as Acting Chairman, presented the First Report of the Select Committee on Public Accounts (on Unauthorized Expenditure), as follows:

Mr. Speaker, I move without notice—

Agreed to.

Mr. Speaker, when the debate was adjourned we had dealt with a number of matters. Amongst others I had joined with the hon. the Minister in expressing appreciation of the services rendered by the retiring Director-General of the department, as well as the head of the Reserve Bank. It struck me that there were some other names which perhaps deserved being mentioned as well. I should like to mention some of those names today. Firstly, I should like to mention the name of Mr. Pretorius, Secretary to the Treasury, whom I have found—and I am sure other hon. members will agree with me—to be the most helpful, courteous and able individual. I might say he is the quiet man of Finance, but the fact that he is quiet does not mean that he is not able. He is very able indeed. Secondly, I also want to mention the name of the Commissioner for Customs and Excise, who goes about his job in a most effective manner. Finally, there is also the Commissioner for Inland Revenue. His particular post is not very popular. With his sense of humour and his ability, however, he has done much to change the image of that department.

I believe that tribute should be paid to these officials, as well as to those others who are directly concerned with this debate by virtue of their involvement in the various matters which are related to finance, both within the department and at the Reserve Bank.

Furthermore, I should like to express my appreciation for the memoranda which have been supplied to hon. members in respect of each of the individual Votes. I believe it is going to make our task during this debate much easier, particularly in discussing the various Votes. I believe our appreciation for this new method should be placed on record.

Returning to the budget itself. I immediately want to move as an amendment—

1. (1) to take adequate steps to combat inflation:
2. (2) to manage the economy in an effective and businesslike manner and as a result has aggravated the general economic condition of the country, the effect of which has been to place upon the public the burden of increased taxes, higher interest rates and escalating costs; and
3. (3) to pay due regard to the social and political needs of the community and establish new economic priorities in an era of changing political conditions.”.

I should like to begin by referring to the final leg of my amendment. First of all I should like to point out that the timing of the downturn in the economy is, I believe, in many respects a tragedy for South Africa. It comes at a time when not only the expectations of unprivileged people are high, but also when, politically, within the White community, a showdown is pending between those who want to come to grips with the realities of peaceful change and those who merely want to maintain their position of privilege. The first, but by no means the last step in this political watershed is the break-away from the NP by those who formed the CP. I believe this break-away has created a vital test for the NP: Do they now stand still to retain support or do they demonstrate courageously an alternative to the NP policies of 1948 which the CP is seeking to revive? Support will not be retained by them by arguing that there is no need for a break-away and that everything is really still the same. The reality is that ultimately a line is going to have to be drawn in South Africa between those who want to avoid conflict through negotiation and peaceful change and those who believe their interests will best be served by holding on and facing inevitable confrontation.

The changing political era is, I believe, upon us without any doubt, a situation of change certainly on the White political scene, but also in the Black, Coloured and Asian political environment, change in the relations between the various race groups in South Africa, change in regard to the action to be taken in order to satisfy the aspirations of peoples and change in the broader Southern African context, as well as in respect of South West Africa and in South Africa’s relationships with the outside world. These changing political circumstances also, I believe, call for new economic priorities. It means that we must determine not what is desirable and comfortable for us, but what is essential for survival and for peaceful co-existence. That is why we have, particularly on this occasion, chosen as our theme for this debate the new economic priorities in an era of changing politics.

These new priorities will require the allocation of resources. Naturally, in a period of economic growth such allocations can be effected without substantial reallocations. In a contracting or static economy, however, or where real growth is minimal, the test of allocation pursuant to priorities can be more difficult. Instead of directing that the increase in the economic cake should be handled in a different way, the slices may have to be cut more thinly in order to give effect to new priorities in South Africa.

This is the tragedy. In these particular economic times, when South Africa really needs the resources, we find that growth is petering out. Growth is petering out. Our currency is internationally weak. Our balance of payments is in need of remedial action and inflation is at levels which are utterly unacceptable. Unless this situation can be remedied, the question will not only be one of reduced standards of living in a recessionary business cycle, but also whether a community, in this most difficult time, is prepared to make sacrifices in order to safeguard its future. I believe this needs confidence on the part of all the people of South Africa. It also needs an ability on the part of those who lead the country to motivate the people in the country and to show that there is reason for such confidence. This is really the challenge of 1982, because, on the ability to handle the politics of the day will depend the willingness of the community to accept economic change. Without the politics being changed, the economy cannot play its role. Without economic strength, the political solutions will become even more elusive. I believe we have to tackle both of them with equal vigour.

When we talk about priorities, much is being said about justice which must be done to the people in the field of human and political rights. I want to submit, however, that any freedom is incomplete if it is enjoyed in conditions of miserable degradation. Therefore the priorities for peaceful change involve an effective answer to those who preach violence and who hold out the hope of unattainable utopias as the reward of the success of their violent activities. Promises are one thing; the tasting of the fruits of a system is quite another.

Therefore I want to submit that the new economic priorities which we should have in South Africa must involve the following: Firstly, it must involve the economic freedom to pursue the vocation of one’s own choice, to choose what one wishes to do economically; secondly, the implementation of the concept of equality of education—which in principle has already been accepted by the Government—but with adequate resources to make it meaningful and appreciated that it is really happening; thirdly, the hastening of the training process to ensure that those who are educated can fit into the labour market; fourthly, job creation so that the educated and trained are not frustrated in their new role; fifthly, we have to tackle the housing problem with greater resources to ensure that the dwelling places of workers do not become the breeding ground of revolution; and, sixthly, the upgrading of social services to ensure that they are available in equal quality to those who seek to use them.

I do not believe that we in this House should really differ on these objectives. But massive resources are needed in order to implement them. In addition, they cannot be achieved overnight, and so nobody can make the promise that they will miraculously appear overnight. They certainly cannot be attained with any degree of expedition in the type of economic conditions which are now prevailing. That is why we look upon the present budget, and the events which led up to it, with such a degree of sadness and disappointment. I say this because this is really the time when we need the resources and the money in order to achieve what has to be achieved.

There are a number of matters in the budget with which one can perhaps deal immediately. Firstly, married women are without doubt still dissatisfied with the progress that the hon. the Minister is making in regard to the taxation of married women in South Africa. We shall come back to this again at a later stage. Secondly, when it comes to military pensions, those who speak for ex-servicemen have expressed their unhappiness at the extent of the increase which has taken place. I think we can do better for our military pensioners. When it comes to social pensions, one has a very grave difficulty-one of my colleagues will deal with this in detail—in regard to what is actually now the policy of the Government in regard to the closing of the gap in the pension situation as far as it affects social pensioners, particularly with regard to the doubt that arises as a result of a television interview given by the hon. the Minister of Health and Welfare in this regard. In any case, at the present rate there will not be equality of pensions and the gap will not be closed until well after the year 2000, if we continue at the present rate. The other matter which of course creates grave disappointment is the hon. the Minister’s failure to deal with the means test in regard to pensions.

When it comes to the question of life insurance, this has always been encouraged in South Africa, but what is also clear at the present moment, is that the additional taxation which has been imposed upon the investment of life insurance companies will eventually be borne indirectly by the people who hold policies with those companies, either in the form of reduced bonuses where they have without-profit policies, or where there are new policies, with higher premiums. So this eventually falls back on the ordinary man in the street.

I should now like to come to the question of the taxation on the gold and the diamond mines. I am not the greatest champion of the gold mines or the diamond mines, but surely at this moment in time it is a question of hitting people when they are down. Particularly in regard to the diamond mines, and especially the smaller diamond mines, there could not have been a worse time for an increase in taxation than at present.

Then there is the question of the sales tax on advertising material. The general opinion is that this is ill-timed. Furthermore, this is not the only example in this regard. There are many other examples to show that GST is really a form of double taxation. Even though the amounts involved may be small, the principle remains.

In regard to company taxation, I think the same objective could have been achieved by the imposition of a savings levy which has the greater advantage inasmuch as money could have been put back into the economy when it was required in order to stimulate it. However, the way in which this is now being done will undoubtedly affect cash flows and dividends and in this way also affect many retired people who rely upon dividends for their livelihood.

In regard to the relief in respect of cinema tax, this is to my mind the greatest cynicism imaginable because that relief is not for the people who go to the cinema but in fact relief for the people owning the cinemas, who have already made it very clear that they are not going to pass one cent on to the public in this connection.

Whose fault is that?

It is your fault for not handling it correctly. Some of my hon. colleagues will elaborate in regard to the question of the bread subsidy but I want to make it very clear here that we do not believe that the way in which the bread subsidy has been handled is in the interests of the ordinary South African. It would appear to me that what is happening is that certainly in the case of white bread it is now being turned into a luxury in South Africa when it used to be one of the staple foods in our society.

I want to say that as far as the housing subsidy is concerned, I welcome this subsidy as a breakthrough. Criticism has been expressed to the effect that it is not sufficient to be stimulatory but the principle has been established and I want to tell the hon. the Minister that I welcome this. Let us see how it operates this year and then, perhaps, if it does not have the desired effect, it can be reviewed at a later stage. However, to my mind, it does establish a most important principle.

There are three particular matters with which I should like to deal in regard to the allocation of funds. In the first instance there is the question of housing and of education. Obviously, in respect of these two items, we welcome the increases that have been forthcoming. Although we do not feel that they are sufficient to deal with the problem, we feel nevertheless that particularly in regard to some of the sections involved in the Department of Education and Training the increases are substantial and I believe that this indicates that we are on the road towards what the Government has said it was committing itself to, namely, equal quality of education. If it continues in this way, then that to my mind will be adequate proof of action in respect of something which up to the present we have only been discussing.

In regard to the question of defence, I must say that I find the defence budget rather remarkable. I say this because the increase in this budget is relatively small and I doubt very much whether we will be able to keep within those limits as the year goes on. I hope and pray that there will not be any escalation of hostilities but I do feel that we are being a trifle optimistic in regard to the defence budget at this particular juncture.

Who is the Judas in your caucus?

Does your caucus agree with you?

Let me also say that I do not believe that one can assess this budget in isolation. I feel that the fiscal measures that it introduces must be examined as a package together with those announced during the part appropriation debate and also that such a fiscal package must be considered together with the Railway budget and the Post Office budget. These three budgets must in turn be taken together with the monetary policy which is being followed. What I do think is really remarkable from a financial history point of view, is the speed with which the turnaround in the current account of the balance of payments took place. Only a comparatively short while ago the current account of our balance of payments showed a substantial surplus and the rand was riding high against the currencies of our major trading partners. Interest rates were at historic low levels and as recently as August, 1981 when the hon. the Minister introduced his budget and even a few months later when that particular legislation had passed its final stage there was no indication by the hon. the Minister of the drastic measures that were to follow some six months later. The public are entitled to ask what has actually happened. Certainly the gold price has fallen and this has affected both Government revenue as well as the balance of payments. The economies of our trading partners have not revived as had been hoped, certainly as the Government had hoped. However, is there not something more than this? That 1980 was a good year for South Africa economically I think is beyond question. The gross domestic product rose at a rate of almost 8% and the gross national product at a rate of more than 11% in real terms. This was the climax of some good years. The Government, however, acted procyclically and stimulated the economy further by its fiscal measures. Early in 1981 there was no corrective action and there is no doubt that an opportunity was lost by the Government because, after all, there was an election ahead. There was always the prospect of a quick recovery in the gold price and the economies in the Western World could improve relatively quickly—that is the gamble that the hon. the Minister took. We then spoke of “vote now, pay later”. The Government at that time, when the writing was on the wall, instead of taking heed of that, just spoke in bullish terms. I quote the hon. the Minister of Finance—

The hon. member for Malmesbury, who will follow me, speaking then of South Africa, said—

In other words, he did not want to heed the warnings which we were giving.

The bullish talk continued. The hon. the Minister again—

Just listen to this—

The hon. the Minister of Industries, Commerce and Tourism said—

I wonder where he was.

You are quoting out of context.

We carried on into not only the heat of an election, but the overheating of the economy. The 1981 year, although on the face of it not a bad year, turned out to be quite a little different from what we had understood from the Government before the election. They spoke about a 6% growth rate; it turned out to be 4,7%.

Who spoke about 6%?

The hon. the Minister among others such as the hon. the Minister of Industries, Commerce and Tourism, the hon. member for Malmesbury and the hon. the Deputy Minister. [Interjections.]

Order!

Now they do not like what they said. More seriously, however, the gross national product dropped from an 11,3% increase in 1980 to a mere 1,5% in real terms in 1981. That is a real drop—from 11,3% to 1,5%. If one bears in mind the population growth, one sees that the gross national product in fact dropped on a per capita basis during that year. In reality the sharp increases in imports were apparent from the statistics, and the gap between imports and exports was widened. This tendency accelerated in 1981, and once the gold price dropped substantially, the problem was there. While the hon. the Minister had said before the election that the overall balance of payments position would remain sound during the whole of 1981, now we are publicly told by a senior official of the Reserve Bank—

In other words, this is how it worked: A turnaround of R6,8 billion catches the Government by surprise. How can anybody who looks at the graphs and anybody who looks at the gap—I show the House the graphs as they are and as to how they turn—miss what is happening and be caught by surprise, except the Government?

But you knew how it would be, of course.

Despite the statement on surprise, the statement that they were surprised, let us listen to what the hon. the Minister said during the 1981 budget debate—

So they were to be expected! Why then, if they were expected as the hon. the Minister claimed they were, whereas now they are said to be a surprise, was adequate corrective action not taken earlier to avoid the drastic action now? If it came as a surprise, then what prize economic watchfulness when a trade gap, excluding gold, increased in a manner as I have demonstrated! That is the reality; that is the question.

Much has been said about the money supply. The broadly defined money supply, the M2, increased at a rate of 27,4% and 25,1% in 1980 and 1981 respectively and the quantity of actual money, the Ml, by 34,1% and by 15,4% respectively. Let us hear what the hon. the Minister said in 1980—

Some rate of inflation it must have been, because it was 27% in 1980 and 25% in 1981 and ordinary money was 34,1% in 1980. Well, Sir, what prize forecast from this hon. Minister! When appeals were made to the Government by reputable economists, at a time when the country was awash with liquidity, to drain some of it off by relaxing exchange control to allow the banks to invest overseas at the then prevailing high interest rates, or for the Government itself to borrow when rates were low and money readily available and to place it overseas, they fell on the deaf ears of this Government, while it heeded it would have drained off some of the liquidity at the right time and would have helped to fight inflation and would have had an influence on local interest rates. However, except for some mild action by the Government and for the self-correcting action which eventually resulted from the drop in the reserves, the Government failed to take adequate corrective measures. The matter became even worse. The hon. the Minister, in presenting his post-election budget, said in August 1981—

and now the important words—

That is what he said. Yet only a short time thereafter the Government did the very thing which the hon. the Minister had considered to be undesirable. It went into the banking sector, with all the undesirable effects. So while in the first half of the year the net claims of the private sector were the causes of the change in the money supply in the main and the Reserve Bank was able to say that the monetary authorities had “succeeded in regaining effective control of the money supply from May 1981 onwards”, in the second half of the year it was the Government’s own actions which caused the problems. What is interesting are the reasons given by the hon. the Minister for this. The hon. the Minister said the Public Debt Commissioners suffered unexpected withdrawals, and mentioned parastatal institutions. Because of a small inflow of funds the Public Debt Commissioners were therefore unable to invest as much in Government stock as they had anticipated at the time of the budget. A situation where the Public Debt Commissioners invest only R1 052 million as opposed to R1 850 million—almost R700 million less than anticipated—needs a little more explanation.

What did the S.A. Transport Services withdraw?

That is a matter between the hon. the Minister of Finance and the hon. the Minister of Transport Affairs. They, however, appear not to be on speaking terms. Apparently the hon. the Minister does not know what the hon. the Minister of Transport Affairs is doing and he does not know what the hon. the Minister of Finance wants to do.

The other factor is that the hon. the Minister sort of sits back as if the Public Debt Commissioners have done something terrible to him. He does not tell the House that he is one of the Public Debt Commissioners.

I am the chairman.

Yes, the hon. the Minister is the chairman. So he is the one who has done it himself. It is not as if somebody has done it to him. I would also assume that the hon. the Minister as a Public Debt Commissioner, as chairman, must work on cash flows, must liaise with para-statal organizations, and I think we should know a little more as to what really happened. The latest Reserve Bank Quarterly Bulletin gives us some hint as to what has happened, but still some details are not there. Does not the reason for some of the problem involve some of the parastatal organizations? There, in fact, sits one of the culprits, and I am referring to the hon. the Minister of Transport Affairs. He was also suffering as a result of the problems of an election year.

Then there is the other issue which is, of course, the crucial one. Were the rates of interest not out of line with market conditions, and I ask this because this situation also seems to be related to, and demonstrated by, bond redemption? That exceeded the budgeted figures by R250 million, the reason being—so it is said—the rapid rise in money rates and “… the fact that the Exchequer did not adjust its offer rates immediately”. In the face of the PDC’s failure to take up the R700 million budgeted for, going to the banking sector was not the only option available to the hon. the Minister. With proper planning there could have been State bonds placed with the private sector, provided—and this is the important provision—market-related rates were offered. That is what you did not do.

How would you have financed the record maize crop?

The hon. the Minister says that from many points of view it is to be welcomed that most interest rates in South Africa can once again be expressed in positive terms. It is the Government, however, that has been more than reluctant to offer real returns on its own stock. That is the reality, and even now those returns are only marginally above the inflation rate, because the inflation rate has, in fact, dropped.

Why then did our Government issue succeed?

Succeed? How much did the Reserve Bank have to take up with the tender offer? How much? Come on, tell us! You know very well that you could not place it all and that the Reserve Bank had to take it up and then had to sell at a loss because you did not issue the stock at market-related rates.

A small quantity only, but how would you have financed the record maize crop? Tell us that.

You did not offer the Government stock at market-related rates.

Order! The hon. member must refer to the hon. the Minister as “the hon. the Minister”.

I thought I was addressing you, Mr. Speaker, since that is the practice of the House. The hon. the Minister does the same thing all the time. On a previous occasion, when the Government was under attack for its fiscal and monetary policies and management, the hon. the Minister has tried to turn the attack away from himself and the Government by deflecting attention to officials. He tried it, in fact, earlier this year. No such attack was, however, either made or intended. What is interesting is that when things go well, or seem to be going well, he has no hesitation in taking credit on behalf of the Government. Let me quote him again—

Maybe if we could get just a little good management from this Government, things would be a little different. As the hon. the Minister interjected, the financing of certain agricultural crops has admittedly aggravated the problem. No blame, however, attaches to the hon. the Minister and the Government, or the farmers really, because of the inability to export owing to world market conditions.

How much was that financing?

Nobody blames him for that. What I can blame him for, however, and what he has to take responsibility for, is the fact that he has done his financing at rates unrelated to market conditions. That is why he created those problems. Do hon. members know what they did? There sits a maize farmer, the hon. the Minister of Transport Affairs who got the hon. the Minister into trouble with the PDC. They took the money from the Land Bank at the low rates and lent it back to the banks at the high rates. Ask them how much money the maize farmers made because of the way in which that was handled. I see the hon. the Minister of Transport Affairs is blushing. I do not blame him for blushing. [Interjections.] Even though the hon. the Minister is blushing, the hon. the Minister of Finance is going to get his tax from him an what he made out of the Land Bank. [Interjections.] That is the truth of it.

Amazing!

If farmers are deserving of interest rate subsidization, or if there is some other group that is deserving of such socially desirable subsidization, there should be market related interest rates imposed without distorting the market. Then one can have such subsidization if the relevant purpose is a socially desirable one. The hon. the Minister pays lip-service to the free market mechanism, but that is one of the facts that this Government has failed to appreciate over the years. The market mechanism cannot function if it is not allowed to operate freely and fully, only being allowed to operate in some respects, though not in others.

Then we come to interest rates. They are now historically high. It appears to be a source of satisfaction to the Hon. the Minister that they are now showing real returns. This question, however, as I have said, is open to debate.

Are you against real returns?

I am in favour of you bringing down inflation in order to show real returns and to have interest rates of such a nature that business can function properly with them. You know the interest rates are high because of the monetary mess you have got us into.

“The hon. the Minister”.

Yes, Sir, the hon. the Minister’s monetary mess. Here again we see the cynicism of the Government. When market conditions created a situation which led to building societies increasing their mortgage rates and the political conditions—this was just before an election—did not suit the Government, the hon. the Minister with great to-do appointed a commission to inquire why the rates went up. He knew why the rates went up. They went up because the market required it. The hon. the Minister, however, appointed a commission of inquiry. Now the rates of the building societies are much higher, but there is no protest from him at all and the commission’s report is still awaited.

The commission is still sitting.

The reality is, as I have said earlier, that if it is socially desirable for interest rates to be lower for housing, then building societies must be allowed to compete at market-related rates, but where the social purpose requires to be satisfied, it must be done by subsidization.

The dramatic increase in interest rates on bank acceptances of 4,5% in January 1980 to 19% and more this month is, of course, another case where the economy was managed in a particular way. The high interest rates at this time are without doubt part of the package designed to deal with the economic situation which has come about not only as a result of external factors, not only as a result of the gold price, but also because of the problems created by the Government’s lack of foresight and its failure to take timeous and correct action.

Many of the comments on the budget have been that the hon. the Minister in fact had little option but to take the kind of action he took. The question, however, must be asked not only whether he had other options—there were other options—but also whether the Government itself did not help to create the present situation. The reality is that the Government painted itself into a corner and, now that it is painted into a corner, it claims its options are limited. Nobody put the hon. the Minister in the corner. He painted himself into it. It is his work that got him into that corner. That was the cause.

The question that has to be asked is where all this puts the consumer. I believe the consumer has been put into a price punch bag. The package the Government has presented has had as its direct effect a reduction in living standards. The ordinary citizen may feel that he is not greatly concerned about the money supply, the balance of payments and the external value of the rand, but these and other macro-economic factors have a direct effect on the average South African’s real income and his ability to spend and save and on the social action that can be taken in order to ensure the stability of the country.

The Government’s imposition of general sales tax has enabled it to employ what I think is a silent extractor of taxation. “After all”, people say, “what is an extra cent in the rand on purchases?” However, this cent is conservatively estimated to produce over R600 million during the current year, and that is about four times what the 5% loan levy is expected to produce. Can you imagine, Sir, the public reaction that would follow if, instead of increasing sales tax by 1%, the surcharge on income tax had been increased by 20%? That, in fact, produces the same amount of money, so this is the silent extractor of money from the public which the Government is now employing.

In the same way the consumer is affected by the import levy which adds R500 million in direct costs to imported goods and will also add indirect costs. Additional direct and indirect costs have also been imposed in the Post Office budget and the Transport Services budget as well as through the increases in administered prices of certain products. If we add to this all the fiscal measures which have been announced in this budget and the impact this has on the consumer, there can be no doubt that that impact will be tremendous. Then we must not forget fiscal drag, which now takes two forms. Firstly, there is fiscal tax in respect of income tax, where the taxpayer, without any actual increase in real income but merely keeping up to date with inflationary conditions, continuously goes into a higher tax bracket. When, for example, an approximate 15% increase in salaries is announced for public servants, nobody asks how much of that money will be going directly back into the coffers of the Exchequer. It means, therefore, that they give with the one hand and take back with the other, and the real increase is something quite different.

[Inaudible.]

And then, of course, there is the price of goods and here again inflation assists the hon. the Minister in regards to general sales tax. The price of food, for example, went up by over 20% last year, and in that way the general sales tax silently extracts more money. It is interesting to note that the hon. the Minister, without any increase in sales tax, but merely through the constant rise in prices, has budgeted for an extra R400 million to be taken from the consumers of South Africa. However, as I have said, high interest rates are also part of the package. In the absence of high interest rates and without the depreciation of the rand, the Government would probably have imposed even more severe financial measures. Who actually pays, however, for the high interest rates and who has to suffer because of the low value of the rand? Again it is the consumer. Not only does he pay a higher interest rate on his overdraft; he pays a higher finance charges, and he will pay indirectly as the price of consumer goods has built into it the higher rate of interest and higher finance charges incurred by the manufacturers and distributors. Here also there is a fascinating quotation. Hon. members may remember the debate that we had just before the election about interest rates, and they may also remember the hon. the Minister and the hon. the Deputy Minister’s indignation about this 24% finance charge limit that I said was at that time being imposed. This is what the hon. the Minister then said—

I wonder whether the hon. the Minister would like to swallow those words today.

When was that said?

That was said on 19 February 1981, just before the election. The hon. the Minister at that time said the interest rates would not move up to that level. I wish we could go back to those lovely days before the election!

Mr. Speaker, on a point of order: Is the hon. member for Waterkloof allowed to sleep in this House? [Interjections.]

Order! The hon. member for Yeoville may proceed.

Reducing the external value of the rand has also taken its toll on the consumer, as the price of imported goods has gone up. I also want to say to the hon. the Minister that the depreciated rand has acted as a redistributor of wealth because the export trade, including gold, has received more in rands than they would have received if the value of the rand had been higher. On the other hand, those who need to buy the imported goods have to pay more. With taxation and with the value of the rand depreciating it is therefore once again the State that is involved in a not insignificant process of wealth redistribution in South Africa. The hon. the Minister is a great redistributor of wealth in South Africa, even though he pretends to pay lip-service to free enterprise and capitalism.

Must we push up the value of the rand?

It is not that the rand went down by accident, because this interesting statement was made—

That is said not now; it was said in September 1981. I believe therefore that the consumer has been hit very hard in the first three months of 1982, and that the picture is drastically different from the picture of a promised land painted in the 1981 election, less than a year ago. I said then “Vote now, pay later”, and now it is a case of “Pay for what you voted for”.

Unfortunately, however, there are those who did not vote for this Government, those who voted against the Government and those who did not have a vote at all, all of whom have to suffer with those who made the mistake of voting for this Government.

I want to deal now with Government expenditure, Mr. Speaker. In this respect the hon. the Minister has claimed credit for disciplining Government expenditure for the forthcoming year and keeping it to the level of 14,9% on a budget-to-budget basis, and 11,9% against the revised estimates. I commended the hon. the Minister for that, and I still do so. It must be remembered, however, that on the hon. the Minister’s own figures the 1981-’82 expenditure is slightly more than 2,5% above the original estimate, which was in itself a substantial increase. Despite everything, however, this is still a commendable restraint on the part of the hon. the Minister. The question must be posed whether expenditure can be kept within these limits and whether the expenditure from the various funds and paragovernment bodies will be kept within the general parameters of the budget.

There are some specific issues to raise in this regard. Firstly, one asks whether some of the departments whose rates of increase as set out in the estimates are relatively low can or will be kept within these limits. In this regard I have already referred to the Department of Defence. Secondly, one asks whether the budgeting for staff is being done on the basis that the new service conditions will not curb the outflow or that we will actually have a new increase in the course of the year in respect of the Public Service. Or are we simply going to consider that there is going to be a continuous staff haemorrhage in the Public Service? Thirdly, programme budgeting is done on the basis of existing programmes, the extension of existing programmes and on new programmes, with five priorities which are laid down—absolute priorities, the deletion of which will be catastrophic, necessary extensions which cannot be left out without prejudice to the public, desirable extensions by reasons of advantages to the community, useful extensions, and those extensions which can be dispensed with without prejudice to the public interest.

Bearing in mind these priorities, the question that I direct specifically to the hon. the Minister is this: In respect of which of the departments has he cut out the fifth of these priorities? From which of the departments has he cut out the fourth priority? From which of the departments has he cut out the third priority, and has he cut out from any department any part of the first or second priorities? In other words, in this cutting of expenditure, has he indeed dealt with essentials which we need? Finally—if it is correct, and we understand it to be correct; I have seen it myself—if every submission of a budget must be accompanied by a written confirmation that only known price increases, such as salaries, provisions in contracts, transport costs, etc. are included, and that no provision is made for anticipatory infiationary factors, must it then not be assumed, in any assessment of the effect of the budget on the economy, that an allowance for this inflationary aspect has not been made in the budget and should be made before we make an assessment in regard to the cutting back of expenditure in this regard?

I think that one of the things I should like to do, is to point out that the hon. the Minister commences every reply to a budget debate by collecting all the newspaper cuttings on which he can lay his hands, in which he is told by those who have something, by those who want something and by those who hope to get something in future, what a great guy he is. That is what the hon. the Minister does. He has already collected such clippings which he will use in replying to this very debate. Just in order not to disappoint the hon. the Minister, I want to quote him some other things.

Just look at this pile, Harry. I have them here in my hand.

I shall quote the hon. the Minister a few other things. I shall quote him a few of the things said by some of his best friends. Let it not be forgotten that we are now paying for the sins of the past. We are paying for the hon. the Minister’s sins, Mr. Speaker. That is the truth of the matter. I quote from a financial publication, as follows—

What a very kind way to refer to the inefficiency in management! Let me quote the comment of a commercial bank—

Let me quote yet another source—

I want to quote another economist.

You cannot get past this package.

I have got many more. I can go on for hours. If I am given another hour I shall go on. Safda says: “The conflict between monetary and export policies has been particularly harmful to the South African economy.” The Standard Bank says: “Financing turned out to be far more inflationary than planned.” Even the Reserve Bank talks about having had to regain effective control over the money supply. Volkskas says: “Daar is minder rede om gelukkig te voel oor die loop en bestuur van Staatsfinansies.” Barclays Bank says: “The monetary and fiscal policy has been pulling in opposite directions.” Even people in the hon. the Minister’s own Treasury concede: “Die monetêre owerheid deels te laat opgetree het om die oorverhitte ekonomie af te koel.” The hon. the Minister cannot repudiate those words. Again from his own people we hear: “Die swaai van ’n oorskot tot ’n tekort van R4 miljard op die lopende rekening van die betalingsbalans het ons aimai verras.” Then we hear from the managing director of Sanlam: “Past economic policy has severely limited the options available to the Minister of Finance.” Even the IMF team criticized South Africa’s monetary expansion in the final quarter of last year. Assocom, through its economist, states: “We did not apply the appropriate policies timeously. The result is we now have to apply them more stringently than might otherwise have been the case.” A professor of RAU says: “Die stryd teen inflasie word glad nie gewen nie.”

Those quotations are completely selective. Why do you not read what they said in full?

Rapport says: “Die owerheid het eenvoudig nie die streng monetêre beleid toegepas wat hy gesê het hy wil toepas nie.” Sake-Rapport says: “Om die waarheid te sê, inflaste het ’n swak derde op die prioriteitslys gekom.” The economist of the FCI says: “The monetary authorities took a long time to regain effective control over the money supply.” Then, finally, another one of the hon. the Minister’s favourites from the Sunday Times: “The current Minister of Finance has not learnt as much as he should have from Dr. Diederichs’s mistakes.” The reality of the matter is that it is not a question of not learning from other people’s mistakes; the hon. the Minister has now made new ones. A whole series of new mistakes has been made, and the reality of life is that the worst has not passed.

What has happened is that the hon. the Minister has imposed a budget that gives him a series of options during the current year in terms of which, if necessary, he can impose more burdens on the community. The message that really comes out of the budget is that whatever the hon. the Minister had to do, he has had to do not only because of external circumstances, but also because of the manner in which the Government managed the economy of South Africa, and that is why I have moved my amendment.

Mr. Speaker, to begin with I, too, should like to convey my thanks to certain officials of the department, inter alia Dr. De Loor, Dr. Pretorius, Mr. Odendaal and Mr. Van der Walt. A special word of thanks, too, to Mr. Schickerling, with whom it has been my privilege to co-operate for the past year or so. I wish to give hon. members the assurance that he has rendered outstanding services and that we shall miss him. My sincere congratulations to Mr. Ellis, who is to succeed him. We trust that our co-operation with him will be equally pleasant. I also wish to convey my appreciation to the Departments which, as instructed by the Select Committee on Public Accounts, have in fact introduced a new practice by submitting memoranda on all the votes, so that the discussion thereof may be more meaningful.

The hon. member for Yeoville began by expressing his concern about the turmoil that has occurred in the NP, but I think that at one stage the hon. member for Yeoville was worried that he would lose his position as chief Opposition spokesman on finance. I think he was more worried than we on this side of the House were. As chief spokesman on the Opposition side it is surely expected of the hon. member to analyze and criticize, but any analysis or discussion which is only analytical without also being practical is unbalanced. When we look at the analysis by the hon. member for Yeoville—unfortunately I do not have as much time as he did and I am therefore unable to discuss all the points he raised—it is evident that the majority of the points he raised here were a matter of hindsight and wisdom after the event. That is very easy. I recall that there was an economist in the USA in the late thirties—that was after they had fought their way through a major depression—who said that in future they should try to co-ordinate the budget and the business cycle, so as to co-ordinate the years of scarcity and the years of plenty more effectively with the business cycle. To a very great extent this is what the hon. member for Yeoville asked for today. However, this can only be done if one is clairvoyant, because to predict the business cycle is of course impossible. In the amendment moved by the hon. member he mentions that the Government has failed to pay due regard to the social and political needs of the community and establish new economic priorities in an era of changing political conditions. I had expected the hon. member for Yeoville to tell us what these new priorities should be, but we did not hear from the hon. member what these new priorities should be. We are still waiting expectantly. What I do want to say to the hon. member for Yeoville is that the important changes effected in this country have been effected by the NP, and also that the important changes which are to be effected in this country will also be effected by the NP. As far as the economic policy of this side of the House is concerned, it has been clearly spelt out by the hon. the Prime Minister, and not one occasion but on several occasions. Has the hon. member for Yeoville never heard of the Carlton Conference and the Good Hope Conference? Did the hon. member for Yeoville not take cognizance of what resulted from those conferences? It seems to me as if the hon. member goes through life with his eyes closed.

In the course of his speech the hon. member also said many contradictory things. The hon. member calls for more expenditure with less revenue. How that is to be achieved, only he would know. I want to mention a few of these contradictions. The hon. member mentioned the tax on life assurance. What is wrong with causing a prosperous industry to contribute towards State revenue? I have no fault to find with that. It is a prosperous industry; it is not an industry that is struggling. Indeed, I think they are exceptionally prosperous when I look at the results of their activities. He speaks about gold mines and diamond mines that should not be taxed, but surely every sector has to contribute its share. He also spoke about advertisements which were now being taxed at an inopportune time. What is inopportune about tax on advertisements at this stage? It is beyond me. The hon. member omitted to tell us why it was inopportune at this point. He merely told us it was inopportune. As regards the tax on bioscopes to which he referred, I wonder whether he knows how the small bioscopes in the rural areas, the drive-in theatres, for example, have been hit by the introduction of television services. These small enterprises are barely able to get by, and I think it is appropriate that there should be relief for them.

The hon. member wants more for defence. I do too. I, too, should very much like to have more for defence, but at the same time the hon. member is calling for us to reduce tax.

But they are fighting among each other about defence.

It is very easy to be wise after the event. The hon. member devoted much of his speech to criticism of the hon. the Minister for not having taken certain steps at certain times, but I should like to refer the hon. member to this. I happened to look at a note I made while he was making a speech in 1979. At the time the hon. the Minister submitted a so-called “expansionary budget” and at that state the hon. member for Yeoville said that that was excellent. He agreed with that, but it did not go far enough; the hon. the Minister should have gone much further. That was in 1979.

And now he is complaining.

At the time he said that we should give the economy more life; that we should expand the economy so that all the population groups could benefit.

That is also the time when he came up with the idea of social democracy.

Yes, and it is very easy at this point to say that we went too far.

So it is really your fault, Harry.

In any event, the majority of the debating points which the hon. member has raised have already been dealt with at length by the hon. the Minister in the course of his budget speech. I re-read the speech and I must say it is an outstanding piece of work. The commentary that followered it! For every quotation criticizing the budget which the hon. member for Yeoville can present, I can quote another which praises the budget.

Ten for every one.

I shall come to that in due course.

As far as the question of sales tax is concerned the hon. member says: “it is a silent extraction”, but if it is a silent extraction and no one complains about it, then surely it is a good tax. After all, we always say that one should pluck the goose in such a way as to cause the least noise. After all, it is good taxation if one can do it that way. [Interjections.]

I contend that the hon. the Minister, carefully guided by able officials, has, by dint of clear thinking, wisdom and statemanship, succeeded in giving the nation a budget in the best interests of the nation. I am told—unfortunately I was not able to be there myself—that an economist at one of the conferences on the budget jokingly summed it up as follows—

In one respect he was right on target: It is a budget in the national interest.

Progressive ideas are always in the national interest.

You are never in the national interest.

The budget is in the national interest because its basic point of departure is the protection of the South African economy by consolidation and adjustment of the balance of payments.

In the final few weeks before the budget speech, a spurt of pessimism would be detected among spokesmen for various sectors of the economy, and I was concerned about that. The predictions were that this was to be the most severe budget since the Second World War. The hon. the Minister surprised us all, and I believe that even the hon. member for Yeoville will have to admit that he was surprised by the budget. I should like to refer to comment on the budget in the form of newspaper headlines. Die Burger writes—

Another heading reads—

A heading in Beeld reads—

Beeld goes on to write that this is a tame budget; it surprises businessman. [Interjections.] The Citizen writes—

Even the Cape Times states: “It could have been worse.”

The pessimism about economic prospects is not limited to South Africa alone. A general pessimism prevails abroad and some economists even believe that the West is heading for a depression such as that of the thirties. The list of countries with an unfavourable balance of payments is getting longer, and an acceptable international monetary system hardly exists any more. Nowadays every one’s eyes are on the USA, and everyone hopes that President Reagan’s economic policy will succeed. Everyone hopes that he will cure the ailing American economy so that there may be a revival in international trade. At the moment, however, it seems as if the policy of the President of the USA is beginning to fall into disfavour. While the world economy is beginning to stagnate, more and more countries with balance of payments problems are seeking methods to protect their economies. Protectionism is even beginning to raise its head among the EEC countries, and this, of course, is not in the interests of a revival of international trade. It seems as if there is some degree of panic about the inability to control inflation and the problem of unemployment. As far as I know, there is no country that is able to control inflation and unemployment effectively. Karl Otto Pöhl, the president of the German Bundesbank said 14 days ago—

Referring to his own country, he goes on to say—

Therefore it is not only in South Africa that there has been a sudden swing from a surplus to a deficit. This has also occurred in other Western countries, our trading partners, countries with far more sophisticated economies than ours. Even these people have experienced the problem of a rapid swing from a favourable to an unfavourable balance. He goes on to say—

May I add to that “and certainly not the Republic of South Africa”. No country can afford to live beyond its means. Sometimes, however, it does occur that a country lives beyond its means without wishing to do so. This has happened in Western countries and in South Africa as well. There is therefore no point in the hon. member for Yeoville criticizing the hon. the Minister by saying that he should have done this or that. This kind of thing cannot be predicted. If it could be predicted, the world economy would not be in the situation it is today. I can therefore say with confidence that the basic objective of this budget, viz. the consolidation of the domestic economy and the adjustment of the balance of payments, is correct. South Africa must live within its means. We shall therefore have to make certain adjustments. Steps will have to be taken which will not be popular in all quarters. In prosperous years everyone lives well, but in the difficult years everyone complains, but everyone should also realize that steps must be taken to enable us to enjoy prosperity again in the future. What is important is that we must now make the short-term sacrifices which, in the long term, will mean that we shall be in a position to enjoy the benefits which the upswing—which must occur—will bring with it.

There are certain steps that will have to be taken to achieve our objectives. To begin with, we can consider the problem of our unfavourable balance of payments, which of course stems from the fact that the gold price dropped unpredictably—or was the hon. member for Yeoville perhaps able to predict that?

He knew everything, he just did not want to say so.

If he was able to predict that but did not do so, then he did not do his duty to his fatherland.

You did not listen to what I said before the election.

Perhaps the hon. member for Yeoville will predict it for next year.

As I said, the problem arose due to the fact that the gold price dropped unpredictably and because the momentum of the exceptionally high growth rate of 1980 was such that although the business cycle had already reached its turning point, economic activity is still above normal. The upswing in the economy which was accompanied by excessive liquidity was consumption-oriented. The existing surplus capacity in the manufacturing sector was taken up, and most undertakings initiated programmes for the creation of additional production capacity. These expansion programmes did not come to a standstill immediately as soon as certain negative factors were present in the economy. These expansion programmes proceeded, and relied heavy on imports. They still rely heavily on imports. That explains our high imports, even at this stage. It is gratifying that the latest figures show that the trade deficit for February has dropped to R55,3 million, as against R229,8 million in January. It is to be hoped that this trend will continue.

I am of the opinion that the 10% surcharge which the hon. the Minister announced in the little Budget will assist the process. One’s first reaction when the balance of payments begins to present problems is, of course, to advocate restrictions on imports. It is logical that one should feel that way. In other words, the feeling is that one should introduce import control. I, too, am of the opinion that the Government should investigate selective import control, but then, of course, one comes into conflict with existing international agreements such as the GATT agreement, as well as the broad concept of non-protectionism as advocated by the International Monetary Fund. As far as GATT is concerned, I am not clear in my own mind whether it involves more advantages than disadvantages for us, particularly in the last few years since the EEC came into being. Last year, at a conference of the Co-ordinating Committee of Control Boards, it was asked whether GATT was still to the benefit of the agricultural sector in particular. There were reasonable reservations on this score, and I should like to hear from the hon. the Minister what his point of view is in this regard and whether an in-depth investigation into this matter should not be undertaken.

A further problem connected with the high import factor is of course that South Africa is a developing country with a high demand for capital goods in order to create the necessary production capacity and infrastructure. This is something one would not want to restrict. If the value of the rand cannot be protected by sustained exports at competitive prices, then we shall have to be prepared to review our priorities. The fact we cannot escape is that we must earn what we want to spend. To be able to do that we shall have to produce products of quality at competitive prices; in order to produce competitively, we shall have to keep the inflation rate in check.

The Government has never hesitated to say that it regards the inflation rate as a problem. On every occasion on which the hon. the Minister has introduced a budget or made a speech, he has stressed that. It is not, therefore, a problem with an easy solution. The weakened rate of exchange of the rand against the American dollar and against other important world monetary units as well, does, it is true, place exporters in a stronger competitive position on the international markets, but this is detrimental to domestic inflation. Indeed, there is a conflict of interests in this regard, but I believe that the temporary benefit of a weakened exchange rate does not make up for the detrimental effect of inflation in the long term. The primary aim of this budget is to cause the nation to live within its means and to combat inflation.

Mr. Speaker, at the outset I should like to associate myself with the words of the hon. member for Malmesbury when he thanked and paid tribute to the officials. On behalf of the CP I, too, wish to thank them, as well as those who are about to retire, for their service.

The hon. member for Yeoville moved an amendment this afternoon. The hon. member for Malmesbury has already replied to a number of its aspects, but I think it would be as well if I, too, said something about it. All the hon. member for Yeoville still had to do was to advocate the abolition of all taxes. This is about all he neglected to do.

The hon. member does not wish to pass the budget. I wonder where the State is to find the money to pay its officials, for instance. In the second leg of his amendment, the hon. member says that the budget should not be approved, as the Government has failed to run the economy in an efficient and businesslike manner, as a result of which general economic conditions in the country have deteriorated. It is true that the Government has involved the private sector during the past few years and that in many respects, what the State used to do has been entrusted to the private sector. Is this, then, a crime in the hon. member’s eyes? Was it wrong to do this? I say “No”. This could perhaps be criticized, but I say that it was right.

Then there is the question of the narrowing of the wage gap. They are always pleading for this. However, this is one of the direct causes of inflation. This is one of the direct causes of the economy not functioning as it should, as the narrowing of the wage gap did not give rise to a corresponding productivity in the country. We cannot get away from that. It is true, and the hon. member should not therefore have raised that point.

The third leg of the hon. member’s amendment is—

The only political change which has taken place, is the establishment of the CP, and I want to warn the hon. member for Yeoville: We are going to be sitting in those benches shortly, not they. [Interjections.] The hon. member should realize that today was perhaps his last speech as spokesman for the official Opposition. Directly after the budget on Wednesday, my comment was that it was a conservative budget. I congratulated the hon. the Minister and I also said that in my opinion the hon. the Minister, had underestimated both his revenue and his expenditure. We on this side are going to criticize, but we wish to advance constructive criticism, since our concern is the interests of South Africa and its people. We therefore wish to advance healthy criticism. What is in the interests of South Africa and its people? The hon. the Minister said in his budget speech that if he erred, he would rather err on the conservative side. That is the correct approach. The hon. the Minister would not be making a mistake if he were to err right into these benches!

As far as the underestimation of revenue is concerned, in my opinion there was a slight underestimate. It was nevertheless a conservative estimate. However, I think that the expenditures were underestimated to a greater extent, and therefore the hon. the Minister has in fact budgeted for a deficit. One calls to mind, for instance, what will have to be done for the farming community as a result of the drought conditions. They will have to be granted much more aid in a supplementary budget. Even if more taxes have to be imposed at a later stage, I want to plead that more be done for the farming community, as a terrible disaster has befallen them. Our farmers are saddled with drought conditions, high interest rates and many other difficult circumstances. Loans are becoming increasingly large and they have to be repaid, and if the farmers are not assisted, they cannot produce food for South Africa. I therefore plead today on behalf of our party that they be assisted.

It is claimed that on the Government side they only express thanks, but today we on the Opposition side also thank the hon. the Minister for the generous concessions as far as social pensions are concerned. The pensions of White pensioners are being increased by R16, those of Coloureds and Asians by R12, and those of Blacks by R9 a month. We support these increases and are grateful for them, as well as for the bonuses which will be paid in May and November, viz. R30 for Whites, R24 for Coloureds and Asians and R18 for Black people. However, I wish to say to the hon. the Minister that with the best will in the word, I cannot see why these people have to wait until 1 October for these increases. Today’s old people helped to build South Africa. They experienced hard times, because they never knew the prosperity many of us have experienced. It could be said that there are administrative and other problems, but it is not fair that these people have to wait six months before their pension increases are paid to them. The bonus is a completely different question. We are very grateful for this, as the hon. the Minister was very fair in that respect.

All military pensions are being increased by 15% from 1 April 1982, and if they are being increased from that date, then this can also be done in respect of social pensions. Civil pensions, too, are being increased by 10% from 1 April 1982, plus 1% for every completed year of retirement until 31 March 1982. This is another fine gesture for which we thank the hon. the Minister most sincerely. Now people who receive civil pensions can also become members of official medical funds, if they are not already members. Only a small amount of R5,2 million is involved. However, this is a tremendous help to the people concerned. When someone does not have the money, and becomes ill and has to pay for it, it makes matters very difficult for him.

In this regard, I also think of our aged. They, too, are hard pressed by inflation. Many of them can no longer keep their heads above water. In my constituency, there are many senior citizens—I prefer to refer to them as the aged—who not only cannot get flats—flats have become impossibly expensive for them. Those people just cannot afford them. Many of them even have to give up their flats and go and live in rooms. For instance I have in mind the aged in two old age homes which formerly fell into my constituency. One of them is Harmoniehof, which became part of the Pretoria Central constituency during the previous delimitation. The other old age home is Nebohof. There is a waiting-list of at least 500 names at each of those old age homes. New applicants simply cannot obtain accommodation in those homes. I believe, therefore, that to make them wait another six months for a small increase is not quite fair. I think that the citizens of South Africa, here and elsewhere, would be prepared to pay a small extra amount, even if it is by way of an additional tax, in order to assist those people.

At this point, and in the same breath, so to speak, I wish to discuss the housing shortage in Pretoria with the hon. the Minister. I should like to know what he and the hon. the Minister of Community Development have in mind as regards the provision of further essential housing in Pretoria. We thank the hon. the Minister for the commendable scheme he has already announced. In terms of the scheme announced, one may now write off 2% of the cost of every housing project providing accommodation for five or more families, and may write off a further 10% by way of an initial allowance in the year in which such a scheme is completed. That is all very well, but I still think that we should do more to assist people who are in need of housing.

Now, however, I also with to criticize. It is constructive criticism, however. Inflation is indeed our biggest enemy. My criticism should therefore be seen against the background of a difficult economic situation in South Africa. Low exports and high imports are detrimental to our balance of trade. Furthermore, our economy is, so to speak, constrained in every respect. However, I predict that in the future we are going to discover increasingly what an adverse effect inflation is having on us. Prices have already soared, especially in certain respects. Notwithstanding the general salary increase of 15%, I still wonder whether the time has not come for a thorough investigation into all aspects, the causes and the results of inflation on the economy of the country, and on the standard of living of its citizens. A conference on inflation took place in Johannesburg last year in March. However, I think that that was as far as it got. Nothing further happened.

Therefore, I wish to call upon the Minister to appoint a committee or a commission of experts to study the question of inflation thoroughly. We have various forms of inflation. For instance, there is demand pull inflation, cost pressure inflation, wage inflation, etc. This is, however, a difficult and complex phenomenon. Should one take one specific step to fight inflation, one may thereby be giving rise to 10 other factors which aggravate it. Therefore I would urgently request the hon. the Minister to consider having a proper study made of the question of inflation, in co-operation with the private sector, the various universities and all possible experts. We have already had an inflation year. However, much more could be done to fight inflation effectively.

One of our problems during the past year has been the tremendous increase in the money supply. I wonder whether the hon. the Minister could explain to us what the Government has done, and at what stage, to combat and control the impossible increase in the money supply. I should like the hon. the Minister to tell us, when he replies, what the net bank credit amounted to during the first three quarters of the 1981-’82 financial year, and how much net bank credit was used in each separate quarter to finance State expenditure. I do not have that information. Nevertheless, I believe that that is one of the problems which did crop up. I therefore think that it should be given attention. Too much bank credit was used by the State. If this is not true, I shall be very pleased. However, I should like that information from the hon. the Minister, and I hope that the hon. the Minister will furnish me with it in his reply to this debate.

I now come to education. Education is a very important facet of our society. Accordingly I am pleased that ample provision is being made for education. However, I have a very thorny problem. It concerns the Pretoria Onderwyskollege. I was involved in the matter myself. Twenty years ago, plans were made to establish a campus for the Pretoria Onderwyskollege. This was subsequently done. Tenders were called for and awarded. Contracts were entered into with the contractors and building contractors who drew workmen from across the length and breadth of South Africa. They also imported expensive building material from overseas. Then, all of a sudden, we read in the newspaper one morning that the project had been terminated. We are very sorry about that. The people concerned did not know why the project had been terminated. I do not wish to dwell on this at any length but could the hon. the Minister inform us what is going to happen to that project? I am interested to know. The hon. the Minister does not have to say it across the floor of the House, or even mention it in his reply later. If he could give it to me in private, I should be very pleased. I should like to know what the contract price was, what costs have already been incurred and why the project has been terminated. We accept that there are problems. We know that the State has problems. We know it is not easy. My real question is: When is this project to be resumed? I wish to make an urgent appeal to the hon. the Minister to resume this project. We know that a great deal of money will be lost if this project is not resumed. Are new tenders to be called for, or could the old tenders be proceeded with? However, one thing is very clear. We have to have teachers, we have to have the facilities, and therefore I ask that those facilities be created. If those facilities are provided where land has been set aside for that purpose, we shall most certainly not have a white elephant on our hands as far as the existing college is concerned. Those hostels—there are a number of them—and the number of blocks of flats which were expropriated earlier to obtain residences for students, would become available immediately to the people who are on the waiting list to lease those places. If that project could be proceeded with, it could also afford an indirect solution to our housing shortage in Pretoria.

I am very please that the hon. the Minister of Defence is here. There is just one thing I should like to say to him. I should just like to say across the floor of this House—and the hon. the Minister knows this—that I have had a high regard and great respect for him over the years, and I still do. I should like to keep it that way. I was told that the hon. the Minister is supposed to have said that we broke away because we were frustrated and were not given promotion. Is that true or not? [Interjections.] The hon. the Minister need only say “yes” or “no”, because if it is true, I just want to say something to the hon. the Minister.

Is it true that you broke away because of this?

We differed radically on principle. We differ about a principle. If the hon. the Minister does not know that we broke away because of a principle, he should take cognizance of it now. I wish to continue to hold the hon. the Minister of Defence in high regard. It is his duty to defend South Africa. From this side of the House, we wish to support the hon. the Minister. We want to stand by him. Having said that, I ask him please not to go and tell people that we do not differ on a matter of principle. We are here as a result of a dispute about a matter of principle, but as far as the defence of South Africa is concerned, there is only one South Africa, and we will defend it with everything we have. The fact that we are on this side, makes no difference.

In conclusion, I just want to quote something to the hon. the Minister in English—

[Interjections.] Sir, this is how I see the economy. Whether it is the hon. the Minister, the Government, or the Opposition, or whether it is the private sector that is dealing with it, this economy of ours is a porcupine. No matter from which side you tackle it, its quills are going to prick you. Let us therefore stand together in order to deal with the situation in the best possible way.

Mr. Speaker, you have now listened to this debate and I should like to know whether you can tell me if the CP is in favour of this budget or not. I listened to the hon. member for Sunnyside, and according to him the only political change has been the founding of this new CP and that they will shortly become the official Opposition. It is always a good thing not to set one’s sights too high. Furthermore, the hon. member also referred to the farming community as well as to inflation and during the course of my speech I shall come back to this. However, what really amazed me, was that the hon. member for Sunnyside who has been in this House for many years, should now come forward with the request that social pensions should be paid out with effect from 1 April. I think that even the backbenchers in this House know that this increase takes place with effect from 1 October every year. What would it mean in practice if that payment were now to take place with effect from 1 April? It would mean an increase of 1½ instead of one full increase. It is easy and as simple as that. Furthermore the speech of the hon. member was simply a Committee Stage speech and I want to tell the hon. the leader of the CP that I think he should rather find himself another chief spokesman on finance.

The hon. members of the Opposition have had a great deal to say during the Part Appropriation debate this year and in the Press as well—the hon. member for Yeoville referred to it once again today—on the matter of the Government’s failure to take adequate anti-inflationary measures and the fact that the Government allowed the money supply to become uncontrolled. The hon. member for Amanzimtoti, who I presume is going to speak after me, even called it a “first-aid budget” by means of which the hon. the Minister wanted to save the country from the predicament that it had caused by allowing too much money to be supplied last year. The hon. the Minister has already dealt effectively with this accusation but I should like to quote the opinion of an expert like Prof. G. de Wet of the Department of Economics at RAU with regard to this matter. I quote from Sake-Rapport 14 March 1982 as follows—

Sir, I want to recommend that the hon. members of the Opposition deliberate on these statement by Prof, De Wet before they make any more irresponsible statements.

The level of domestic economic activities during 1981 remained high in sharp contrast to the position that was prevailing in general in the economies of most of South Africa’s trading partners at the time. The real increase in the gross domestic product exceeded 4% whilst the increase in gross domestic expenditure was considerably higher. Therefore, if a critical view is being taken of the current state of affairs in the economy, it must be admitted that as a whole we are still dealing with overheated conditions. Imports are a very barometer of the extent of the domestic monetary demand for goods and services, and this is still being maintained on a level that is too high. The tremendous shortage on the current account of the balance of payments also reflects the degree to which the country has been living beyond its means. We cannot continue to live beyond our means any longer, and that is why financial discipline is the only answer.

Not only must South Africa’s import account be checked; it must indeed be decreased by exercising stricter control over the increase in domestic expenditure. As the international economic situation and the prospects for the gold price can be evaluated at present, a lower import figure is unavoidable if the shortage on the current account of the balance of payments is to be properly dealt with.

To wish for a higher gold price on the short term in order to alleviate this shortfall, would be risky. Indeed, fundamental international economic complications do not predict a favourable position for gold in the foreseeable future. Similarly, the recession in the world economy is warning us clearly that we should not be unrealistic in our expectations of when and how rapidly the country’s export earnings from goods will recover again.

During my Second Reading speech on the Part Appropriation Bill I quoted certain statistics in order to prove how important the gold price is in South Africa, but apparently it made little or no impression on the Opposition, and that is why we are having these representations again today.

I want to refer to these briefly once again in order to indicate how dependent South Africa really is on the gold price. Let us look for a moment at the role that gold plays in the economy. In 1980, when the gold price was at its peak, sales amounted to R10 141 million—more than all the other exports combined. In 1980 it amounted to over R4 000 million more than in 1979, and more than R6 000 million more than in 1978. Tax and lease payments by the gold-mines to the State have increased as follows over the past years: In the year 1977-’78, R466 million; in the year 1978-79, R862 million; in the year 1979-’80, R1 501 million; and in the year 1980-’81, R3 633 million. Therefore it was an increase of 714,5% over a period of three years. This gold bonanza was, in over-simplified terms, equal to a “handout” of R260 for each of the 25 million inhabitants of South Africa. Therefore this windfall of thousands of millions of rands created a moderate upswing in a true boom period. Consequently the message is very clear: Gold is undeniably more important than any other single domestic or foreign economic factor in the South African economy.

At the beginning of this year gold was still being negotiated at just over $400 per ounce, and it was generally expected that the turning point was imminent. However, the downward trend is continuing. It is also a fact that a drop of $10 in the gold price meant a loss of more than R200 million in foreign currency for South Africa. The State also loses more than R100 million in taxation if the drop of $10 takes place over a period of a year. According to the present indications, the State revenue from the gold mines will decrease by no less than 40% during this tax year.

Another factor that gives rise to concern in the mining industry, is the unit labour cost. In general, labour costs in mining represent a much higher percentage of the total production than in most other sectors, and therefore the trend of the unit labour cost is very important. An increase of approximately 19% in the unit cost of production is envisaged for 1982. This means that unless the gold price is 10% higher on average than in 1981, the profit of the gold mines will drop further this year. Indeed, calculations for the first term of 1982, based on known trends, indicate that the profits of the gold mines could show an average drop of more than 10%, calculated on the results of the last term of 1981.

In my Second Reading speech during the Part Appropriation I referred to the gold mine taxation formula according to which the State receives a relatively smaller percentage of the profits of the gold mines when profits drop. It is not necessary for me to elaborate further on this now. The sharp decrease in the gold price and the concomitant increase in labour costs in mining create special problems for the economic policymakers of South Africa.

However, it is not the gold mining industry alone that is experiencing problems. The established diamond industry is also experiencing serious problems. The depression in the mining industry has led to a drop of 45,6% in the earnings of the mighty De Beers Consolidated group in the year that ended on 31 December 1981, to such an extent that De Beers was obliged to lower its dividends by almost a half. This is the first time that this has happened since 1944. De Beers’s taxable profit for the first six months of 1981 shows a drop of 39%. In order to try to maintain stability, De Beers had to stockpile a supply of diamonds for which there was no demand. The result was that the value of its supply of diamonds increased from R705 million to R1 403 million, whilst its cash dropped from R552 million to R224 million. In addition the diamond account itself dropped from R802 million to R360 million in 1981.

A well co-ordinated monetary and fiscal policy package which has as its primary aim achieving a balance between domestic spending and the production ability of the country, is extremely essential. If we do not succeed in achieving this, it means a further depreciation of the rand, an even higher rate of inflation, even higher interest rates, as well as a longer adaptation phase and the disruption that accompanies it in order to place the economy on a sound basis once again.

I want to allege that the budget that is before the House complies fully with the requirements of such a policy package. The budget has made a fool of many prophets of doom. Over the past weeks hon. members of the PFP and the NRP, as well as various economists and businessmen—as my hon. colleague for Malmesbury correctly pointed out—have come forward with particularly pessimistic statements. Most of these statements, however, were wide off the mark. Businessmen and consumers are now in agreement that under the present circumstances, it is a particularly good budget and that it succeeds par excellence in balancing the books of the State without placing too heavy a burden on the average taxpayer.

The hon. the Minister introduced a responsible, balanced, conservative budget which distributed the burden justly and fairly amongst taxpayers and which should achieve its basic objective, viz. to contribute towards a consolidation of the domestic economy and the adjustment of the balance of payments. The budget complies with the most important requirements that are necessary in the present climate. Firstly, the total estimated expenditure is only 11,5% higher than the revised expenditure for 1981-’82. Secondly, the estimated shortfall before loans increased by only 15%, as against the figure for 1981-’82, and this still represents a mere 2,8% of the GDP. Thirdly, provision is being made for the financing of this expected shortfall in such a way that it will not lead to any increase in the money supply. Fourthly, the budget is distributing the burden in a fair, just way by means of increasing GST by 1% and introducing a 10% surcharge on certain imports, which has already been announced in the Part Appropriation. These are indirect taxes that affect a broad spectrum of people. Then there is the increase of 5% in the ad valorem excise duties, chiefly on non-essential goods such as jewellery and fur coats. Then there are higher direct taxes or levies of 10% on companies, including the gold and diamond mines, as well as on the investment revenue of insurance companies. There is also a 5% loan levy at a rate of 8% on income tax payable by individuals, but—and this is very important—it is subject to certain exemptions with regard to the lower income groups and elderly people over 70 years. There are also several concessions that are aimed chiefly at the lower income group, and I just want to mention the most important of these. Social pensions are being increased by R16 per month for Whites, R12 per month for Coloureds and Asians and R9 per month for Blacks. In addition there are also two further bonus payments of R30 each for Whites, R24 for Coloureds and Asians and R18 for Blacks. Military pensions are being adjusted by 15% and civil pensions by 10% plus 1% for every completed year of retirement. Bread subsidies are being increased by R45 million and the first R100 earned from interest and dividends, will in future be tax-free. The introduction of the final PAYE deduction system for persons whose taxable income does not exceed R7 000 per annum, will result in this group of persons paying R109 million less. This is a particularly significant concession to the lower income groups. The allowable deduction from the earnings of working married women is being increased once again by R200 to R1 600 and the taxation on cinema tickets is being eliminated completely. The developers of buildings for rent are also receiving greater tax concessions. This is a very important concession to the benefit of those who are dependent on rented accommodation. Local authorities are also being assisted to the tune of R92 million. The concession that I have just mentioned, amounts to no less than R518,4 million, which is a special achievement under the present circumstances.

A package of improved service conditions is also being offered to the Public Service. The cost of this amounts to the record sum of R800 million. These improvements should contribute a great deal towards relieving the manpower problem in the Public Service. The State also grants financial support to agriculture and here I am referring specifically to the canning industry and the dried fruit industry. Excise duty on unfortified wines and on apple, pear and orange drinks is being done away with and the excise duty on non-alcoholic drinks is being decreased by 1c per litre. Whilst the representations of the S.A. Agricultural Union with regard to poor conditions in some sectors of the agricultural industry are receiving serious attention at the moment, I nevertheless want to ask that the hon. the Minister take interim measures to combat the problems. Due to poor agricultural conditions many farmers will not be able to pay their debt to the agricultural co-operatives which in turn will not be able to pay their debt to the Land Bank. The sum that will have to be transferred in this way, has been calculated at as high as R400 million. Then there is also the financing of the following production season which is estimated at amounting to easily another R500 million. Without this help there will not be a significant harvest next year. At the current high rates of interest many farmers will not see their way clear to borrowing money for the next harvest, particularly after they have already been unable to pay the debt on the previous harvest. Urgent aid from the authorities is therefore essential. This should be in the form of subsidized interest rates and postponing the repayment of debt.

We are grateful that the Government will act as soon as possible after the recommendations of the Jacobs Committee have been received, in order to help to relieve the lot of the numbers of farmers who are threatened by drought. However, apparently it will still take some time before these recommendations can be submitted. That is why I want to make this plea on behalf of the farmers this afternoon.

I also want to ask that in collaboration with the Department of Agriculture and Fisheries and the S.A. Agricultural Union, a thorough drought-aid scheme should be introduced as soon as possible on the longterm so that farmers will be in a position to make provision for difficult years during more favourable times, as had already been recommended by the Jacobs Committee.

There are no grounds for pessimism with regard to the medium and long-term prospects of the South African economy. Indeed, the opposite is true. The aim of the present policy of stabilization is in fact to prepare everything for the next upswing in the economy. In this budget the authorities have followed a comprehensive stabilizing policy which clearly indicates that the authorities will and can do the necessary to combat the poor economic conditions. I have confidence in this policy and therefore I am pleased to support the budget.

Mr. Speaker, like the chief spokesmen on finance of the other parties, I too should like to wish those officials of the department who will be leaving us soon long and happy retirement. I know that it is not an easy task managing the country’s economy and the Government’s financial affairs, especially when one has to deal with some politicians, but I should like these officials to know that their years of loyal service to South Africa are deeply appreciated, certainly by the members of the NRP. We wish them a long and happy retirement and we thank them for their loyal service.

The hon. member for Smithfield said in his speech that I had called the budget a first-aid budget when I responded to it last week. I believe that this is in fact the case. The hon. the Minister has administered certain first-aid measures to the economy. These have already been mentioned and I intend to do so myself as well. I hope the hon. the Minister will be successful and will not find at a later stage that he has to subject the economy to some really drastic surgery.

The hon. member for Smithfield is correct in saying that the public reaction to the budget has been rather favourable. In fact, I go so far as to say that there have been many sighs of relief, because some commentators in the Press were predicting that this was going to be the worst budget since World War II.

Like Harry.

I believe that it is natural that certain people should be breathing sighs of relief. Cynics say that this is an election budget, despite the fact that the hon. the Prime Minister categorically said a week or two ago that there would not be an election this year. However, with the way political life is in South Africa today, we shall just have to wait and see. While this budget is not as bad as some may have expected, I believe it cannot be seen in isolation. I think the hon. the Minister must concede this because, after all, it comes after the 25% increase in the rate of the general sales tax and the additional 10% duty on imports which the hon. the Minister announced when he presented the Part Appropriation Bill a few weeks ago.

Before I elaborate on the budget, I should like to say to the hon. the Minister that there were some pleasant surprises for me in the budget, and may I say that those pleasant surprises came in some of these comments the hon. the Minister made about the need for not only the individuals in South Africa but also the Government to live within their means. This is the language that I like to hear. I was particularly pleased to hear the hon. the Minister quote Franklin D. Roosevelt’s views on the need to live within one’s means, when he spoke way back in 1932 during the great depression, and I believe that this quotation that the hon. the Minister made, bears repeating. Franklin D. Roosevelt said—

The hon. the Minister then added: “That certainly is what we will never allow”. I am very pleased to hear that the hon. the Minister feels that way. This quote came as a surprise to me because these are the exact views that I tried to put to the hon. the Minister during the Part Appropriation debate. I warned then about the dangers of overspending, of the piling up of deficits and of living beyond one’s means. I said that whether it is a nation, a business or the individual that is involved, it makes no difference, because the end-result is, as Roosevelt said, eventual bankruptcy. So I was pleased to hear the hon. the Minister making this quotation, especially after he criticized me during the mini-budget debate for using the word “bankruptcy”, when I warned of the dangers of spending money …

You said South Africa was bankrupt. [Interjections.]

I said, and I quote, my Hansard “we are in the classic downward spiral towards bankruptcy.” Now the hon. the Minister has seen fit to curb Government spending and to cut the deficit before borrowing. He stated the three minimum requirements of the budget to be: Firstly, that government spending should be restricted as much as possible without disrupting the position of the central services; secondly, in order to assist the monetary demand and to prevent undue upward pressure on interest rates the deficit before borrowing should be reduced and, thirdly, that the Exchequer in order to raise the money to meet the deficits before borrowing should not have to go to the banks for credit. I certainly welcome these comments of the hon. the Minister.

It is not very often that an Opposition member compliments the hon. the Minister, but I want to say in all seriousness that by expounding these views, inter alia the need to live within one’s means and also by presenting a budget that pulls the reins tight on Government spending, I believe the hon. the Minister has done a service to South Africa in these very difficult times that is facing not only our country but the whole of the Western World. For that the hon. the Minister is to commended.

We should not forget, however—and this is where the first-aid comes in—that he is merely correcting the problems that, I believe, have resulted from his past mistakes. As I have said earlier, the budget must not be viewed in isolation. The hon. the Minister has raised company taxes by approximately 10% and imposed a 5% loan levy, as has been mentioned, on private incomes. This comes on top of a rise in the rate of the general sales tax and of import duties. These increased taxes, when coupled with increased rail tariffs, Post Office rates and increased fuel bills, I believe is bound to push up the cost of living in South Africa. The inflation rate is going to persist at an unacceptably high level at a time when we are experiencing a continuing fall in the real growth in our gross domestic product.

These facts I believe highlight the most important political problem facing South Africa today, and that is the increasing pressure being brought to bear on the Government as a result of our increasing population and also as a result of the rising aspirations of especially our economically depressed Black and Brown people.

Throughout the last session of Parliament we repeatedly heard of the absolute necessity for our economy to grow at an average rate of 5% a year between now and the turn of the century in order to provide a suitable standard of living for all our people. To give hon. members some idea of what this means, I want to put it that it means we have to create 8 million new jobs between now and the year 2000. That, in turn, means that we have to create 40 000 new jobs every year. If one has to invest, as we do have to, in certain industries as much as R50 000 in order to create one job opportunity, it means that we have to invest something like R400 billion between now and the end of the century, or an average of R20 billion a year. Where does this money come from? It certainly has to come from savings. It has to come from the national product. Therefore it is so essential that we maintain a very high growth rate in our domestic product.

If one studies the hon. the Minister’s statistical review, one finds that over the last 10 years the gross domestic product has only grown by 3,6%. This is very worrying. I am sure the hon. the Minister must realize this. What is even more worrying is that when one studies these figures over the past 10 years one finds that in only two years the growth rate really achieved a high level of nearly 8%. That was in 1974, and again in 1980. It was at a time when this increase in the gross domestic product coincided with the gold boom. For the rest of the period the performance was rather mediocre.

So, while the budget under discussion gives us, I believe, little about which we can blame the hon. the Minister at this time, owing to existing circumstances, I do believe nevertheless that we can criticize him for the Government’s very clear inability to so manage our economy that we will be able to meet these urgent challenges which are going to face South Africa during the last quarter of this century. For this reason I move as a further amendment—

1. (1) bring about the necessary co-ordination of the use of capital resources by the State and para-statal institutions;
2. (2) control the money supply correctly, thereby fuelling inflation;
3. (3) provide much-needed relief to pensioners and the lower income groups; and
4. (4) provide urgently needed leadership and political direction.”.

What is of great concern to me is that when we had within our grasp the financial means to launch a sustained period of truly positive growth in South Africa we seem to have bungled the entire operation. I should venture to say that the profits from gold gave us the means. However, using a term which is the vogue among young people today, we blew it. And boy, did we blow it!

I am sure that the hon. the Minister must accept this today. The problem, I believe, appears to be our inability to control correctly the tremendous inflow of money resulting from the boom in the gold price in a manner in which it can be used to the best advantage in order to achieve the objectives of a sustained growth in our gross domestic product at a desired level, to which I have already referred.

I am not saying that the hon. the Minister has not tried to achieve this objective. The facts, however, clearly show that he has failed miserably. Be that as it may, however, I do believe that the hon. the Minister must start planning now. I am trying to be very positive now. He must begin to plan now in order to ensure that the mistakes of the past are not repeated in the future. I should like to suggest to him that he should now join hands with our banking sector to try to make possible the re-exporting—if I may use that term—in the short term, of excessive liquidity resulting from gold profits during the boom years. I know a number of hon. members have already spoken about it. The hon. member for Yeoville pointed out that the banks had appealed for this. I believe that the hon. the Minister should take cognizance of this fact. He should not only assist in controlling the money supply by sterilizing these profits for a period but he should also do this in order to allow foreign earnings to be derived in the form of interest. That would also enable us to establish a capital pool outside South Africa, which could then be brought back into South Africa in a controlled manner, as and when it is needed in order to fuel our economic growth, for instance at a time when the gold price should drop drastically, as it has during the last few months.

As I have already pointed out, much has of late been said about this idea. Nevertheless, I believe it warrants the serious consideration by the hon. the Minister. It will level out the economic cycle. It will provide better control over the balance of payments, over the money supply and also over interest rates. I wonder whether the hon. the Minister will perhaps see fit to comment on this when he replies later to this debate. I personally would greatly appreciate it.

Another serious problem that arose last year and which upset all the hon. the Minister’s plans for controlling the money supply, was the inability of the Public Debt Commissioners to meet the borrowing needs of the Minister as he had originally planned to finance his deficit before borrowing. The hon. member for Yeoville has already referred to this. As he said, it was expected that there would be something like R1 850 million available to be invested with the Government. Eventually there was a shortfall of nearly R700 million. After all, it was partly due to this shortfall that the hon. the Minister had to resort to the extremely highly inflationary method of borrowing from the Reserve Bank. In my opinion it was a fatal mistake to do this. I wish it could have been avoided. The hon. the Minister says that the shortfall was due to unexpected withdrawals from the Public Debt Commissioners by para-statal institutions, which includes the S.A. Transport Services and the Post Office. If this is the case, then surely there should be some form of centralized financial planning in the public sector which would prevent this from happening? I do not know whether the hon. the Minister is aware of this, but the hon. the Minister of Transport Affairs and hon. members who sit on the Select Committee on the Accounts of the S.A. Transport Services certainly are, that I have often called for a review, as I again did in respect of this year’s S.A. Transport Services budget, of the capital expenditure of the S.A. Transport Services, especially in the light of the overall capital needs of all sectors of our economy in order to achieve the growth in the GDP to which I have referred. I believe that all my worst fears that I have had over the years have now been confirmed as a result of what the hon. the Minister has disclosed to us. I sincerely hope that the hon. the Minister will give hon. members the assurance that the utilization of both the windfall profits resulting from the sale of gold and also funds with the Public Debt Commissioners will be so planned as to ensure a far less violent cyclical pattern to our economic growth.

As I have already said, the proper control of gold windfalls and the funds with the Public Debt Commissioners need proper planning. I should also like to submit that we can no longer afford to waste the opportunities that are presented to us from time to time as we did in 1974 and 1979-’80. The problems facing South Africa today are too urgent. Time is running out on us. We have perhaps 20 years to project our present population of 26 million people into a dynamic, powerful and productive economy which at the turn of the centruy will have 50 million people living in it. It should be an economy where no person will have to rely on hand-outs or subsidies in order to survive, but an economy that will ensure employment for all those who are prepared to work and levels of productivity that will guarantee them a suitable standard of living that not only they but all South Africans can be truly proud of.

I have said that time is running out for South Africa and I believe that this also applies particularly to the problem of finding a political solution for the heterogeneous population that we have here. We can no longer afford to talk past one another, as we often do in this hon. House. We just do not have the time to waste on semantics as may be we had in the past. I believe that now is the time for politicians, and also for political parties, to come clean with the people of South Africa and to tell them in an unequivocal manner what it is that their respective political policies hold out to the electorate. It is for this reason that I welcome the emergence of the Conservative Party. I am sure that if we all do our duty to our people and if we are all true to our respective political philosophies to the extent that we use the opportunities presented to us in this hon. House to state our policies, there will soon be clarity as to what the four parties represented here stand for. In this delicate and urgent time in our history I believe it is incumbent upon each hon. member to show and to explain during debates in this House, firstly, how their party’s policies will meet the rising social, economic and political aspirations of all the diverse groups of peoples who make up South Africa’s total population.

I hope that some of my colleagues will present the NRP’s point of view in this regard at a later stage during this debate. In the second place, I want to ask how these policies respect and protect the dignity and the rights not only of individuals but also of groups; that is to say, how will the individual’s basic human rights be protected and how will the proposed constitutional formulae of the various parties prevent political domination of one group by another? We have four political parties represented in Parliament today. On the right-hand side, politically speaking, there is the new CP whose members, from what I hear and what I read, want to preserve the separatist or segregationist policies of the Verwoerdian philosophy, as we heard earlier today—the 1948 philosophy. Of course, that goes way back to Dr. Malan. Anyway, I want to refer to this as the Verwoerdian apartheid philosophy. Those hon. members are adherents of the traditional apartheid policies of the NP which demand sovereign independence for all racial groups. [Interjections.] If I am not correct in this assessment—the hon. member for Sunnyside told us that they broke away on a matter of principle—then I sincerely hope that during the course of this session the hon. members of that party will certainly enlighten me as well as other hon. members as to how they intend meeting the rising socio-economic and political aspirations of all those people of colour who live in our midst.

On the left hand side of the political spectrum stands the PFP which I believe to be South Africa’s integrationist party. They believe in an open society …

Are you against integration?

… where no recognition whatsoever is given to group rights or ethnic rights. They reject the concept of ethnicity. [Interjections.] They therefore propose a fully integrated political system based on universal suffrage or “one man, one vote” on a common roll. [Interjections.] This, Sir, must lead to majority rule and, because of this, the PFP does not stand for the sharing of power, not at all. [Interjections.] The logical political consequences of the PFP’s constitutional proposals is in fact the transfer of power from a White minority Government to a Black majority Government. [Interjections.] If I am wrong in this assessment of the consequences of PFP policy—and I believe that I am not the only one who holds these views—then I think it is incumbent upon the hon. the Leader of the Opposition or certainly some of the senior members of his party when next they rise in this House to explain and prove to hon. members in this House where I am wrong—that is to say, that their policy is not one of transfer of power. [Interjections.] I should like them to prove that to me. After all, I believe it is the duty of the PFP to show that its proposals will achieve the second prerequisite in respect of a constitution for South Africa which I have mentioned and that is: How will their proposals respect and protect the dignity and the rights of groups in South Africa?

This brings me in the short time I have left to me, to the NP and to my party, the NRP. I believe that my party lies somewhere in the centre of South African politics. [Interjections.] The hon. the Prime Minister appears to be taking the NP along the road of the political philosophy of my party, mainly in regard to the pluralistic policy which is the policy which entrenches group rights in the constitution for all our people. I want to tell hon. members of the PFP that this is the only way in which I have a genuine sharing of power between groups on matters of common concern. The CP rejects totally the entire concept of the sharing of political power and the PFP’s policies are a capitulation to the concept of the majority rule because it seeks a transfer of power to South Africa’s Black majority. [Interjections.] That is the challenge I issue to the PFP. It is no use their laughing at me today. They will have many opportunities to rise and prove me wrong. We in the NRP reject both these concepts, and therefore we reject totally the proposals of the CP and the PFP as well as the proclaimed policy of the NP of apartheid. We all, however, welcome the changing attitudes within the NP, but I believe that the NP has an awful long way to go. After all, the NP is the governing party in South Africa, and therefore the hon. the Prime Minister and his colleagues must stop equivocating and stop vacillating; time is short for South Africa. As I have said before in this House—I am pleased the hon. the Minister of Internal Affairs said it on TV the other night—South African politics today is on the road of narrowing options, and as long as this urgently needed leadership of political direction is not forthcoming from the Government, we in these benches shall not be able to support this measure before the House.

Mr. Speaker, actually today’s debate on the budget is very interesting, because for the first time in many years speakers of the Opposition have something to say which does at least have a little substance. During the past three years they had to try to contrive artificial arguments against an excellent budget which was the result of very sound financial administration on the part of the Government and long-term planning which had come to fruition. Then, quite suddenly, within a few months—I think this is the perspective we must all have on today’s budget—South Africa’s potential income from gold dropped from R10 milliard to perhaps less than R1 milliard this year. Then conditions arose on the international scene which made it impossible for the South African monetary authorities to cushion us any further from these consequences. Certain measures therefore had to be taken and this gave the hon. member for Yeoville in particular the opportunity, for the first time in five years, to arrange a circus for us today. Naturally we cannot agree with everything he said, nor do we share his criticism, but we did sit and listen to a man who was enjoying himself so much, for since had prophesied so many things in the past, a few of them have at last come true. Today he was therefore able to make a different kind of speech.

Where is he now?

I think he enjoyed himself so much that he has now left the House entirely.

In his absence I want to comment on a few of the things he said in criticism of the budget which I feel were unfair. In the first place he said “the timing of the down-turn was unfortunate” as if it were possible for the Government to choose a better time. If he had been here I could have asked him if there is ever a time in the economic history of the country in which a “down-turn” can be preferred. Surely there is no such thing. Whenever there is a down-turn in the economy there is always an excellent reason to feel that the down-turn was inopportune and was causing unnecessary harm.

He again brought up what I should like to refer to as a “hardy annual”. This is the separate taxation of married women. One can never be absolutely dogmatic about this, but there is one aspect he always forgets when he debates the taxation of married women, and this is the following: When one considers the total taxable income one can get from private individuals, one comes to the conclusion, taking into consideration the entire income requirements you have, that you can get a certain amount from individuals. Once one has decided on the percentage of the whole you can get from individuals, you must decide how much you can get from a taxable unit. Up to now we have always seen the family as the taxable unit and in the taxation pattern a specific value was attached to this. This means that if the wife is removed from the total taxation package and the taxation unit is therefore changed, the shift is to where the tax must come from, will take place within that specific taxation package. Naturally female tax-payers will then pay less tax within that taxation package, and the male tax-payer will have to pay more because the total package must of course remain the same. After all, the hon. member for Yeoville is not stupid when it comes to this sort of thing. Why does he not, once and for all now, give us his view of the total taxation package which must come from private individuals? Then we shall be able to ascertain what his specific philosophy is. As surely as we are sitting here today, if the wife is to be taxed separately, the husband will have to be taxed more to keep the total package from individual taxation unchanged. Surely we are not discriminating against wives by taxing them in this way. This is merely the way our taxation philosophy works.

The hon. member for Yeoville made an unnecessarily acrimonious remark about the hon. the Minister of Finance by suggesting that the hon. the Minister was kicking the gold-mines when they were down. I think this is unfair. If the hon. member had listened carefully to the hon. the Minister’s budget speech, he would have understood his motivation quite clearly. I think it was quite fair. The hon. the Minister said that in these difficult times in which marginal mines would develop and greater demands will consequently be made on the Treasury, it would be necessary for those gold-mines that were still producing profitably, to contribute in order to help the marginal mines. I think that is only fair. Surely there is nothing mean about this. It is therefore totally unfounded to allege that the mines are being kicked when they are down.

The hon. member for Yeoville also raised another of his hardy annuals here, i.e. sales tax. I think tax experts in South Africa are all agreed that the introduction of general sales tax was one of the best developments in the history of taxation in South Africa. It is a fair tax; it is easy to collect; it is a tax without prejudice and in addition it meets all the basic requirements of taxation. If sales tax is levied on goods on which a special levy already exists, it only means that that specific commodity can bear a certain percentage of tax, and whether it is imposed in the form of excise duty, a levy, or whatever form, including a portion of general sales tax, makes no difference. If we had another tax combination, a specific commodity would still have to be taxed by that specific percentage. I think it is unfair that the hon. member is waging this campaign against general sales tax.

The hon. member also had a great deal to say about company tax. The fact of the matter is that during the past two years a slow shift has begun to take place, after the Government achieved a great deal of success with its monetary policy, particularly the policy in respect of the exchange rate on the one hand and the money supply on the other. However, something very important has happened now in that the accent has now shifted from monetary policy to fiscal policy. Why has the Government found it necessary in the case of company tax to tax rather than to borrow? The answer is quite simple. When one draws up a budget one reaches a stage where one has to decide that one cannot borrow any more money. The hon. the Minister reached that point in the budget and decided that in order to generate further income he was unable to borrow any more money, not even from companies. For that reason he had to resort to levying a specific tax. This does not mean that this will always be the case. During the past few years we have had a reduction in taxation. Surely it is only logical therefore that the hon. the Minister can change these aspects of policy, as far as fiscal measures are concerned, when matters improve.

The hon. member for Yeoville once again said something, the real danger of which he did not realize. He said that the hon. the Minister should reduce inflation. During the past few years the hon. member has constantly accused the hon. Minister of being responsible for inflation. Apart from the fact that this is not true, it also an extremely dangerous thing to say, because the combating of inflation requires a partnership between the authorities, the private sector and the individual worker, the individual citizen of South Africa. Without a partnership consisting of those three elements, we shall never be able to fight inflation in this country. I should therefore like to put a question to that hon. member now. If he believes that the hon. the Minister must and can fight inflation, he must please come forward with the necessary law to make this possible. Instead of rattling off a long list of criticisms, he must tell us what fiscal or monetary measures he feels will be able to fight inflation.

This brings me to a point I should like to make about inflation. In South Africa our inflation rate for various reasons, has a large and hard-core labour cost input. We need only look at the OECD countries. They also find that virtually half of their industrial costs consist of a labour component. In South Africa this is even worse, and there are a great many good reasons for this. I think South Africa is the best example of a combination of a First and Third World country. The other day I heard something very interesting from someone from the Bureau for Economic Research of the University of Stellenbosch. He told me that our inflation problem in South Africa is aggravated by two races that, as far as labour is concerned, are being run simultaneously. In the first place there are too many unskilled labourers chasing too few unskilled and semiskilled job opportunities. This is one race which is creating a tremendous problem in South Africa. In the second place there is the race in which too few skilled people are involved, in other words in which too many employment opportunities are chasing too few highly skilled people. These two races which are in progress in our economy, have a very specific impact on it.

As far as skilled and unskilled labourers are concerned, this means—and we have discussed this frequently in this House—that we are dealing with Third World people who still have what is basically a Third World culture, in which the free enterprise system is an alien transplant. In Eastern countries, for example, it is a basic motivation to participate in the system and to work flat out every day, not merely to work for a specific number of hours, or to earn enough money over a certain period to be able to do something else. There it has become part of the culture to be fully absorbed into the free enterprise system. If we cannot bring this kind of approach home to our semi-skilled and unskilled labourers we are in trouble.

However, we also have a social obligation, as well as a counter-revolutionary campaign in which we are involved. We want to narrow the wage gap by means of a deliberate policy. Unfortunately it is true that this does not go hand in hand with an increase in productivity. That massive labour input of semiskilled and unskilled people, who are in addition buying for a small number of posts, is a tremendously large input in our inflation situation.

Let us now, on the other hand, consider the skilled labourers. Perhaps this was even better illustrated a few years ago, but there is no doubt that a top-notch manager entering the market today can virtually write his own salary cheque. The other day I was talking to someone in the advertising industry. Recently a company recruited a person at a salary of R20 000 per annum, but before that person could be appointed, he received two further offers. The second offer, which he eventually accepted, was R36 000 per annum. If there are too few skilled people to satisfy this tremendous demand for skilled or managerial staff, one gets this kind of salary inflation, and someone has to pay for it. The person who has to pay for it is the person who eventually pays for that particular commodity. So when we speak of inflation in South Africa, we must undoubtedly do so in an extremely responsible way. One really cannot then understand how a responsible member of this House, with a view to political gain, can continue year after year, to lay the sole blame for this terrible problem at the door of the Government. I do not think it is fair, because as far as inflation is concerned, we in South Africa have a painful structural problem.

We are also very sensitive to all kinds of other things. As a result of the tremendous overnight increase in the money supply, a huge wave of demand inflation appeared. If there is a strong cost inflation and a small upswing also occurs which stimulates demand inflation, one has the problems we are experiencing at present in South Africa. Let us make no mistake: If we cannot succeed in reducing our inflation rate by increasing productivity and improving training, I think we will have problems in future.

If we now consider the budget before this House, two basic questions arise. The first is whether the budget represents a reasonable package of fiscal and monetary measures which will give us a chance to resolve the problems in our economy. I referred to our structural labour problem which is such a tremendously high cost-input in our inflation, and bearing this in mind I think, if we consider the amounts appropriated in the budget in respect of manpower and the public awareness of this problem, we have to say that as far as manpower training and education are concerned, the Government is taking fair and reasonable steps to solve the structural problems of inflation. They cannot be solved overnight, but since the Government has increased the amounts appropriated under the specific two Votes so tremendously, under difficult conditions, I think we are moving in the right direction. Since we now have a levelling off and the demand for skilled people has diminished slightly, companies have the opportunity to invest more money or to pay more attention to the training of their staff and to increase managerial expertise by means of training. When the upswing comes, people will be ready to utilize it to the full. I think we can expect the hon. members of the Opposition parties to give us a more scientific, fairer and more correct analysis of our inflation problems in future and to make proposals in this connection in the debate in a fairer way.

The question we must ask ourselves is how we are going to recover. In our case economic recovery can only come from three sources. We can have a revival by means of consumer spending, we can have a recovery by means of State spending and we can have a recovery by means of an upturn in our exports. It is fairly difficult to prophesy that these three possibilities will give us hopes of revival in the near future. We shall therefore have sufficient time to consolidate, to stock up and to prepare ourselves properly so that we can ride the next wave more successfully. We also learned a great deal. This is probably the first time in the history of our country that our monetary authorities have had so many problems with the money supply. I think a great deal of good will come from this which will enable us to iron out the peaks in the graph a little more in the future.

I should just like to say something about State expenditure. I think it may be said that under the guidance of the hon. the Prime Minister the Government has taken every possible step to curtail State expenditure. Surely nothing more can be done in this regard. In this manner revenue needs have certainly been cut to a bare minimum. That is why the taxpayer got off fairly lightly as far as the budget was concerned. It was not half as bad as many people thought it would have to be.

We are experiencing serious problems in the field of exports. If we do not increase our productivity in future so that we can compete effectively on the overseas market, we shall have problems. We cannot live in isolation. That is impossible. We must export our goods and we must do so in such a way that we can compete with other countries. Our productivity in South Africa is pathetic and there are no measures we can adopt in this House to improve it if a general feeling does not arise throughout South Africa that we should make ourselves competitive on the international market by means of hard work.

In this regard I should like to say something about our minerals and raw materials. We must take care that they do not become a curse to us in South Africa and we must investigate the utilization of these resources very thoroughly. Is it not true that the countries which are flourishing on the international market today are those countries with few, if any, minerals, but where the people work hard? Just think of Japan, Taiwan, Korea or Singapore. They do not have any raw materials and yet they are on the crest of prosperity. Why? Because they realized that they had to work. I believe that we have reached the stage in this country where we must guard against the tremendous security most of us feel and the fact that we think we have great mineral wealth which will help us through the difficult times, do not become a curse to us. As a matter of fact, I think it is time we at least took a very serious look at the improvement of our processing methods. If we did this, it would enable us, in circumstances such as those we are at present experiencing, i.e. where the prices of our minerals and raw materials have dropped, to place processed or semi-processed products on the world market. Then we would have some latitude and we would be able to maintain a more uniform business cycle. However, if the private sector merely sits back and waits for the Government or foreigners to undertake the development of our minerals, we are looking for trouble. We definitely cannot go forward to meet the future in this way.

A final word on interest rates, to which I also referred in previous debates. An important point we must bear in mind is that high interest rates have come to stay in South Africa as long as the inflation rate is high. Our real interest rates must remain positive, and to bring them down we must bring down what is causing interest rates to rise, namely our inflation rate. Here we are facing a very dangerous situation, and I want to quote what The Economist of 13 March had to say about high interest rates—

This is very important. The current high interest rates are supposed to be of such a remedial nature that we can have a revival and that when we have a revival the interest rates will drop again. However, the interest rates can also cause a total collapse or slump, and many people fear this, particularly in the USA, where they are having a very serious effect.

A final word on the question of inflation. A drop in the inflation rate as such is not sufficient. We must not merely aim at bringing about a drop in the inflation rate. If the inflation rate and the demand both drop, it means nothing. However, if the inflation rate drops while the demand remains the same and our economy remains viable, we are making good progress. This is the kind of inflation we are looking for, and we can only achieve this by putting our shoulders to the wheel and utilizing the raw materials with which we are so richly endowed.

Mr. Speaker, fortunately the hon. member for Florida made a couple of points at the end of his speech on which, I believe, we in these benches can agree with him. I fully agree with the point that he made in regard to our mineral resources in South Africa. We certainly need to protect them, but we should certainly not rely on them for our future economic welfare.

Secondly, the hon. member mentioned the close connection between the interest and the inflation rates. I agree with the point that he made, namely that interest rates will not and should not come down until such time as the inflation rate drops to an equivalent extent.

The hon. member also made some rather sycophantic noises about the Government’s highly successful monetary policy. I think the hon. member for Yeoville demonstrated—and I shall also try to do so—that it has been anything but successful. He then attacked the hon. member for Yeoville in connection with his remarks in regard to inflation, and he suggested that neither the hon. the Minister nor the Government was at all to blame for inflation and that basically they had very little to do with it. This is, of course, nonsense. We are well aware that in the United Kingdom and in the USA the inflation rate has dropped materially over the past few years.

And unemployment?

This drop was directly due to the policies of the Conservative Government and the Reagan Government.

And they have record unemployment.

Unemployment was certainly very, very high. We do, however, also have that same high unemployment in this country. We have it on top of our high inflation rate. [Interjections.] That certainly goes without saying.

The hon. member for Amanzimtoti also moved an amendment. In his amendment we find nothing with which we can argue. We go along with it. It does not give us a problem. In fact, most of the points in his amendment were made by the hon. member for Yeoville. What does perhaps cause us a little bit of a problem are certain remarks the hon. member for Amanzimtoti made in terms of integration. Yes, we are a party that believe in integration. We do not hide that at all. We proudly proclaim it indeed. We see it quite clearly that there are only two alternatives. One either believes in integration or one believes in apartheid, because if one does not believe in integration one obviously believes in separation. Separation, obviously, is apartheid.

Have you ever heard of local option?

Yes, I have indeed heard of local option. I do not consider it local option, however, when in the first instance one needs a two-third majority, and in the second instance, having obtained that two-third majority, it is still not carried out until the local authority agrees. I do not believe that is local option at all.

It sounds to me like local veto. [Interjections.]

Finally, the CP made its début in an economic debate. I noticed that hon. members on the Government side smiled with pleasure when the hon. member for Sunnyside introduced the thought that very shortly that party would be the official Opposition.

Hear, hear! [Interjections.]

Hon. members on the Government side smiled with anticipation at the thought of the CP becoming the official Opposition. I do want to warn them, however, that if that happens it will happen for one reason only. That reason is that there will then have been many more defections from the NP ranks to the benches of the CP. That is the only way in which, within a short period of time, the CP could become the official Opposition.

You know everything about defections, do you not? [Interjections.]

I suggest hon. members on the Government side do not smile so happily at that thought. [Interjections.]

When one looks at the budget one has to look at it certainly as somewhat of an anticlimax. The events that have gone before, and the events that are still to come, are of such much greater importance that this budget really becomes the calm of the eye in the centre of a hurricane. The pre-events, I believe I should talk about right at the outset, have all been very obvious to anybody who is interested in the South African economy. We all know that we had a tremendous boom in 1980 and in 1981. This boom was caused to quite a large extent by the great gold bonanza. It had very little to do with the hon. the Minister’s policies because we were only beginning on a slight increase until the tremendous increase in the gold price came about. Only then was there a real takeoff in the economy of South Africa. Only then did money flood into South Africa at an unprecedented rate. The hon. the Minister’s bottle, to which he referred in his budget speech, was neither half full nor half empty; it was simply overflowing. We were awash with money within South Africa.

What happened? Interest rates dropped until, in real terms, investing money was an expensive luxury. One actually lost on every investment one made in terms of fixed interest rates. The rate of interest on deposits—and this is where the hon. member for Florida comes into the picture—was well below the inflation rate. In any normal society the bottle would have been allowed to overflow, but not in this society, which is obsessed with siege politics and with the so-called total onslaught. Instead of allowing the bottle to overflow, we put a stopper in it, and we continued to prohibit currency to leave South Africa. This decision is really a major cause of what happened in the Part Appropriation and in the budget which we are discussing now. This decision must bear the major part of the blame for our current economic situation. The results of too much money being bottled into the system were inevitable. Firstly, we had dropping interest rates. Secondly, we had expanded credit facilities. Thirdly, and as a result of this, we had too much money chasing too few goods. The inevitable result was inflation par excellence. Production facilities could not cope with the demand and therefore we had runaway imports. If one cannot fulfil one’s demand from one’s local sources, what does one do? One immediately imports additional goods and those goods have to be paid for. Ultimately the moment of truth had to come and the result was exaggerated by the gold price which had now started falling and which had continued to fall. Thank goodness, it was accompanied by a dropping oil price. Then we suddenly found ourselves with a tremendous balance of payments deficit. The current account of the balance of payments was a great problem and we had a fast depreciating rand. The hon. the Minister, as the hon. the member for Yeoville said, had painted himself and the whole of South Africa into a corner. This budget, in the circumstances, was inevitable. Indeed, it could well have been worse. I think that when in due course we hear the reply to the Second Reading debate and the hon. the Minister trots out all those cuttings that he has there and he continues to tell us about how wonderfully everybody has accepted this budget, we should realize the basic fact that the hon. the Minister had painted himself into that corner and that this budget was inevitable. In the circumstances everybody could say that that budget was reasonable, but what were the circumstances and why had they come about? I hope that the hon. the Minister has learnt a lesson from this debacle. We live in a constantly changing political world and we must adapt our economic policies accordingly. We still need to drastically overhaul our foreign currency policy. For example, right now, if we were not so restricted, we could possibly be attracting an inflow of foreign funds from countries with lower interest rates than those that apply in this country, thus helping our balance of payments and our weakening rand. But I wonder whether the hon. the Minister will even consider that. We need to bring about these economic changes in this particular period of time and in the future because of the changing political environment. We obviously need to bring about a situation where home ownership is allowed to all South Africans. We also need to bring about a situation where we open the central business districts to all South Africans. Thirdly, we need to bring about a situation where we open our suburban shopping areas, but this Government is blinkered in terms of these changes that should come about. In passing, I should like to say that it interests me that we are often scornful of Great Britain’s economic situation and labour unrest, yet the hon. the Minister of Finance fails to tell us that today the value of the rand is lower against the pound than it has been for many, many years.

The second pre-budget event was, of course, the Part Appropriation Bill. In that Bill general sales tax was increased by 25% and the import surcharge was pushed up by 10%. Now we come to this budget with a 10% rise in company tax and an increased payment by the individual taxpayer of 5%. If this whole package had been put together in one budget, South Africa would have reeled under the shock. But the hon. the Minister was very clever. Had he administered all these shocks in one fell swoop, there would have been tremendous outcries, but what has actually happened is that he gave us a push with the Part Appropriation Bill and, while we were still trying to recover our balance, he gave us a good, hefty boot with the budget and, fortunately for himself, he has been able to overcome the worst effects of the policies of this Government.

There is a further factor which has not to any large extent been mentioned in this debate—I have spoken repeatedly on this subject in this House—and that is the fiscal drag caused by inflation. Of course, we are told, and we were told in the past, that our inflation is largely imported, but I think we should note now that our inflation rate is higher than that of either Great Britain or the United States. Without the increased taxation our revenue is estimated to rise by R1 127 million aginst a drop in the gold price which could cost the country approximately R1,6 billion in revenue. I am working on a drop of approximately $150. That amount of R1 127 million plus the amount of R1,6 billion is primarily the result of fiscal drag. I think that one of the key questions we have to put to the hon. the Minister in this debate is on what estimated price for gold he has based his revenue budget. Obviously, he had to base it on some figure or other. He had to look into his crystal ball, he had to arrive at a price and say that that is the price that we are going to base our revenue on. I would very much like to know what that price was. It would appear to have been something of the order of $300 per fine ounce. If in fact the average is $400 then the additional income would have been R1,1 billion and we could then have done without the increase in GST and company tax which is now, I think, the highest it has ever been.

Will you tell me what your view is in regard to the gold price? I have not heard it yet.

Mr.

Speaker, my view is that in the long term the gold price will rise.

What should we base it on for the next 12 months?

Mr. Speaker, if the hon. the Minister would like to surrender his portolio to me for the next 12 months …

No, I want to know. You are criticizing me.

I would suggest that the hon. the Minister would have to base it conservatively because it is too important a matter to take lightly. It must be done conservatively.

What would it be?

What I am asking the hon. the Minister is not what I think it should be but what he actually decided that it would be.

But you are criticizing me.

What I think in these circumstances pales into insignificance in comparison with what the hon. the Minister thinks. That is why I am asking him what price he is basing it on. I want to come back to the question of company tax. I believe that this tax is the highest it has ever been in the history of South Africa and this is a fact which I do not think has been made enough of. Of course, we have in the past had loan levies which pushed it higher. For instance, during the war years we had certain extraordinary levies that pushed it higher from time to time and which affected different companies on a different basis. However, I do not believe that the tax on ordinary companies—I am not now referring to mining companies—has ever been higher than that now imposed by the hon. the Minister. I believe that this is a retrograde step in a country that is trying to encourage small business development. I think it is particularly a retrograde step at a stage when those small business ventures are struggling with high interest rates and liquidity problems. This is additional direct tax. It is not even a loan levy. We also note that the 5% tax previously imposed has now after 11 years also become part of the basic tax rate. Small business ventures are vital to South Africa in our changing political climate and a stronger middle class is a necessity. I believe that this 10% imposition is going to hamper the economy of the country, particularly developing small business ventures, and that it will make ultimate political solutions more difficult.

I want to come now to the question of personal tax which, on the face of it, is being increased by a 5% loan levy. However, what is the real increase after fiscal drag has taken its toll? In this regard I am indebted to Business Argus of 27 March, last Saturday, for the following examples. If one looks at these examples, one finds that if a husband earned R600 and his wife R400 in 1981-’82, their total tax payable was R928. If they then had a 15% increase in salary—an increase equivalent to the inflation rate—their tax would rise by 22,4%. In the case of a man earning R1 000 and his wife R500 per month, the tax would increase by no less than 33,6%; and in the case of a man earning R1 666 and his wife R833 per month, the tax would increase by 32,2%. What is the result of all this? In this regard I want once again to quote from this same Business Argus, as follows—

This is one of the problems that we have in regard to this particular budget. This budget means a tightening of the belt. What is the alternative? I want to say here that I acknowledge the strenuous efforts of the hon. the Minister in restricting expenditure. With the colleagues he has in this Cabinet, that must have been a very difficult job but, like Oliver Twist, I believe there should have been more. The hon. the Minister himself has acknowledged an increase of 14,9% which is slightly higher than the inflation rate. I believe it is time that the Government tightened its belt. Let me give some examples of this. Let us look at land consolidation for which R64 million is set aside. In terms of the policies of the Government this is a very small amount. It does not begin to cope with the necessity of paying people out for land in terms of Government policy, but we should rather have a policy in terms of which, instead of their becoming independent homelands, they should become federal States which would certainly not give rise to the necessity of buying people out from those States and therefore save us large sums of money.

There are two further items I should like to touch upon in relation to the actual budget presented by the hon. the Minister. The first is the bread subsidy. If we look at page 16 of the typed speech which the hon. the Minister was kind enough to circulate, we see that in effect and despite inflation the Government will be spending less money in this coming year than it did in the past year—only marginally less though, but nevertheless less—on the subsidy on bread, and this in a situation, as we have said, of inflation. In real terms it means that the Government is spending 15% less, or more than 15% less on subsidizing bread, one of our basic foodstuffs. They have reduced the subsidy on white bread to only 5%. If we are going to reduce it that far, why not cut it out altogether? The effect of 5% subsidy on white bread is absolutely minimal, and I would certainly rather see that 5% which the hon. the Minister is putting on to white bread utilized on brown bread. Let us have one product that really is remarkably inexpensive in South Africa so that the many, many poor people know that they can buy it at a very reduced rate.

The other point I should like to make with the hon. the Minister relates to tobacco farmers where he has suggested that there might be assistance to affected producers of tobacco. I hardly believe that tobacco is a staple diet of South Africa. I cannot believe that it is important to the economy of South Africa that we should produce tobacco. Certainly I do not believe that the ordinary taxpayer should be asked to subsidize the production of tobacco.

They pay excise duty.

I do not mind what they pay in excise duty; it is a pernicious habit.

But I do.

What I want to tell the hon. the Minister is that I would be in favour of seeing him pay subsidies to tobacco farmers to get out of the tobacco business.

But you are a hater of farmers.

The hon. the Minister of Finance should use that money to encourage the tobacco farmers to produce something of greater use. The hon. the Minister of Transport Affairs himself went out of dairy farming because the situation in dairy products was so bad.

The last item that I wanted to discuss was inflation, but unfortunately the time that I had available to me is running out. In conclusion I support the amendment of the hon. member for Yeoville.

Mr. Speaker, the hon. member for Florida indicated here in the House in no uncertain terms which factors fan inflation, and we had hoped that the hon. member for Port Elizabeth Central would accept these because they had been spelled out so clearly for him. However, apparently this has not been the case, and as far as this is concerned, he remains ignorant and stubborn. As far as this is concerned, I shall leave him at that.

He also referred to foreign loans that are not being used by the Government to supplement the shortage on the balance of payments at the moment. It seems as if he did not take note of the various budgets that have been before the House over the past years. It seems to me that it is largely a question of ignorance here because it appears that he does not understand that repayments of foreign loans are also subject to the prevailing exchange rate fluctuations which means in effect that the price of repaying them remains high. Later on I shall deal with the other factors to which the hon. member referred and which had an influence on the budget. Experience, a sense of responsibility and financial skill have once again saved South Africa in the financial sphere. The sense of responsibility with which the hon. the Minister of Finance handled the budget is a characteristic of the solid, thorough advance planning where the experience gained over a period of years becomes apparent.

One sometimes wonders with a feeling of oppression what the position would be if the PFP were to come into power and suddenly had to draw up a budget in a financial climate like the one which we are experiencing at the moment. I think it would be catastrophic. In this regard I want to refer to statements by members of the Opposition. I have a great deal of respect for the financial knowledge of the hon. member for Yeoville. He has the knowledge of the entire financial world at his disposal, but when he debates financial matters in the House, he always tries to make political capital out of it. With all his smooth talk and distinctive vocabulary he could soon plunge the country into a financial dilemma because superficial listeners could easily agree with him that the budget is a chaotic fusion of unrealistic financial data. He very rapidly creates the impression—the hon. member for Port Elizabeth Central also tried to do so—that the hon. the Minister has submitted a poor budget. This problem lies in the fact that the hon. members have simply not succeeded in convincing themselves that their arguments are valid; they are also succeeding in including part of the Press in their views. That is not all. They are confusing the man in the street and are even succeeding in convincing some people that it is indeed a poor budget.

Let us look at what the hon. member for Yeoville said. Last Wednesday that hon. member said that he was having some difficulty with the hon. the Minister’s explanation that factors in the world economy were largely responsible for the poor state of the economy in South Africa. He asked: “Can everything simply be ascribed to factors abroad, or is there possibly something wrong with the administration of the finances of the country?” This is exactly the same standpoint that the hon. member adopted during the little budget. The hon. member is repeatedly making the unqualified statement that there has been poor administration of our finances. I have already said in my speech during the Part Appropriation that we reject these insinuations with contempt. This continual conjuring up of spectres with regard to poor administration not only puts the hon. the Minister of Finance in a difficult position—he is a public, political figure and he can withstand the onslaughts—but it puts the officials in a difficult position too. I reject the insinuations with regard to the officials who work on the budget. I reject these insinuations with absolute contempt. The undoubted good faith of the officials must not be dragged through the mire by the hon. member and those who share his views. The nights that are spent working at solving our financial issues, must be recognized and appreciated. We on this side of the House want to say thank you to the Director-General of Finance, the Treasury, the Department of Customs and Excise, the Department of Inland Revenue, the Reserve Bank, as well as to all those officials who have been involved in the budget, for their continued, dedicated work. We see it and we appreciate it.

The hon. member for Yeoville questioned the influence of foreign factors on this budget. However, I want to ask him whether the decline in the gold price is due to poor administration. Should the decline in the gold price not be ascribed to external factors such as the continued sale of gold supplies by the Arab countries, inter alia? Do we have domestic control over the gold price? However, that hon. member will also know that the hon. the Minister has always adopted the standpoint that we should not build our economy as a whole on a high gold price. This has always been his standpoint.

However, let us go further. The fact that the entire Western world, particularly our trading partners, is caught up in a serious world recession, must surely have had an influence on our exports. Therefore, when we were experiencing the boom period, i.e. between 1979 and 1981, we were able to export and we had to export at that time too, but during that period we had the problem of an inadequate demand for export goods to the countries in question. The unprecedented growth did of course result in a demand for imported goods. It offered our trading partners and other importing countries a golden opportunity for disposing of their products. The obvious result was a considerable shift in our balance of trade position, which of course had an aggravating influence on our balance of payments. It was an influence that assumed alarming proportions. From a surplus of R2,8 billion in 1980 there was a switch to a deficit of R4 billion in 1981. This represents a turnaround of nearly R7 billion during this period. This process, which is gaining momentum, must be arrested, and therefore I welcome the surcharge levy—and I think everyone in this House welcomes it too—which was announced in the Part Appropriation, as well as the increase in the ad valorem duties of 5% on less essential goods. Hopefully this will result in fewer luxuries forming part of our spending pattern. I really want to express the hope that this will be the case in future. I want to repeat that it is chiefly external factors that have exerted an influence on the levelling-off in the economy, and I therefore reject the hon. member for Yeoville’s reprehensible statements and insinuations that there is something wrong with the current administration of our budget. This is not to South Africa’s benefit.

Various speakers have already referred to the influence of certain increases announced by the hon. the Minister in the budget speech. This incorporated a sense of balance into the budget, a balance that removed the sting from the decelerating economic position. The early announcement of the increase of 1% in general sales tax, as well as the surcharge levy, is not being welcomed by trade and industry alone. I believe that the man in the street welcomes it too.

The next matter that I want to deal with, is the serious attitude that the Government displays towards education in South Africa. This is reflected in this budget. In spite of the curtailment in Government expenditure the Government has seen the necessity of education as a long-term investment in the essential increase of the standards of living. This year R3,16 milliard is being budgeted for education for all population groups. This is 150% more than it was five years ago. The people concerned must take note of this fact. These are figures that cannot simply be ignored. Education remains one of the highest priorities of the Government. We realize that education is not only the source of effectiveness of the skilled manpower position in the country, but that it is also at the root of the healthy building up and general and spiritual forming of every nation. If we fail to provide adequate, orderly education that must remain linked to the national character of every population group, we are going to allow the backbone, the identity, of the various peoples and groups to be lost. This would amount to genocide. This Government does not want to be guilty of that.

As far as the budget is concerned, I want to conclude by expressing my gratitude towards the hon. the Minister of Finance, on behalf of the local authorities. I want to convey my thanks to him on behalf of Pretoria in particular for the increased contribution on the part of the Government towards property taxation. The additional R14 million increases the allocation received from the Government to R43,6 million. As far as Pretoria is concerned, the City Council thought fit to return the first allocation to the landowner, the tax-payer, in the form of a decrease in property tax. However, I have my reservations about whether it will still be possible this year. If Pretoria needs this increased allocation this year in order to render or to improve other essential services, I feel confident enough to ask the residents of Pretoria to allow the City Council to use the allocation in another way apart from decreasing property tax on this occasion. However, we leave this in the competent hands of our city fathers. We know that they will adopt a realistic approach to this matter.

In conclusion I want to refer to another matter, a matter that I want to raise with a great deal of understanding in the House today, viz. the presentation of organized sport on Sundays. I do this in the knowledge that not everyone thinks and feels as I do about Sundays. Sunday is not necessarily a Sabbath for everyone. I am fully aware of this. I am also aware of the fact that the Black people use Sunday for organized soccer and that this is traditional amongst them. Amongst the Whites too, there are tremendous differences of opinion with regard to Sunday sport. In a country with a heterogeneous population composition, like the one that we have in South Africa, we will inevitably differ in this regard. All that I am asking today is understanding for the fact that those of us who do not want to and cannot accept organized Sunday sport as a way of life, should have the right to state this and to condemn Sunday sport, without being branded as racists.

You have the right to stay at home.

When a church, an organization or an individual expresses an opinion against organized Sunday sport, he should not be branded as a person looking for trouble, who wants to confront others and force his will upon others. Myself and other people who are opposed to Sunday sport, want to retain the right to object to it, even though I can stay away from such gatherings. In spite of the right that I have not to switch on the TV and the radio to look at sport or to listen to it, I nevertheless want to retain the right to object to it if it is in fact presented. I could be branded as a socalled super Afrikaner or something similar, but in spite of that I ask for a peaceful, calm Sunday for those who prefer it. In my opinion Sunday sport should not be forced down our throats by money-grabbing organizers. I therefore want to convey my gratitude, as well as that of those who are of the same opinion, to the hon. the Minister of National Education for his declaration that the Government does not approve of organized Sunday sport, and will not make financial contributions in this regard either. In addition, I also want to thank the hon. the Minister of Law and Order for this decision not to provide police to do duty at the cricket match last Sunday.

Mr. Speaker, during the course of this debate, various speakers on Government side have suggested that one of the reasons for the problems that we have in this budget, is because of the decline in the price of gold. I find this a little surprising because last year the Government actually budgeted for R2 160 million, on gold and in fact got R2 171 million. This is a remarkable performance, because it is difficult to guess what the price of gold will be. The point is that the Government was on target with what it expected out of gold taxation. If therefore the Government now argues that the decline in the price of gold affected its plans, what it is in effect saying, is that it did not believe its own forecast.

One of the few areas in which concessions were made in this budget, was in the area of social old age pensions. Let me state very clearly that we in these benches are pleased that social old age pensions got an increase. We are particularly pleased that in the case of civil pensioners, special allowance was made for the pre-1969 and the pre-1973 pensioners because of the fact that they retired earlier. If one retired on a pension of R200 per month 13 years ago, one was considered to have made adequate provision for one’s retirement. If one, however, gets a 15% increase on R200 per month, it means an increase of R30 per month, but one is far worse off than one of one’s colleagues who retired 10 years later on say R600 per month, because if he gets a 15% increase, it means an increase of R90 per month. Thus, with each increase in pension, the people who retired earlier find themselves falling further behind their colleagues who retired later. I will be coming back, during the course of this debate, to the question of percentage pension increases. I am also delighted that retired civil pensioners who could not remain members of an official medical aid scheme will now be allowed to rejoin a medical aid scheme. It is well known that medical expenses are often one of the major expenses faced by aged people, and any assistance in this regard is to be welcomed.

I am sorry—and I want to put it to the hon. the Deputy Minister—that the hon. the Minister of Finance did not see his way clear to making an adjustement to the means test. A system in terms of which someone who received, for example, R375 a month from investments, and qualifies for a social old age pension, is clearly inequitable if somebody who receives R117 a month from a pension fund cannot qualify for a social old age pension. I am also sorry that the gap between social old age pensions paid to the various race groups is widening. In this budget Whites are receiving an increase of R16 a month, while Blacks are granted R7 a month less, and Coloureds and Asians are receiving R4 a month less. Moreover, the bonus which is paid is also discriminatory.

Coloureds and Asians have been granted R12 a month, and not R4.

I am referring to the differences between what they receive and what Whites receive. In other words, in absolute terms the gap is widening. I have believed that it is the policy of this Government that we should ultimately eliminate all discrimination based on colour as far as the social old age pension system is concerned.

That is right, Lapa.

I have made this statement here in the House, and nobody on the Government side has contradicted me. In fact, we in the PFP have agreed with the Government that this is desirable. We did argue indeed that it should be done at a faster pace, if possible. It is no good talking about percentage increases because accommodation, food and clothing are not paid for with percentages; they are paid for in terms of rand. If a White person receives an increase of R16 a month, and a Coloured person receives an increase of R12 a month, the gap between the two has widened. Without any doubt whatsoever the Coloured person has less money to spend than the White person has. To argue that one has received a greater percentage increase than the other is seen by the vast majority of the population as a deceitful exercise in semantics. It reduces the credibility of the Government who professes that its policy is to close the gap.

This credibility of the Government has been even further damaged, I believe, by a statement made by the hon. the Minister of Health and Welfare in a television and radio interview. Now we have a new element entering into the debate. The hon. Minister must correct me if I am wrong.

You remember what I said in 1980?

Does the hon. the Minister mean to tell us that he made that same blunder twice?

The hon. the Minister told us on television that when considering the amount paid to social old age pensioners, we must take into account the respective differences in their cost of living, etc. That was how I understood the statement that the hon. the Minister made in his television interview. Because Blacks pay less for accommodation than Whites, the logical conclusion that should be drawn is that they will receive a smaller social old age pension. This arises when one takes into account the difference in their accommodation cost. I believe this is a matter which this House must debate because it is in terms of the policy of this Government that Blacks are forced to live under the present housing system. It is under the policy of this Government that 9 million urban Blacks are not allowed to acquire freehold title to land in urban South Africa.

The hon. the Minister of Health and Welfare tells them they cannot expect to receive the same social old age pensions as White people because the cost of their accommodation is less than that of Whites. In effect, what he is saying, is that under the policy of this Government they are not entitled to provide for their accommodation in urban South Africa and that he is now going to penalize them for it. [Interjections.]

If I accept at face value what the hon. the Minister is saying, the only logical conclusion I can draw from it is that he wants to condemn social old age pensioners of colour to a state of perpetual subservience. [Interjections.] If I am wrong I wish he would tell me so because I think it would be in the interest of South Africa. The theory of separate development was that people would be separate but that they would be equal. If we are going to accept this then the theory of separate but equal is being thrown out of the window; the moral content that the policy of separate development had is destroyed if one does not accept the concept of eventual equality between people of colour. What is to take its place? Pragmatic White “baas-skap”? I think it is necessary for us to get an unequivocal statement from the Government as to whether it is still committed to the concept of the equalization of social old age pensions between the various race groups, or, if one wants to rephrase it, the removal of race discrimination. In his speech today the hon. member for Florida made the point that the Government wants to close the wage gap. What I am asking is whether it is still the policy of the Government to close the gap between Blacks, Coloured and White pensioners. I think it is very important, in view of the recent statements made by the hon. the Minister of Health and Welfare, to spell out quite clearly what the Government means when it talks about equalization. Does it mean, as we in these benches understand it, that eventually a Coloured, Indian or Black social old age pensioner will receive the same pension as a White social old age pensioner, assuming that he is classified the same under the means test, i.e. he has the same income and so forth?

And he has the same expenses.

This is interesting. The hon. the Minister says: If he has the same expenditure. When we evaluate an application for a social old age pension we do not look at what the expenditure of the applicant is. We look at what his income and assets are. Otherwise, if this is logical, we must discriminate between White pensioners depending upon their expenditure. If we are going to do this in so far as Black and Coloured pensioners are concerned, then the only basis for discrimination, I regret to say, is that of race. Moreover, we must just think why Blacks pay less for their accommodation than Whites. It is because the Government has not allowed them to finance their own homes in the areas where they work. They have not been allowed to own them. South Africa differs from most other industrial societies because there the poor live close to town and the rich live in the suburbs. In South Africa, however, we have forced exactly the opposite situation.

Where do you want them to live?

Our policy is very clear. Wherever they can afford to live.

Interpret it.

Our policy is well-known. When one looks at this question of the equalization of pensions, I think one must realize that this is a sensitive subject. There are approximately 450 000 social old age pensioners in South Africa of whom roughly one-third are White and two-thirds are non-White. About a year ago the hon. the Minister of Health and Welfare raised the ire of a number of White social old age pensioners when he said that they could eat for R20 per month. It seems to me that he is now intent on antagonizing the rest of them as well.

I now wish to deal with another point, namely the question of what we are going to do to provide for the aged in South Africa. The increases announced by the hon. the Minister of Finance in this budget will amount to approximately R154 million in a full financial year.

Plus the bonuses.

Yes. Together it is an amount of approximately R200 million. To see that in perspective, in 1973 the total social old age pension system for Whites, Coloureds and Indians cost the country R88 million. In 1975 it cost R141 million. This shows the extent to which the cost of the social old age pension system is escalating. Last year the hon. the Minister of Finance said that by the turn of the century it could cost South Africa R2 000 million.

More.

More? I think that R2 000 million is going to be a gross underestimation.

I think I said R5 000 million.

I would agree with a figure of between R5 000 million and R7 000 million. It could very easily be such an amount. When we look at the situation we find that in 18 years’ time we are going to have another 1 million aged people in South Africa. By the year 2020 we are going to have three times as many aged people living in South Africa as we have today. In 1966 the Cilliers Committee reported on the pension problem. In 1975 the Van der Spuy Commission reported on the pension problem. In 1980 we had the first report of the Interdepartmental Committee of Inquiry into Certain Pension Matters. That committee commented specifically on the preservation and transferability of pension benefits. I do not wish to deal with this matter now because I do not have time to do so.

The point I wish to make, however, is that we have considered this problem but we have done nothing to solve it. Each year that we delay finding a solution, it costs the taxpayer of South Africa an incredible amount of money. Each year approximately 50 000 people claim social old-age pensions for the first time. If they receive the social old-age pensions announced in this budget which will come into operation on 1 October, it will cost the country R45 million in one year. However, when a person reaches that age, he has a life expectancy of approximately a further 10 years so the cost in respect of each year of delay over that 10 year period will amount to R450 million. At present 40% of working South Africans contribute to a pension scheme and 60% do not. Let us not argue that under a free enterprise system they must make their own provision because if they do not make provision themselves, it is left to the taxpayers of the future to provide for them. We do have systems such as workmen’s compensation and third party insurance in terms of which we compel people to belong to these schemes. That does not remove any of their rights, Sir. We have a unique situation in South Africa in that we have a well-developed private pension industry here, a pension and insurance industry which will cater for any company. If one made it compulsory for employers to provide a pension scheme, there is a vast variety of choice available to them within the private sector. We have the system of retirment annuities for self-employed people or small companies; in other words, the infrastructure for solving the long-term problems facing South Africa in providing financially for the aged is already there. This infrastructure has been provided by the private sector and the various State pension funds that we already have. The only thing holding us back from taking steps to solve the long-term problem is the inability of the Government to act. It is for this reason that I have no hesitation whatsoever in supporting the amendment moved by the hon. member for Yeoville.

Mr. Speaker, the hon. member for Amanzimtoti said in his speech that it was time a clear indication was given of exactly where we, i.e. the political parties represented in this House, stand with one another. He also said that we should state the reasons why we of the CP are sitting on this side of the House. After the hon. member for Amanzimtoti had spoken, the PFP clearly spelled out that their standpoint is total integration. However, the hon. member for Florida who followed the hon. member for Amanzimtoti, did not say a word about politics.

This is a financial debate and you know it. Do not pretend to be stupid.

Perhaps the hon. member said a little too much on the previous occasion when he did want to talk politics. [Interjections.]

Mr. Speaker, it is not unknown in our history that whenever there was a threat to the Afrikaner nation, or call it the White South African nation if you wish, because there are thousands of English-speaking people today who identify themselves to such an extent with the aspirations and ideals of your people and mine that they consider themselves to be part of that nation …

That is a AWB statement.

I say that if the right to self-determination or the absolute sovereignty, in other words the complete freedom of that nation is threatened or assailed then it falls back on the conservative standpoint of preserving what one has.

Do you still have your shares in Die Afrikaner, Willie?

Give me a chance; the hon. member can take part in the debate himself.

Then it falls back on the conservative standpoint, of retaining what one has, the system of values with which you grew up, the outlook on and philosophy of life which brought a policy and standpoints into existence which have for decades borne it safely through the special problems of the population structure situation in Southern Africa, by means of the policy of separate development, vertical differentiation or vertical separation and the consistent implementation of this policy at the present time, too, in the political debate revolving around the constitutional proposals which are now under consideration.

If we go back in time for a moment and consider our history, we observe that this is not the first time that this situation has occurred in our country. Just think back to President Paul Kruger of the Transvaal Republic, the great statesman and hero of the old Transvaal Republic. An MP at present sitting here, the hon. member for Pretoria Central, is reported as having said the following when he was dealing with the standpoints of the leader of this party, the hon. member for Waterberg—

For that very reason those people were prepared to fight a war of liberation, and so, too, I think, were the ancestors of that hon. member. Now, however, that hon. member takes it amiss of President Paul Kruger for having gone so far as to take up arms.

Who says I took it amiss of him? What about the realities of 1982?

Let us continue this line of argument. General Christian Frederick Beyers ascended a political platform in Pietersburg shortly after the end of the Second Anglo-Boer War to establish one of the branches of the Het Volk Party. Dr. G. D. Scholtz described it as follows—

It is striking that, three-quarters of a century later, the leader of this party also stood on the same platform, and where was he reported? Not in the Afrikaans-language dailies, but also in the English-language Press, including the Citizen.

What were the issues at the time? They were described as follows—

That is precisely why the NP came into existence: It could not see South Africa’s interests being subordinated to the British Empire. Subsequently there was the United Party standpoint of integration, and once again a Herenigde Nasionale Party was established in the ’forties which adopted a standpoint opposed to this, and ultimately triumphed.

Now, in the year 1982, we have once again arrived at such a situation. The NP caucus accepts power-sharing and one government in one country as the correct interpretation of NP policy.

But you voted in favour of it in 1977. [Interjections.]

Louis says you voted in favour of it in 1977.

The head committee of the Transvaal in principle accepts power-sharing and one government on behalf of the Transvaal congress but—and this is important—at the same time it rejected the motion moved there by the hon. member for Barberton, viz.—

This motion was rejected by the head committee on behalf of the Transvaal NP. Now what could be clearer than that? The situation we were confronted with was that of an inexorable choice: Either we chose the newly accepted principles of the NP, viz. powersharing and one government, or the principles of the CP, as spelled out in the clearest terms by my hon. leader, Dr. A. P. Treurnicht, in Pretoria on 20 March. We are confronted here with a situation in the country in which the freedom of the nation is being threatened by power-sharing, joint decision-making and a joint say by other nations and groups. What is at issue in the final instance is not the Coloured franchise; what is in fact at issue is who governs who, and the possession of our fatherland. If I am interpreting the deeds, words and ideals of our nation correctly, there is only one choice for me, viz. to range myself on the side of the leader of the CP, the hon. Dr. A. P. Treurnicht, a man who is prepared to maintain and continue to implement the policy of separate development, and also to include it in the new constitution we are debating at the present juncture. If there was still any doubt about the NP standpoint on power-sharing and one government, the hon. member for Brits eliminated any trace of a doubt with his latest leading article in Nat. 80s. He dealt with the contents of the new dispensation, and then went on to say—

Do you agree with that?

Of course I do not agree with that.

Can there be more than one Government in one country?

Parliament is the legislative assembly of the country and there cannot be a place for all our population groups in this highest council chamber. It is very interesting to take cognizance of the quite recent view of the hon. the Minister of National Education as it emerged from his book Ideaal on werklikheid—

We have also heard these sentiments being expressed—

The hon. the Minister then expressed the following criticism—

These were also Mr. Vorster’s words—

I wish to ask the hon. the Minister whether he still argues in this fashion today. Are the Coloureds a nation-in-the-making and are they a group with their own identity? The hon. the Minister arrived at the following conclusion in his book—

Next I wish to refer to a very significant paragraph in this book, and I wish to ask him today whether he still adheres to this standpoint, because if he does, he belongs on this side of the House, with the CP.

Come over, Gerrit!

As I have said, he then belongs on this side of the House, particularly if we assess this view against the background of the statement by the chief information officer of the NP on one central executive authority, one legislative authority of Whites, Coloureds and Asians in this country. The hon. the Minister wrote as follows in his book—

A few days ago the hon. the member for Innesdal advocated freehold ownership for Blacks in the White area. [Interjections.] With its acceptance of power-sharing, in whatever form the NP undoubtedly finds itself, with the idea of one government, and now, too, one legislative authority, on the slippery slope of political integration in South Africa.

Recently someone sketched this situation very effectively in a verse. I should like to quote this, and hon. members should listen carefully now—

This man is Dr. A. P. Treumicht … [Interjections.] … and this was dedicated to him by the poet, Andries Smit, of Pietersburg. This afternoon I wish to state unequivocally and clearly here that these verses interpret the opinion of a very important section of the voters of the Transvaal and also of the entire Republic of South Africa.

Mr. Speaker, I listened with interest to the hon. member for Pietersburg. However, he will still have to tell us what their policy is in regard to trade unions, the profit motive, capitalism, etc. I heard nothing about that in his speech. Other hon. members will probably reply to the points which he raised tomorrow.

Before I proceed with my speech, I should like to put a question to the hon. the Minister of Finance. When it comes to housing subsidy schemes, is it not possible to give more attention to older, unmarried persons? In Pretoria it happens that many of the flats of unmarried persons are being sold out from under them as a result of the sectional titles system. I know the Commission for Administration is at present investigating this matter, and I should like to give this investigation my full support. While I was about it, I wanted to ask for motor cars for the professors, too, but then Dr. Rautenbach said I was being too hasty. This budget may probably, in view of the background to it, be considered to be one of the finest the hon. the Minister of Finance has ever introduced. I should like to refer to Mr. Shostak of Santambank.

Hendrik, you have not written a book yet, have you? [Interjections.]

Never mind, I shall come to that hon. member in a moment. Mr. Shostak pointed out that—

Mr. Shostak then proceeded to apply this budget to his economic model and came to the conclusion that in 1982, at 1970 prices, the gross domestic product would increase by 1,19%. In 1980 we had an 8% growth and in 1981 a 4,5% growth. Under all circumstances, and having regard to the budget, it is being predicted that the growth in 1982 will be 1,19%. In view of this, he said that we would be able to maintain the exchange rate of 0,90 dollars in the rand. This means that despite this budget we shall be able to maintain the present value of the rand. He also predicted—and this was very interesting—that the real increase in private spending this year would be 0,6% and in gross fixed investments, 4,99%. I do not think we can ask for more than that. Nominal imports will decline by 15,76%, which is precisely what the Minister of Finance hopes to accomplish by means of his budget. The only cause for concern is that according to this model the price index will continue to increase by 14,13%. We hope that we shall, during the course of the year, succeed in reducing the inflation rate by means of our monetary policy.

There are many other interesting aspects of this budget. The Opposition kicked up such a row about everything which is being adversely affected. They said that we were now sinking deeply into the mire. I compared this budget with the budget of seven of the most important OECD countries. It was interesting to find that our indirect taxation—this is what the Opposition was so upset about—decreased from 7% of the gross domestic product in 1978-’79 to an estimated 6,3% for 1982-’83. What is the position in the most important OECD countries? In those countries indirect taxation comprises 10,7% of the gross domestic product. We could go a little further and look at direct taxation. Our direct taxation of the individual is dropping from 4,9% to 4,0%—this excludes the loan levy. In the seven countries to which I referred, the figure was 10,9%. I think we ought to be very grateful. Our companies are also unhappy about the increased taxation. In South Africa the figure in this connection is 3,9%, while it is 2,6% in Europe. However, I shall return to this problem later.

Let us first consider indirect taxation. Criticism was expressed because we are going to levy income tax on advertising costs as well. The advertising and other marketing costs of some of our industries—and I have in mind a specific group which I investigated myself—comprise up to 20% of their total turnover. In view of this fact, this tax is perhaps a very good thing, for in that way it will be possible to curtail such exorbitant expenditure.

I come back to the problem which the Opposition raised in connection with indirect taxation. In the Western World there is a general shift from direct to indirect taxation. We have been clinging for too long to the theories of Keynes. Keynes was an economist in the days of the recession, and in my opinion his heritage is still causing us considerable problems. We still adhere to the idea that one should not save or invest because one has surplus capacity, and that one should consequently spend. During the past 10 years this excessive emphasis on spending has caused many countries to find themselves in serious difficulties.

Let us consider our own private spending. The hon. member for Yeoville referred to this and said that the budget would place the poor South African under tremendous pressure. One finds that real spending on durable consumer products increased by 27,1% in 1980, and by 9,2% in 1981. No country can afford to spend its money in such a prodigal way on luxury items.

Why have we to an ever-increasing extent begun to spend our money on durable consumer products? Because we have an excess of cheap capital available. In South Africa the real yield of capital is 0,1%, and in the USA 5,39%. There were complaints about the high interest rates, but it is important that we should return to a situation where capital becomes more expensive in South Africa, for then we shall begin to utilize our labour better.

It is quite interesting to see what a fine time our people in this country are having. In 1981 we occupied eleventh place among the motor producers in the world. More than one out of every 80 South Africans of all races bought a new passenger motor-vehicle last year. Surely things are not going badly if a country can boast of such figures.

Mention was made here, inter alia, of the price of bread, and it was suggested that the poor Black man was going to go hungry again because the subsidy on brown bread was going to be reduced, and as a result the price would soar. According to a survey made by the Unisa Market Research Bureaux on the income and expenditure of Black people in the Pretoria area, their incomes between 1975 and 1980 increased from R3 517 to R4 106 per household, at 1980 prices. Let us see how much money was spent on white bread—R19,4, and on brown bread—R91,59 per household in the year 1980. The increase in their spending on food represents only 3,5%, while the total increase in other expenditure was 9,03%. In my opinion, therefore, this does not sound as if these people will all die of hunger because the bread subsidy is being reduced.

It is also interesting to note that, on the one hand, we are now being attacked because we are levying an ever increasing amount of indirect taxation, inter alia, taxation on food. It was also suggested that this was regressive and that the lower income groups were being affected by this. On the other hand, directly afterwards, there were complaints about the fiscal drag because, so it was alleged, the higher income groups were being adversely affected in this way. However, one cannot on the one hand champion one group, and directly afterwards champion another. I believe that the hon. the Minister of Finance is being completely realistic in making use of direct and indirect taxation. Let us consider company tax. I have a measure of sympathy for our industrialists as far as their total increased taxation is concerned. However, I believe that we should move away from the Keynesian concept and that we should encourage savings and investment. We also know that savings by companies are of great importance today in so far as our investments are concerned, particularly our high-risk investments. At present, however, our industrialists cannot complain too much, particularly not if we observe that their gross operating surplus as a percentage of the gross domestic product increased from 34,3% in 1978 to 42,2% in 1980. After that it diminished slightly to 37,3%.

Things have gone very well for our industrialists. They have made good profits. We are very grateful for the investments they have made. I know that as soon as the gold price rises again to R400 and over, the hon. the Minister of Finance will grant them relief again so that they can once again proceed with their entrepreneurial role in South Africa.

Some hon. members of the Opposition find it so easy to say that it is simply the Government which is once again causing all the problems, that it is simply the Government which was unable to predict the gold price correctly, and therefore adopted a poor monetary policy. However, I have always had the impression that hon. members of the Opposition are inclined to try to apply all the modern ideas from Europe and America here in South Africa, with its complex race problems. However, when it comes to the economy, I find it so strange that they apparently forget entirely what is happening in other countries. America and Europe went through an oil crisis. With the tremendous increases in the oil price during 1979 and 1980, most of those countries in Europe had to make exceptional adjustments. Of course this required a redistribution of their real incomes. Surely, therefore, one cannot expect those countries, particularly in view of the crisis situations that they had to contend with owing to the increased oil prices, to display a high economic cyclical movement immediately afterwards. At the same time it is very interesting to note that those countries have, as a result of these circumstances begun to cut back heavily on State expenditure. This is the outcome of a present-day philosophy which wants to see State expenditure reduced in the modern economy. It was found that in the ’seventies governments began to play far too big a role in their economic structures.

At present, with the downward economic tendencies overseas, we can still consider ourselves fortunate that we have a gold price which has frequently come to our rescue. The gold price has frequently come to the rescue of our balance of payments and our State revenue. Now I should also add that we were also fortunate to have had a good maize crop last year. We are still experiencing a few problems in exporting it, and I do not know whether its profitability is all that wonderful. I see that the hon. the Minister of Transport Affairs seems to be amused by what I have just said. Perhaps we are indeed making a good profit on our maize exports when we use the Richards Bay harbour instead of the East London harbour. [Interjections.]

We have consequently experienced a wonderful period of growth, growth which varied between 8% and 4,5%, while in Europe and the USA tremendous adjustments had to be made. We may be justly proud of our history of growth. However, as I have already indicated, we also began to spend on consumer goods on a large scale. And this, of course, stimulated the economy further. At a stage we experienced a shortage of skilled workers. This brings me to an important question. In the ’sixties we also experienced tremendous growth and a large influx of immigrants. This was one of the most rapid growth periods in our history. Yet we did not at that time have such a major problem with inflation. Consequently, I wonder whether our industrialists always do their duty when it comes to the training of their workers, particularly if they cannot get immigrants. Why should the Government always get the blame for this? When one realizes that one is heading for a period of major economic growth, surely one should make timeous provision for the necessary training of one’s workers.

However, we began to poach one another’s workers. The mines poached workers from Escom. Poor Escom is never able to poach staff from anyone else because the salaries it pays are hopelessly too low. [Interjections.] With this economic growth and with the rapidly increasing income in South Africa, it always happens of course that this country of ours when its economy grows rapidly, and its income increases rapidly, is inclined to import too much. It happened once again that we began to import too much, while our exports began to diminish in the process as a result of the recession overseas. This created this problem of ours of tremendous deficits on our balance of payments. There is nothing wrong. These are normal business cycle movements. One must learn to adapt to them. I must also congratulate the Government, particularly Dr. De Kock, because they are now moving towards a free market system, precisely in order to cope with this problem by means of high interest rates and by dropping the rate of exchange.

In conclusion there is one more thing I should like to ask of the hon. the Minister of Finance. Since we are still moving away from ever-increasing restrictions, is he not able to reconsider the law on the limitation on the disclosure of finance charges? That ceiling is really causing a great deal of trouble. I believe that the Government will soon be able to solve its balance of payments problems and that we will in future have sound growth.

Mr. Speaker, there is nothing I should like to add to the speech made by the hon. member Dr. Marais; I should just like to make a single observation on the speech made by the hon. member for Pietersburg. My objection to him is that his party always speaks only half the truth. Today he again stopped half-way. He told us about what President Kruger and what Christian Beyers ostensibly said. But recently another leader spoke in the Northern Transvaal, a man about whom poems are now being written. This leader said: “In a time of crisis a man like our Prime Minister soars like an eagle and the mice run away”. Do hon. members still remember that? One should always, if one quotes one’s leader, quote him in full. Otherwise one may eventually be misinterpreted.

Sir, I now move—

Agreed to.

Mr. Speaker, I move—

Agreed to.