidiary organizations. The hon the Minister must therefore excuse us if it takes some time for us to build up our confidence about the State’s pronouncements on finance. I mean, not nine months ago we heard his predecessor forecasting:

[Interjections.] Do hon members think that we have simply had bad luck? Is it their policy now to try to induce a recession by the imposition of punitive interest rates and fiscal measures, and then simply wait for good luck? If it is, it is not going to succeed. These measures will temporarily swing the balance of payments around and will strengthen the rand for a while, but we will not succeed in the long term unless we address the deep structural problems in our political economy that we must come to terms with. What should we be doing? One financial correspondent recently described the hon the Minister as somebody who had just taken over a new company and was now busy pulling out all the skeletons and all the dirty washing so that he could make a fresh start. If that is his policy, I take no exception to it. It is the wise and correct policy to follow at this stage. I think the analogy of a company is useful and can be taken further. When somebody takes over an ailing company, every aspect of the operation of that company must be examined and purposeful decisions must be made about what has to be done. One ends up with short-term and long-term policy reappraisals of that company. I have the feeling that we as a Government are taking some of the short-term measures but that as far as a long-term policy is concerned, we wait until we bump our nose which prevents us from avoiding pitfalls and disasters. Mr Speaker said yesterday that wisdom started with a prayer, but in the economy it starts with a peep into the abyss of bankruptcy. The lesson that we are a poor country with immense and clamouring needs has not yet been properly learnt. It is masked by gold production and the inequality in our distribution of wealth. As the State President said yesterday, the Government now believes that the curtailment of Government spending will lay the foundations for sustained prosperity. That is just not so. Just as we examined the symptoms of inflation and eroding currency and behind them found Government spending as their immediate cause, we find when we look at Government spending that it too is a symptom and that the real cause of our economic plight lies in macro-Government policy. The concept of dividing the old Republic of South Africa into separate self-governing territories which share one economy and a mutual responsibility for each other’s welfare, is so unsound as to be totally unworkable. It requires an ongoing massive distortion in the allocation of scarce resources, which will ensure the perpetuation of complete dependence on a whimsical gold price. The problem does not lie in the R2,5 billion that is transferred annually to these independent countries. It lies in the prerequisite that the allocation of our scarce resources should be made after careful cost benefit analysis, and that subsequently investment must be monitored and controlled. This is not possible without participation in the governments of the states concerned. When the State President declares that our future will be within a framework of Black states and that we will build on the foundation of Black local authorities, I pray. Do hon members know what I pray for? I pray that the price of gold will go down and not up, because we have just not come to terms with the lessons we have to learn. The lessons the economy can teach us in an impartial fashion are the least unpleasant way of learning lessons which we have to come to terms with. It is, unfortunately, easy to show that we still do not realize the necessity of turning every coin over twice before we spend it. Would a Government that did so, for example, increase the remuneration package of public servants by 30% in a year when it was trying to address an inflation problem of the size we have?

Then we have the question of the industrial decentralization policy which is designed to keep Blacks in or near their territories. This is a recipe to keep our manufactured goods uncompetitive into the indefinite future. Our strategists tell us that we seek our future prosperity in the export of manufactured goods, yet we turn our backs completely on the whole concept of comparative advantage.

I wonder how many hon members on that side of the House realize that the taxfree wage incentive of R110 paid to workers in decentralized areas can be considerably in excess of the amount actually paid for the work to the worker. The industrialist can take the difference between what he pays the worker and the R110 he draws and put it in his pocket; in other words, he can do this perfectly legally. It makes sense from his point of view, but does it make sense to the South African taxpayer?

There are certain principles that are highlighted by the establishment of Spitskalk Mining, a company started in Lebowa. There were questions asked about it in the session earlier this year. Has the government considered the consequences to existing industry? Thirdly, is it not farcical to withhold lish themselves under the decentralization scheme? Also, has the Decentralization Board or any other Government body authority to assist existing industry to meet the competition of subsidized decentralized industry? Thirdly, is it not farcial to withhold promised financial support of a decentralized industry because it is using more labour than originally envisaged, and in an area where there is high unemployment? This is the type of absurdity that arises when the motivation for an economic strategy is ideological.

When I hear the hon the Minister of Constitutional Development and Planning argue the case for constitutional change I am aware of his ability, but when he states proudly that the decentralization policy will mean that 2,5 million people who would have been established in so-called urban areas will not be established there, I am aware of his limitations. By what possible magic does he believe …

That is not what I said.

But I can quote you.

That is not what I said.

I am sorry. [Interjections.] By what possible magic can he believe this is a good thing? It could be disastrous and it probably will be. Anyway, I would like to refer in this respect to the remarks made recently by Dr Flip Smit when he was pointing out the beneficial effect of urbanization on the economy, and to the remarks made by Dr Simon Brink, who has been talking very positively about the priorities that will have to be set and which will arise from the new level of Black expectations.

Unless we can keep the central planner’s hands off the reins and let our economic horse pick its way through the difficult terrain with less interference, it will founder, and we will lose our major asset in trying to negotiate the turbulent transition period that must lie ahead of us.

Mr Chairman, I listened with great expectations to the hon members for Yeoville and Walmer. I expected to hear some constructive advice as to what the Government can do to resolve the present economic problems. I have an open mind and I like to listen to good advice, but I must admit with regret that the hon member for Walmer left me with very few constructive ideas this afternoon.

Let me first come to the hon member for Yeoville. He started off in a very positive frame of mind. He started to address us on the question of consensus. I believe that in the economic field there is certainly scope for consensus, but if one is only going to ask critical questions without supplying answers or making any constructive proposals one is not going to get consensus.

I gave you 21 answers.

The hon member put one or two questions to which I simply have to reply, but before replying to them, I just want to state clearly that in South Africa the economy is not compartmental. What happens in one segment has an influence on another. It is very easy to speak about a particular economic matter and then to jump to another without indicating what the link between the two is. The hon member spoke compartmentally today. Surely we all realize that striving for particular economic goals has an effect on other goals. It is not possible to strive for divergent goals to the same extent. Allow me to give an example. The effort to combat inflation as an economic goal necessarily has an effect on the goal of a high degree of employment. Unfortunately it is true, however painful it can be, that striving for a policy of combating inflation necessarily leads to a lower degree of employment, to unemployment and other painful consequences for the economy.

You are satisfied, however, as long as it brings about integration. [Interjections.]

For those who at least understand something about it, Mr Speaker, these are the realities of the economy. That is why, when it comes to the protection of industries, we have to take into account the fact that a variety of economic goals are being striven for. The hon member for Yeoville asked various questions.

†He wants to know why we expose our industry to the harsh winds of international competition, as if they are a force in international competition, as if industry in this country were not enjoying protection.

*Allow me first just to make it clear that industries in South Africa are protected. They enjoy a high degree of protection, and I shall say something more about that at a later stage. Here, too, however, the important question the Government has to answer is the question concerning what combination of measures should be used to best serve divergent economic objectives. It is not possible only to protect domestic manufacture without also taking the interests of the consumer into account. The hon member for Yeoville always makes a great fuss about the interests of the consumer. I emphasize that excessive protection does not serve the interests of the consumer. It simply leads to inefficiency, purposelessness and to increases in prices, and is not in the best interests of the consumer. Consequently, the correct balance of measures is appropriate here. Excessive protection of domestically manufactured goods does not promote exports either. The hon member for Walmer has just argued that our future lies in exports. We so often argue that South Africa will have to become less dependent on gold. We shall have to export more manufactured goods, and that is another reason why we shall have to introduce a combination of measures by means of which the replacement of imports is made possible, whilst not eroding or weakening the promotion of exports at the same time.

In the same way, a balanced group of measures will have to be introduced to protect domestic manufacture in such a way that it does not eliminate competition. It is true that in the South African economy there is a high degree of economic concentration in many sectors of the economy. In quite a few sectors there are only one or two manufactures. In those particular cases, therefore, effective competition is only possible with the aid of imports. That is why it is not so easy only to ask questions about the so-called supply of manufactured goods or of domestic industries to export. What are the facts? The facts, Mr Speaker—for the information of the hon member for Yeoville—are that the Government is using a combination of measures to protect domestic industries. Unfortunately, time does not allow me to elaborate on that. However, there is the programme relating to the use of domestic material, of which the programme for the domestic manufacture of motor vehicles and light commercial vehicles is a good example. To this can be added the manufacture of diesel engines, gear boxes and rear axles—a manufacturing programme which is aimed at protecting domestic manufacture.

Furthermore, there are also State preferences when purchases are made—preferential tenders—which are aimed at encouraging and protecting domestic manufacture. There are also various tariff measures. I do not wish to say a great deal about tariff measures this afternoon. I only want to point out that the levels of tariff protection in South Africa are high, and that in the recent past they have been extended to include a whole series of products. I could indicate what a variety of products in the latest series have been afforded protection by way of further measures. For example, there is fertilizer, plastic polymer, rubber, tyres, basic copper products, aluminium products, certain steel products, stainless steel, various chemicals, bicycles, bolts, electrical machinery, and so on.

If things are going so wonderfully, why are so many companies going bankrupt? [Interjections.]

Now the hon member for Yeoville is claiming with the greatest ease in the world that the Government is simply handing over industries in South Africa. Surely that is not true. If we want to reach consensus we must at least speak to one another as responsible people about the facts of matters. [Interjections.]

In the limited time I still have at my disposal I want to deal with the speech of the hon member for Walmer. The hon member once again came back to the question of decentralization. The hon member still wants to claim that decentralization is only motivated ideologically. However, I do not think the hon member says that it is only motivated ideologically.

†In that respect he must disagree with the hon member for Houghton who regards decentralization as pure ideological trash. I am delighted to know that the hon member for Walmer at least…

I never said that I regard it as ideological trash.

No, I referred to the hon member for Houghton. Fortunately the hon member for Yeoville is also in favour of decentralization although we may differ as far as its application is concerned.

Economically it is a sound principle.

Yes, economically it is a sound policy, and I should like to come back to that aspect.

The hon member for Walmer agrees with decentralization if it affects his own region, but when it comes to other regions he is against it. He complains about the labour subsidy because it encourages employers to pay their labourers above what is required.

*The hon member for Yeoville, on the other hand, is pleading that we should do more to make the creation of employment possible. This is precisely the objective with these measures.

But the money is not going to the labourers.

But of course it is going to the labourers. Surely these decentralization measures are not a gift an industrialist receives and goes and puts in the bank to earn interest on it. These incentive measures must be used together with his own investments to establish an industry, motivated by the profit motive. If he does not succeed in establishing an effective industry he also loses his own capital.

Mr Chairman, may I put a question to the hon the Minister?

No, unfortunately I have too little time to allow questions.

Hon members are trying to discredit the policy of decentralization with these generalizations, with these slaps that are simply being meted out at random, but the policy of decentralization is bearing fruit and I believe this is the very reason why the Opposition is so concerned. We are getting the best co-operation from the inhabitants of those regions, the region of the hon member for Walmer as well.

And from some of the supporters of his party.

Yes, some of the traditional supporters of that party serve on the regional development advisory committees to deliberate on how best to utilize the potential of that region. They are also striving for the further development of that region. The fact is that the latest financial results of the policy of decentralization once again confirm that it is a successful policy. In the financial year 1 April 1983 to 31 March 1984, 1 190 applications were approved, as opposed to 777 the previous financial year—an increase of 53%. This is a remarkable achievement if one takes the present economic circumstances into account. [Interjections.] I shall publish the complete report next week in order to reply to the question to what extent we are succeeding with decentralization. It is therefore no use the hon member for Walmer and his colleagues in the official Opposition trying to discredit the policy of decentralization. [Interjections.] This policy is necessary, and it is in the interests of South Africa that we continue with this policy, since I want to emphasize this important fact: An employment opportunity created in a decentralized area supports more people than when it is created in a metropolitan area. A worker who is employed in a decentralized area can feed more mouths, since the cost of living is lower in those areas. It is in the interests of us all that we give this policy our fullest support. I really want to appeal to the hon members for Yeoville and Walmer, since they support decentralization, also to assist us more constructively to make this policy a success.

Mr Chairman, at the outset of this debate the hon member for Yeoville appealed to all hon members and especially those in the Government benches to exercise a degree of consensus in their approach to this debate. Then, the hon member for Lichtenburg clearly stated that in no way could there be consensus on this subject.

I am inclined to agree because, knowing these two parties as I do, I am aware that their perceptions, whether on constitutional matters or economic matters, are poles apart and they are both confrontationist parties at heart and therefore there cannot be consensus. During the referendum they both opposed the constitutional proposals but the one said that the new constitution would entrench apartheid while the other said it would entrench integration. One can therefore expect those two parties to be totally opposed. [Interjections.] Parliament is, however, a talking shop and a place where there should be an exchange of ideas and I do believe that hon members on the government benches should be prepared to listen to some of the points of view which the Opposition put forward, even although they may be totally opposed to their own ideas. For consensus to be reached there should be a preparedness to accept one’s opposition’s point of view when it is valid. However, it not only means that, but it also requires that when a concession is made by the governing party or by the Opposition, then it must be acknowledged and credit must be given to whom it is due. This is the key to it: The attitude and the preparedness to concede points. That is why I am rather pleased that the hon member for Springs is here, because earlier this year when I called upon the Government to cut the overall expenditure in the budget by 10%, he was the one who ridiculed me and said it would not be possible. Then, in a subsequent debate, the hon member for Roodeplaat tore a strip off me and said I was talking a lot of nonsense. However, I want to stress that this hon Minister of Finance himself has now given instructions to all departments to cut their expenditure by 7,5%. I am prepare to concede this to the hon Minister. I am prepared to accept 7,5% this year, but I sincerely hope that he will do better next year. However, I do believe that the attitude of the new hon Minister of Finance is correct in this regard, as far as we in these benches are concerned.

The hon member for Yeoville mentioned, when he moved his motion, that the priorities committee which has been set up by Parliament should be expanded to include people from the private sector. I have sympathy with the hon member for Yeoville in his call for all these people to participate, but while an all-embracing committee sounds, I believe, very good in theory, just how effective will it be in practice? We have had many examples of committees of this sort having been set up in the past to try to solve South Africa’s economic problems. For instance, we had the anti-inflation campaign under the leadership of Dr McCrystal. We know how much money was spent on that, but was it successful? Yet, in that campaign Dr McCrystal drew upon the experience, knowledge and know-how of some of the most prominent economic brains in South Africa. We have this matter of the lack of productivity in South Africa. We know that we have low productivity and that this is one of the basic causes of high inflation in South Africa. We know that we need a more highly trained labour force in South Africa. In the past there were many seminars and conferences on this subject, but what happened? The Government was urged to provide tax incentives to industry to get them to provide labour-training courses, etc. What actually happened in many instances? We know that the private sector abused these tax incentives and there had to be an amendment this past session in order to prevent this abuse. In the past we had the Carlton Conference as well as the Good Hope Conference and yet today the economy is worse than it has been for many years.

I regret to say, Mr Speaker, that there is much evidence that indicates that, despite all the good intentions expressed at these conferences and in these committees, the desired goal has not been achieved. I think we must examine the reasons why firstly, the Economic Advisory Committee be strengthened and, if possible, should have additional people of high quality on it so that the advice they give to the hon Minister and to the State President will be the correct advice for South Africa as it is today. Secondly, the hon the Minister said he has the Governor of the Reserve Bank to advise him. I want to know from the hon the Minister whether he is going to take the Governor’s advice when it comes to the size of the Public Service. I know that the Governor was a very, very brave man to write the annual report he did this year, and say what he did say about the Public Service. If I know the Public Service, there will be some who are going to criticize the Governor of the Reserve Bank, and I sincerely hope that the hon the Minister and his Cabinet colleagues are going to protect the Governor because that man, I believe, spelt out the economic realities of South Africa. As I have said in debates earlier this year, I believe that the Public Service needs looking at.

Thirdly, I believe that South Africa has to get back to the basic free enterprise principle. I have a quotation here from Lincoln, who was probably one of the greatest liberating Presidents of the United States. This is what Lincoln said over 100 years ago:

I think we should heed Lincoln’s words. In South Africa today we must ask ourselves: Is this Government trying to do things for the people of South Africa, things they could better do themselves? Therefore I believe that the priorities committee should look at the various Government programmes and see whether they cannot cut out a lot of the so-called programmes which are designed to help people and rather let people get on with helping themselves.

I believe that the present state of our economy clearly indicates that not only must the Government save on its expenditure but, as has also been said today by the hon member for Yeoville, South African citizens should also be encouraged to save more. There must be more incentives to save. I heard the hon the Minister ask where the shortfall in taxes resulting from such incentives would come from, but I do believe that he should exercise his mind on this particular problem because I believe that one of the most urgent economic needs of South Africa today, is for our people to save considerably more than they are presently doing.

Finally, I believe that there is an economic disease in South Africa. There are what I would like to call the smart-alecks, those wheelers and dealers in South Africa at all levels of our society who are trying to get more than their share. I include here certain wage earners who want more and more for less and less work, and also certain bosses who look for every loophole in every piece of legislation passed through this House to feed their appetite for more luxurious and extravagant living with the least effort on their part. There are also those employees who look upon the security and protection of the Public Service as a gravy train to be enjoyed at the cost of very little effort on their part. Then there are also some of their bosses who are very busy with their own image-building and also their own empire-building regardless of the cost to the tax-payer and the economy. I believe that that should be looked at.

This disease, I believe, has permeated our economy throughout. Entire sectors whose products are sold at a so-called administered price have forgotten the basic principle of how real wealth is created and the basic principles of free enterprise and competition. They have manipulated the so-called price formula to enable them to grow fat and, I believe, also soft at the expense of their entrepreneurial spirit. Today many of our products are overpriced and all too often we now hear the cry for more protection, more subsidies and more price fixing. I have here a copy of a circular, No HCS 16/84, of the SA Insurance Brokers’ Association, dated 4 September. This document concerns a rating accord, a cartel to fix insurance rates. I believe that this is a scandalous document and accord at this time when we are trying to promote greater free enterprise in South Africa. I believe it is a time for all South Africans at all levels to search our consciences in regard to whether we are abiding by the moral and ethical standards that are demanded by an honest, true-blue free enterprise economic society. We in these benches of the NRP are free enterprise men. I believe that, in order to solve our problems, we should promote more the free enterprise entrepreneurial spirit of our people who believe in the work ethics, who believe in working for what they spend and not in just spending somebody else’s money. I believe that would solve our economic problems.

Mr Speaker, I think it would be true to say that short-term problems such as drought have aggravated the economic situation in South Africa. However, where we can blame drought, we cannot blame gold, because if one looks at gold at its peak of $850 an ounce, it meant R580 an ounce. According to the rate of exchange prevailing yesterday as far as the gold price was concerned, our gold industry was in fact getting R576 an ounce. Therefore, internally, gold at the present moment is not having a detrimental effect on the economy, although it may have a detrimental effect on the external economy.

When we look at the problems that are facing South Africa, I think one can say that they have been there for a long time. If one looks at the statistical review, one can see that. Despite the boom in gold, our gross domestic product grew at 2,6% per annum in real terms over the past ten years. We know that that is not sufficient to create employment opportunities in South Africa. In fact, it just keeps pace with the increase in the population. When one looks at the past ten years, one sees that our gross domestic investment has increased from R7 064 million at 1975 prices to R7 554 million. That is not a particularly high increase. The cost of goods produced in South Africa has increased three and a half fold over the past ten years. The consumer price index has increased more than threefold. Government expenditure as a percentage of GDP has risen from 21% in 1973 to 25% plus now. The Budget deficit before borrowing has increased from R400 million in 1973 to R3,6 billion today. Public debt has increased fourfold. Savings have declined as a percentage of personal disposal income from 9% to 3%.

Mr Speaker, short-term measures will not solve these structural problems. We need to establish long-term economic objectives. I would suggest that there are two long-term economic objectives that we have to achieve. The first is to combat inflation. I should like to go back to what the hon the Minister said. I think that in the short term there is a trade-off between combating inflation and employment. I would agree with that. However, in the long term, when one looks at the economies that have really created employment opportunities—the United States and Japan—one will see that they have in fact kept inflation low.

The second priority is to create job opportunities. It is not enough to just say that we want to grow at a certain percentage. Let us compare the United States and the European Economic Community. In the past decade both of them have had a real growth rate of about 2% per annum. However, in the United States they have created 14 million jobs. In the EEC they have destroyed l,8 million jobs.

South Africa today looks like a company with a massive head office, multiplying at an excessive rate and exhorting everybody else to do their bit. In South Africa we have multiplied bureaucracies, and those bureaucracies are beginning to strangle the economy. Fewer than half of the fixed capital assets of this country are owned by the private sector, and on that they produce three quarters of the gross domestic product. The other half, which is in the hands of the public and semi-public sectors, generates 25% of our GDP. I will accept that the objectives are slightly different in the public sector, but I think there is an imbalance. Excessive bureaucracy does not create wealth; it eventually destroys it. It not only burdens the economy now, it also burdens the economy in the future. Some time ago the hon member for Durban Central asked a question on the State’s contribution to five pension funds. This is interesting. In 1980-81 the cost was R554 million. Two years later, it had increased to R852 million. How does the Government react to the problem? What worries me is that if we are going to cut back on expenditure we must not only cut back on capital expenditure but also on revenue expenditure. If the bureaucracy has not solved our problems let us give the private sector a great chance. Let us not just talk about it. Let us give them the opportunity. Let us see which of the para-State bodies we can sell off to the private sector. I know everybody says that they do not operate at a profit but I want to say to the hon the Minister of Finance that if the private sector had the same rate of depreciation he would be collecting very little tax indeed.

We also have to look at where the private sector can play a role in providing social services. There is the area that I am interested in, namely pensions. We know what is happening with pensions. However, if we actually introduce legislation which determines that every working South African must belong to a pension fund and that his contributions must be transferable, eventually, at no cost to the State, we will solve that problem.

We know that if we are going to create job opportunities in South Africa we are going to have to promote the small business sector. The recent measures have hammered the small business sector. I should like the hon the Minister to read the report of the Department of Manpower on factors which inhibit the small business sector. There is, for example, the Group Areas Act, and particularly the effect it has on Black artisans. If we are going to develop the service sector it will be done where the economic development is taking place. It is not going to develop separate from that. Sir, if South Korea, Hong Kong or Taiwan had some of the measures which we have in South Africa they would have been looking for massive international aid. We must abolish those regulations which restrict Black entrepreneurship and commercial enterprise in both White and Black South Africa.

Black taxis.

Yes, the pirate taxi is a very good example. In a developing country transport is one area where entrepreneurship is developed.

The other thing that we must do in South Africa is to encourage entrepreneurship. I am glad that the Economic Advisory Council has suggested—I have not had an opportunity to read its recommendation—that we look at the tax structure. One need only look at what has been happening to individual tax in South Africa. In 1980-81 we actually collected R2 090 million, approximately 15% of the total tax collected. In terms of the estimates for 1984-85 we are budgeting to collect more than R7 000 million in individual tax. As a percentage of total revenue it is increasing to more than 30%. Our tax system actually encourages consumption by entertainment, housing subsidies and motor cars. The fringe benefits tax, I hate to say, is not going to put a stop to this. In fact, I think it might encourage it. We have to look at that anew.

Tax is killing initiative in South Africa. The upper income groups, the managerial and entrepreneurial classes, are amongst those who are suffering. In the USA President Reagan was criticized because he actually reduced tax on those groups, but what have they actually done? They have the American economy growing at an unparalleled rate and they are in fact creating jobs. We have a look at the tax system because with fiscal drag and inflation that particular skilled group is being condemned to nothing more than a declining standard of living because the income tax tables are not keeping pace with the rate of inflation.

I want to ask the hon the Minister a final question. The Government has spoken about discipline and has exhorted others to practise it. There is one key thing that the private sector is going to look at to see whether the Government is serious, and that is whether the Government will show when setting a budget that it can discipline itself. If it cannot, how can it expect the rest of South Africa to discipline itself?

Mr Speaker, in my reaction to those who have spoken so far, I should like to concentrate on the attacks or statements alleging that the role of the Public Service is one of the major causes of the economic problems we are wrestling with at the moment. Before I begin with that how ever, I just cannot resist the temptation to react to some of the rash statements made by the hon member for Lichtenburg. [Interjections.] The hon member for Lichtenburg attributes the present state of unrest in the country to the new dispensation and to what he calls the undermining of separate development. [Interjections.] Was this what he had to say about Sharpeville at the start of the sixties. Were these his sentiments in 1976? No, but it now suits his purposes to do so. That hon member must ask himself whether his resentment of the NP is so great that he can begin to condone the deeds of the UDF and the forces behind it. [Interjections.] No, the hon member should know that there are forces which—regardless of the policy that is being applied in this country—want to see this country plunged into chaos rather than to see orderly development and growing consensus amongst reasonable people of all population groups. The cause is to be found there and not in differences in nuance which cause the hon member so many sleepless nights.

Three basic statements are made about the Public Service and we have heard virtually all three today. The first is that we pay Public Servants too much. The hon member for Walmer said that. First of all he made a statement which in my opinion was incorrect, ie that we had granted an increase of 30% this year. [Interjections.] No, it was not 30%. The hon member must check his figures. No general increase was granted during the present financial year and the only professional group—apart from a few smaller groups—to have benefited in any way this year was the teaching profession. In any event the hon members criticized us for having done too little too late for the teaching profession. Now they are reproaching us for doing too much. There was a general increase of 12% in January, but when did the previous general increase take place? It was on 1 April 1982. Consequently there was a general increase of 12% over a period of two years, during a period when the inflation rate was considerably more than 10% per year. The officials have contributed their share in regard to the curbing of inflation and the devaluation of the rand. We have applied occupational specific dispensations, something to which I shall return later. We had reached a situation where we were obliged to ensure that the State was able to compete favourably with the private sector in order to maintain essential services, and I should like to prove it to the hon member.

If we use the consumer price index of 1970 as the base year and we put it at 100, placing the Public Service and the private sector on an equal footing, we would find that, nine years later in 1979, the Public Service stood at 80 with the private sector at 106. In 1982 the Public Service stood at 99—a far better position—while the private sector stood at 124. In 1983 the private sector’s position rose to 139 while the Public Service remained constant at 99. Does it look as if the Public Service salaries have gotten out of hand in comparison with those of the private sector? The facts speak for themselves. Hon members quote facts. They must however, listen to facts which tell a different story. [Interjections.] These are official figures, apparently from better sources than theirs. [Interjections.]

Now the hon member will tell me that through occupational differentiation tremendous increases were allocated to certain occupations. Once again I want to provide him with figures. With regard to personnel, the Public Service had to contend with a vacancy figure of approximately 20% in 1980, while up to 85% of the posts in some entry grades remained vacant. The danger existed that essential services such as hospital services, the administration of justice, the registration of deeds and departmental financing functions, could collapse completely due to a shortage of labour.

That stage marked the beginning of an exodus from the Public Service. Thus, for example, a loss of experience amounting to 3 218 man-years in 1976-77 rose to 27 273 man-years four years later in 1980-81. We had to take action as the situation had virtually reached crisis proportions. Occupational differentiation made its contribution. Did it help though? It helped only to a moderate degree for while we had a vacancy figure of 20% then, the vacancy figure at the moment is approximately 10 to 15%. If we were now paying so much more than the private sector everyone ought to be flocking to us now and we ought to be filling our vacancies. That we are benefiting officials to an excessive extent is therefore not true. We were merely trying to achieve the goal of becoming more or less competitive.

The second accusation is that we have too many officials. It is a fact that the number of posts increased by 110 000 during the period from 1973 to 1983, but no mention is made of the greatest portion, namely 61 000, being teachers’ posts. The average growth of the Public Service during the period from 1973 to 1983 was 7,7%. Of this 4,2% was in respect of education for non-Whites, thus leaving an average growth of 3,5%. I do not believe there is one hon member in this House who would say that we should not provide non-Whites with adequate education. Does an average increase of 3,5% over a period of 10 years sound like excessive growth or like a huge bureaucracy that is growing dynamically and getting out of hand? These figures present a different picture to that sketched by some critics.

What was the growth of the White population and the growth of officialdom?

We must speak about the growth of the entire population because the Public Service caters for the entire population.

Apart from this we have also improved the quality of the service. At one stage there was only one teacher for every 65 Black pupils. By training and employing more teachers we have reduced this ratio to one teacher for every 39 children. Is the hon member in favour of this, or is he not? If he is in favour of it, he should not criticize us.

In the final instance it is said that the Public Service is ineffective. I would be the last person to say that the Public Service was perfect. We definitely have great faults, but we are implementing specific programmes. In the minute which I still have available, I want to mention just a few of them. In the first place I want to say that at this stage the expansion of posts and the filling of vacancies are strictly controlled and limited to essential services. In the second place we are hard at work on active programmes in regard to certain matters. The first I want to refer to is the elimination of duplication. There is too much duplication and we are in the process of identifying it because we want to eliminate it. In the second place, we want to reduce red tape. In the third place we want to increase productivity. In the fourth place, we want to establish whether there are any unnecessary services or regulations so that by repealing them we can become even more effective. Furthermore, we also want to improve managerial efficiency, especially through training. Finally we are constantly working on a program of privatization.

We would welcome constructive criticism and are looking for good advice on how these programmes may best be developed. We are quite prepared to reach consensus with others with regard to this matter, but hon members must not throw out the baby with the bathwater and disparage, as they are to fond of doing in debates, what is virtually one of the most important instruments of development in a developing country.

Mr Speaker, first allow me to thank you for granting us the opportunity to have this debate. It shows that you regard the matter we are debating in a very serious light. Secondly, I should only like to say that the debate conducted by this side of the House emphasized one consistent theme, and that is that the politics and the economy of a country are closely interwoven, that we cannot discuss the economy of the country in isolation and cannot correct or patch it up without considering the political aims that are laid down. It is so that nothing subjects the policy of a government to such close scrutiny as a period of economic depression, especially if there is the possibility that government policy itself is contributing to the economic depression, or perhaps even aggravating it.

The hon Minister of Finance will not hold it against me if I tell the House that when he was appointed to his present post I wrote him a letter congratulating him, a letter in which I told him that he was taking over this portfolio in one of the most difficult economic periods South Africa has yet faced. I then told the hon Minister that our descendants would remember him, not for how and where he obtained the money needed for the budget, but for having helped us not to squander money when that money had to be spent. It is about this question of the spending or the incorrect spending of money because of certain political decisions that I should like to say a few words.

†When we look at the whole question of doing a cost-benefit analysis of the political decisions we take in South Africa and of how much money those decisions cost us, we can do it in one of two ways. We can try, as it were, to rearrange the furniture within the structure of the house. We can rearrange it more efficiently or less efficiently and see if we can save a bit here or there. In other words, we can look at the means at our disposal which we use to pursue the political goals of our society. We can try and make those means more efficient or apply them more efficiently. I do not want to enter into this one, because it is a matter of expertise to determine whether we are using the money correctly and to look at fiscal and monetary policies in this respect. However, it is when we actually have to say that the very structure itself is the cause of the misappropriation of means that we have to take very tough political decisions. Then we reach a watershed situation in any country. It is in this respect that I would like to mention one or two very concrete examples.

Before I do that, I should like to respond to the hon the Minister of Industries and Commerce. One can look at decentralization as a means to pursue a certain end. I think we can make that means more efficient or less efficient and we can criticize one another, and so on, but when we look at the political goals for which decentralization is used and we say the goals themselves actually make those means inefficient, it is a different matter. Therefore I can say that decentralization of industries which pursues the goal of preventing people from coming to the cities is a lost cause, but if decentralization of industries is a normal consequence of over-urbanization and a natural need for industries to be decentralized to other growth points, obviously there will be some cases where decentralization will work and others where it will not work.

Let me mention a specific example. I am glad the hon the Minister of Constitutional Development and Planning is going to follow me. I am addressing this to him and I look forward to his reply. Let me suggest one particular goal the Government has pursued for a very long time and which I believe is costing the country a great deal of money, is in fact making the country less efficient and is hampering economic growth. We have to look at how we can stimulate economic growth and how we can increase the percentage or proportion of the entrepreneurs in South Africa. It is not just a question of how one can take the small base one has and make it more efficient; it is also a question of how one can get more entrepreneurs. We have to look at the base of our supply of skilled labour and we must not only consider how to make that base more efficient, but also how to broaden that base.

I want to refer to one particular political goal of the Government which is reflected in a policy which I believe is counter-productive and in respect of which I think the time has come for the Government to take that tough decision. It is a tough political decision because it is going to have political consequences outside this House. We shall have to go back to the country and say that that policy was wrong. Here I refer to the policy that is known as influx control. As the Financial Mail also now says, the time has come to let go of this policy. It is costing us money. It is costing us a great deal of money in terms of manpower, in terms of the misappropriation of resources, and furthermore it does not work. It does not work. It is not stopping the flow of people coming into our cities. It creates the illusion of a solution, and it hampers indeed the effective utilization of the labour force. Thirdly, it leads to bad planning. Because we think we have a policy of influx control it distorts the way in which we plan in our urban areas. We do not plan on the assumption that people are going to come into our urban areas. We plan on the basis that we are going to be able to prevent them from coming in.

It also does not acknowledge the socioeconomic realities that South Africa is going to have to face in the future. One of those socio-economic realities, we know—and the Government is also aware of it—is urbanization. In the first instance this policy is blatantly discriminatory. What does it mean in essence? It means that because a person is Black that person cannot become urbanized as any other South African who is not Black can become urbanized. That is basically what it means. Because of that assumption, and because of the effect of that policy, it affects the kind of constitutional solution for which we are going to search. It affects the kind of housing policies which we are going to try to put into effect in the urban areas. It affects the quality of the labour force that we are preparing. It also affects the way in which we can broaden the base of skilled labour, etc.

I believe the Government is going to have to make a very, very difficult decision because it has committed so many resources over so many years to the execution of this kind of policy and the maintaining thereof that to go back now and to say that it is not a question of the misappropriation of means and of trying to make means more efficient, but actually one of having pursued the wrong goal, is going to be very, very difficult. I believe that if there is a need for consensus that need is in this area. By consensus I do not mean, as the hon member for Lichtenburg said, that people must fundamentally agree with one another. When people fundamentally agree with one another there is no need for consensus.

Then one can have a one-party state.

Yes. Consensus is reached on the basis of an admission that there is a conflict of interests and that one has to reach a compromise if one wants to find a solution. I believe that in this area, the area of influx control—and that is only one example; I can mention many others in terms of Government goals, such as the whole consolidation concept and the whole question of decentralization and of the national states—and that of all other political goals involving economic costs and affecting the economy of the country, the potential for conflict is very real. Conflict is also inherent in the policy of influx control. I should therefore want to know what thinking is going on the part of the Government because I know that whatever thinking is going on that thinking must affect the kind of constitutional alternatives that the Government has in mind for the Black population of South Africa.

Mr Speaker, the hon the Leader of the Opposition will understand that the subject of urbanization and the relevant control measures is a subject that we can debate at great length. Let me, however, just point out at this stage that I believe that the hon the Leader of the Opposition is aware that the Select Committee on the Constitution is considering legislation relating to this. I therefore think it would be much more fitting for us to conduct the debate there, for otherwise I would not have the time to say what I would like to say.

The Order Paper is nevertheless fairly informative, because there are a few aspects it does reveal, the first of which being that members of the official Opposition decided, in order of importance, what motion was most urgent. It is quite interesting to note that they decided that the hon member for Yeoville’s motion should enjoy precedence over that of the hon the Leader of the Official Opposition. If they had not regarded the hon member for Yeoville’s motion as being of much greater import, we would have received a request from the hon the Leader of the Opposition asking us to adopt precisely the same approach to his motion as to that of the hon member for Yeoville.

There is, however, also a second important aspect. Having listened to the hon member for Yeoville and I listened to him attentively—it is clear that he did not take into account what the consequences would be, as far as expenditure was concerned, of the acceptance of the hon the Leader of the Opposition’s motion. I therefore want to suggest that when we conduct debates of this nature here we should, in fact, also be prepared to highlight the inconsistencies in our own standpoints, if it is our intention to be fair to one another.

A further very interesting conclusion I want to draw from the Order Paper is that, as we know, the hon member for Waterberg also gave notice of a motion. The hon member for Waterberg also gave notice of a motion which, if it were accepted, would in essence mean that we would completely have to ignore the yes vote of 66% of the White voters on the basis of the low percentage polls for the Indian and Coloured minority groups. It is difficult to understand such an argument, coming as it does from a party which in all fairness argues, does it not, that its members are propagandists or apologists for White rights. Let me say at once that I am of the opinion that a debate on the subject of the position of the economy is an important one because it determines our political capability, because it determines our ability to find political solutions and also because it determines the living conditions of every inhabitant of the country.

You must not come along with any petty politics now.

No, just wait a minute; give me a chance. The hon member must not adopt so pious an attitude now. He wants to arrogate to himself the right to conduct the debate in a certain way, but others are not permitted to do so. [Interjections.!

A discussion of the position of the economy is continually being conducted, not only in Government circles, but also in both the private sector and the public sector. I think the hon member will know that this debate is being conducted in the Economic Advisory Council, whose membership is drawn largely from the private sector. Secondly I want to point out that at the recent meeting of the Economic Advisory Council certain considered standpoints were adopted in regard to the problems of the economy in our country, whilst at the same time standpoints were adopted in regard to the steps the authorities and the private sector were expected to take with a view to combating those problems. Because it is important, for the sake of perspective and an overall picture I should like to emphasize the following: There was indeed unanimity about present-day problems not being ascribable solely to cyclical factors such as the decrease in the gold price and the deceleration in the exporting of our raw materials. It does, however, also relate to a large extent to certain structural problems to which I shall be referring—as in fact the hon member also did. Amongst other things these structural problems include a lack of effective competition and a shortage of skilled labour in our country. None of the people who adopted a definite standpoint at the above-mentioned meeting, however, expressed any doubts whatsoever about the inherent, fundamental strength of the South African economy. It is my view that for the sake of perspective, and all the other aims we share, we should at least endorse or emphasize this.

There is the danger, a very real danger, that if we do not discuss this subject in its proper perspective, this kind of motion—I am not pointing a finger at the hon member—could create a psychosis which could cast doubt on the inherent strength of the South African economy, both abroad and within the country itself. In my opinion we should avoid this at all costs. The hon member for Yeoville must also guard against seeing the corrective measures, which have been identified in order to deal with the problems, as part of the problem itself—that is what the hon member for Lichtenburg did in that specific context—because those corrective measures must inevitably make an impact on people’s lives, such measures specifically being aimed at the long-term strengthening of the economy’s ability to develop and grow. Again we must maintain a perspective in this specific regard, because in failing to do so we would be creating an aversion to the measures in the minds of those in whose interests these measures are specifically being adopted and whose long-term expectations should specifically be augmented and assured. It is important for us to pay attention to that.

In a discussion about the state of the economy and the economic problems we are experiencing in this country we must also guard against matters being wrenched out of context, with problems which are largely of a short-term nature being regarded as insurmountable stumbling blocks in the way of economic progress in the longer term. By merely highlighting a few aspects and presenting them in the form of one-sided criticism, one specifically loses that broader perspective that is necessary for sound economic policy-making in the short and longer term. The hon member for Yeoville made a series of proposals. The sum total of all these proposals implies, however, the very opposite of what he is advocating, ie more and not less State expenditure. A comprehensive analysis of the South African economy firstly points to the fact—and now I am choosing my words carefully—that over the past few years we have not done as badly as is frequently alleged. The average economic growth rate over the past six years was 2,9% in real terms. That, however, was largely the result of the serious drought conditions as a result of which agriculture was particularly hard hit, for without the drought—and there are also other factors involved—the growth rate, without agriculture being taken into account, would have been 3,7%, which would have been somewhat higher, for the five-year period, than what was envisaged in the Economic Development Programme. What makes this achievement even more remarkable, however, is the very fact that our foremost trading partners did far worse, in the sphere of economic growth, than was envisaged five years ago in the Economic Development Programme, in spite of the fact that we had a downswing in the business cycle extending from August 1981 to March 1983.

Despite continued drought conditions the economy also began to evidence an improvement from as early as April of last year. This year is expected to evidence real growth, although I do not want to quantify that aspect here and now. Unfortunately this improvement was heralded, to a large extent, by increases in consumer spending and not so much by an increase in exports. As a result of this, and as a result of certain external factors, to which the hon member did not refer, for example the recent decrease in the gold price, this led to a quicker bottleneck in the balance of payments than is normally the case. As the hon the Minister of Finance explained, the rand came under great pressure, its value sharply declining in terms of the monetary units of our foremost trading partners. As we all know—although there are people who apparently do not know this yet—the South African economy is a relatively open economy, which is inevitably more sensitive to external factors. For the sake of perspective it is wrong to debate it in isolation. Let us look at what the figures have to say. This is also apparent, amongst other things, from the fact that both imports and exports average approximately 30% of the gross domestic product. So of necessity the South African economy is largely influenced by changes in our financial position relative to that of the rest of the world. Although a depreciation in the value of the rand could embody certain short-term benefits for certain of our industrialists and exporters, there are also serious implications when it comes to the prices of imported goods. If we also bear in mind that there are certain goods that we have to import—chiefly capital goods—we can understand what effect the sustained devaluation of the rand, together with an overall situation of overspending in the economy, would have on local costs and prices, and therefore on the inflation rate. A decrease in the inflation rate is specifically an aspect we all regard as a very high priority. We must realize that further upward pressure on prices, with an inflation rate already twice to three times as high as that of our trading partners, would have an extremely detrimental effect, not only on the competitive position of both South African undertakings locally and on foreign trade, but also on the country’s economic capacity for growth and for the creation of jobs, particularly in the light of the social problems we are experiencing. Against this background it seems very clear to me that the Government must take drastic action. Because these drastic steps do not necessarily hit all sectors of our community or all strata of the population equally hard, they have also gone hand-in-hand with supplementary measures such as special job creation programmes, to which the hon member for Yeoville referred and which are aimed at a more even distribution of the burden.

I do not have the time to go into that, but the hon member for Lichtenburg would have us believe that nothing has been done for agriculture and that agriculture has consistently had to pay interest at a rate of 25%. That, however, is untrue. As far as the consolidation of agricultural debt is concerned, an amount of R800 million was voted, R500 million of which has already been spent. So there is still R300 million available for that purpose. The relevant repayment period is 22 years and the prevailing interest rate is 14%. Why do people find themselves struggling so with the truth? The interest rate for carry-over debt is a guaranteed 8%, regardless of increases. If the debt remains at its present level, this would cost the State R150 million. Interest on new production credit is subsidized by co-operatives to the tune of 35%. As far as agricultural credit is concerned, agricultural credit loans for production have been increased from R50 000 to R75 000 at 6% interest. Why, then, does the hon member blazon such untruths abroad? [Interjections.] That is just another example of the aid programmes introduced by the Government. This relates to the agricultural sector, already heavily bowed down by the interest burden and, hand-in-hand with that, the drought conditions.

Whether the steps taken—let me concede as much to the hon member for Yeoville—are the best steps under the circumstances, is open to some argument. There may be people who are of the opinion that apart from a reduction in current expenditure on the part of the authorities, as far as is possible in practice, the emphasis should fall rather on tax increases, with a view to eliminating the imbalance in the economy. We can debate that issue, but the fact remains that whatever choice we may make, the measures cannot be painless ones. Others may argue that the relevant economic problems demand more direct rather than indirect steps. We can debate that aspect, but again this cannot be a painless process. The fact remains that for the sake of the promotion of economic growth, and the creation of jobs in the longer term, drastic steps had to be taken to counter the pressure on the balance of payments and the concomitant upward pressure on prices and costs. In fact, on this issue there was complete unanimity at the recent meeting of the State President’s Economic Advisory Council, as is apparent from the statement issued by the State President yesterday evening.

It was not only in the Economic Advisory Council however, but also between the Government and private sector representatives at the inflation conference, that there was unanimity about the fact that the combating of inflation required not only monetary and fiscal measures, but also structural adjustments in our economic life. In this connection there was agreement about the fact that he inflation phenomenon was also related to factors such as effective competition or the lack of it, price increases merely aimed at maintaining profit margins or even at increasing them and a narrowing in the so-called wage gap without any concomitant increase in productivity.

Let me also say that as far as so-called parity is concerned, there are unfortunately people in this country—and there are some of them sitting on the other side of the House—who against the background of unrealistic standards give unqualified support, at all costs, to parity in regard to specific public services. If that is what we want to do, however, we must not talk of the economic and financial capability of the country being over-extended. We must then not be critical of public sector spending. The two statements are in conflict; we must make out choices. I tell people who advocate that that in the process one is not taking into account the fact that South Africa is comprised of both First-World and Third-World components or reflects both First-World and Third-World conditions, that South Africa has to deal with a fairly rapidly growing population and that the country’s economy, with its multi-faceted character and large subsistence sector, has a very small tax base. On the one hand, however, there are again pleas to limit state spending, whilst on the other hand there are renewed requests for concessions and for a further narrowing of the tax base. Add to this the increased demand for socioeconomic upliftment, and we have a recipe for chaos.

In the process—this is something I want to warn against—one creates expectations that result in completely unrealistic claims to services that we cannot always afford, and if the expectations are not met, this can, as is frequently the case, lead to internal instability and unrest. Then I blame the hon member for Yeoville for alleging that there are certain sections of the population that have to live solely on the crumbs from the cake. He himself must ascertain the role played by such an unqualified statement in creating resistance and the resulting internal instability and unrest.

You were not listening.

I was listening very attentively.

You are twisting the words.

South Africa has placed a high priority—the hon members knows this—on the safeguarding and the defence of the country, because law and order are prerequisites for political stability. The hon the Leader of the Opposition knows that the government does not only advocate reform in the political sphere—let us forget about whether we agree about how it is being done—but also in the socio-economic sphere. My contention is that this has been illustrated, in the first place, by the growth in government spending on public services such as housing, health and, in particular, education and training in recent years. The fact is that in the period 1970-71 to 1981-82 the expenditure on education, for example, increased at a real rate of 7,1%.

[Inaudible.]

No, Mr Speaker, my time has not expired. The hon member must not try to take over the Speaker’s function too.

I did not say that.

He indicated that I should stop talking. Only the hon member for Yeoville may speak, and then no one else, because when other people are speaking, he also wants to take matters further. The Government is aware of the fact that it would be economic suicide, in the provision of public services … [Time expired.]

Mr Speaker, I want in the first instance to thank you for the opportunity afforded us to debate this matter of public importance. Secondly, I want to thank the hon members who participated in this debate. Unfortunately, I think that even though some things have changed, other things have not changed, and I must say that I want to express my regret that, whereas I tried to conduct this debate on a constructive basis and on a basis which I thought was a concept of consensus, it did not have the same reaction from the other side of the House. On the contrary, the constructive suggestions that we made, appeared to be either rejected or ignored and instead we had a petty political reply. Particularly disappointing was the hon Minister of Constitutional Development and Planning whom I really cannot understand at all, because he is supposed to be the champion of consensus. He wants the confrontational debate to continue here. The tragedy that I see, is that, to him, consensus merely means that other people must agree with what he wants. There is no endeavour to find true consensus within the meaning of the term.

With great regret, one must also point out that, because it is true that one is applying measures which cause pain to some people, one would expect more consideration for those who have to suffer as a result of the medicine, because it affects some people more severely than others. Sir, remember one thing: One cannot live in luxury oneself while one’s neighbour is hungry. Unless one accepts that and accepts that one has to do something to help them one is heading for trouble.

I want to make one last remark in the very short time available to me. One thing has become clear as a result of what the hon the Minister of Finance has said: If we had continued with the budget as it was presented initially in this House this country would have been heading for a major disaster. In that respect I am grateful to the hon the Minister because he at least tried to do something about the disaster that we were heading for.

Business interrupted in accordance with Standing Order No 23 and motion lapsed.

Mr Speaker, I move:

I hope that we shall reach consensus and that we can take leave of one another in peace and harmony.

Mr Speaker, I wish to object to the motion of the hon the Leader of the House that the House do now adjourn. I want to motivate this briefly, in view of what the hon the Minister of Constitutional Development and Planning is trying to imply here now as well.

Sir, in your sound judgement a discussion of the motion of the hon member for Yeoville was permitted. My motion on the Order Paper should have been permitted in the judgment of the Government. It was the Government that decided that we could not debate such a serious motion under these circumstances. I therefore want to mention a few points to the hon the Leader of the House, who announced that Parliament would be prorogued until 18 January next year. I want to place my objection to that on record, since I did not formulate this motion lightly yesterday.

Firstly, I want to point out that there is in fact a crisis in the country, whether we want to admit it or not. There is unrest. We have been reading about this for the past three weeks. There are strikes. There is growing poverty and unemployment. Yesterday the hon the State President also made us aware of the fact that in his opinion, there is no meaningful constitutional arrangement for almost 11 million to 12 million people in our country. I would say that that constitutes a crisis, one which we in this Parliament could discuss profitably.

Secondly, it is not cheap to call a meeting of Parliament. We cannot call a meeting of Parliament every now and then for a few ceremonies and a little pomp and glory. [Interjections.] Particularly when there is a crisis I believe that we as members of Parliament and members of the House of Assembly have a right to discuss and debate serious situations. That is also the spirit in which I formulated that motion.

There is also a third reason why I saw fit to formulate the motion in the manner I did and requested that the House give serious attention to it. We now find ourselves in a new constitutional dispensation in which a Presidential system is entering into matrimony with a Parliamentary system, so to speak. There is going to be tension between the Executive Authority and the Legislative Authority in respect of attention given to matters. We were told by the hon the State President that Black affairs are increasingly going to fall under his attention. I believe that Black affairs should also be discussed by the Legislative Authority of the country because they affect all of us. The budget that is drawn up has a direct impact on those matters. If one looks at the nature of my motion one sees that we were in fact supposed to look at the short-term steps the Government is taking to solve the crisis and what long-term prospects there are to solve the crisis by the formulation of policy and constitutional pronouncements. If we look at the short-term steps, it must lead to serious concern. All we have is a lot of banning’s, people being detained without trial and pronouncements by the hon the Minister of Law and Order that do not make sense to me. I do not know why this is happening and what is taking place. All I read about is the unrest. That is why I say that we have the right to ask whether these steps being taken by the Government are the correct steps. Then we also have the right to ask what long-term prospects the Government has to solve this crisis. The hon the State President said in Parliament yesterday:

†We want to know what plans there are, and this is an appropriate time to look at those matters. I want to know from the hon the Leader of the House whether these are not reasonable arguments in support of why Parliament should not be prorogued so that we can devote urgent and immediate attention to these problems.

Mr Speaker, the hon Leader of the Opposition said that we had assembled simply for a few little ceremonies. [Interjections.] Those were the words the hon Leader of the Opposition used. He said we had assembled for a few little ceremonies. Neither a single hon member of the Opposition, nor one Opposition Whip, has thus far come to tell me we should sit longer hours. Various hon members have asked me whether we would be able to finish by Wednesday evening. [Interjections.] Not one of them asked us to give them an extra day to discuss this matter. [Interjections.] A number of those hon members sitting there have already reserved seats on the aircraft for this evening. [Interjections.] And some have booked seats for tomorrow morning. Not one of them said that the Leader of the Opposition wanted to debate this affair. [Interjections.] Not one of them asked that we sit longer hours, because they have all made arrangements to leave tonight. [Interjections.] This is a political game. [Interjections.]

Order!

That is not to say this proposal is unnecessary, because the extent of unrest in Black townships is of concern to us all. Sir, as the hon the Minister pointed out—because you ranked the hon member for Yeoville’s motion above that of the hon Leader of the Opposition—they must not come along with such stories now. [Interjections.] I say it is not fitting to the occasion to enter into further debate on this matter. This is just the hon Leader of the Opposition’s artful way of showing that he, and not Harry Schwarz, is still the leader.

Mr Speaker, I want to ask the hon Leader of the House whether he does not think that the reasons advanced by the hon Leader of the Opposition are cogent reasons for not adjourning this House. It is a fact that we are in a so-called era of reform … [Interjections.] … with people locked up in detention, with banning’s of indoor meetings, and with most of the Black townships in the country in turmoil … [Interjections.] … and another 1976 hovering on the horizon in South Africa.

Mr Speaker, let me reply to that. Not a single hon member of the Opposition came to me, at any time during the day, and said he had a motion on the order paper which he would like to discuss and that he would therefore like to sit tomorrow. [Interjections.] It is a plain and simple bluff. [Interjections.]

Order!

Mr Speaker, I should like to ask the hon the Minister to give us the names of Whips or of hon members who asked him to let us go home this evening. Secondly, I should like to ask the hon the Minister why he ignores this party, a party whose leader has a motion on the Order Paper that we should like to discuss because it is really important. The hon the Minister of Constitutional Development and Planning today launched an attack on the motion that is on the Order Paper. Why does the hon Minister therefore ignore this party which placed this important motion on the Order Paper? [Interjections.]

Order! I think the hon member has put his question clearly enough.

Mr Speaker, I am standing in a corridor of the Parliament building and an hon member asks me if he can make arrangements to leave on Wednesday evening. Some of the hon members who are sitting there said the aircraft was full and asked if we could not help them to get a seat on a flight. I am not going to disclose any names, but one can determine at the booking office which people reserved seats. [Interjections.] I do not play dirty politics by disclosing any confidential conversation.

You ought to be ashamed of yourself.

No, but the names are available there. Why should I be ashamed of myself? I only want this hon member to realize that SAA flights leave punctually. He will have to hurry or he will be late for his flight. [Interjections.]

Mr Speaker, on a point of order: When the hon Leader of the House rose, there were hon members on this side of the House who wanted to get up to speak, but with respect, Sir, you saw the hon the Leader of the House. It therefore seemed as if the debate were closed.

In fact, at that time there were people here who had speeches prepared. Therefore I would ask you, Sir, in the time available to at least give that opportunity to the people who were ready to speak. The hon member for Houghton, for example, has a prepared speech on the subject. Why should she not be allowed to speak because the hon the Leader of the House jumped up quickly to move the adjournment of the House?

Unfortunately, I cannot accede to that request.

Question put,

Upon which the House divided: