Mr Speaker, I move:

Mr Speaker, we have throughout supported this Bill in principle. Even though there are aspects of it with which we do not agree, we believe that as a whole the measure is far more satisfactory than the existing legislation. Therefore we will be supporting the Third Reading as well.

There are some aspects that are acceptable to us and which, I believe, we should stress in particular. Firstly it means that to a considerable extent a larger variety of local authorities will be able to obtain funds from this board. Bearing in mind the needs of particular local authorities for money, and also bearing in mind the need to develop particular new local authorities, especially those relating to the Black, Coloured and Indian communities, as well as some of the poorer White local authorities, one hopes that this particular institution will be able to provide the funds for this purpose. I say this particularly because those local authorities themselves, by reason of their lack of ability to raise funds, will be unable to have the same standing in the capital market as the stronger local authorities when it gets to obtaining funds. That is why we will certainly not stand in the way of the passage of this Bill, despite its other shortcomings which, we believe, do exist.

The second thing which, I believe, we do value is the fact that the hon the Deputy Minister indicated that the board that is going to be constituted to handle these particular institutions will be representative of all the local authorities in South Africa. Therefore the opportunity will exist for people to be nominated to that board in order to represent the interests of all those local authorities. That means that this board, while it will have a preponderance of membership on the part of the department, will indeed be representative of the population of South Africa even though its members are appointed and not elected. It will in other words be a multiracial board. That is another aspect of this particular piece of legislation which we do welcome.

Furthermore we hope that the Minister concerned will use the powers granted in terms of this legislation and that he will actively seek to provide the necessary capital for local authorities that are unable to obtain funds themselves. In this regard there are two particular matters to which I should like to refer. The first is that we have had a considerably extensive debate about what would happen if there were defaults, and also about what would happen if a local authority could not repay the money borrowed by it from this board. I believe that if we are indeed going to develop those local authorities that do not have the adequate infrastructure, and if we are going to assist them financially in order to enable them to accomplish that development, we will have to look at issues other than the ability of a local authority to repay loans if we do indeed want to create viable long-term local authorities with proper infrastructures. It may well be that the terms of repayment of loans will have to be very easy—if one can use that term—in relation to the terms on which the board itself may borrow money elsewhere. Because of the need therefore to create viable local authorities with proper infrastructures the terms on which money is lent to those particular local authorities may have to be made very attractive in the circumstances. They may even have to be made more attractive in many instances than the conditions applicable to the board itself when it in turn has to raise money from the public. This feature is very important, we believe, because if the functions of the board are not used to that end and every activity of the board is looked at merely as a business transaction and in terms of market-related rates, some of those local authorities will never be able to afford to borrow money to pay for the instrastructures which their citizens need.

The final point I should like to touch on is perhaps a minor one. Nevertheless, I believe it is also quite important. I have tried very hard to persuade the hon the Deputy Minister to agree to it that there should be representatives from the banking or the financial sector on this board as well. There is now a provision which allows for at least one representative to be drawn from that sector. I want to give the hon the Deputy Minister an example of something that has just occurred and which, I think, demonstrates the need for people with business and banking expertise to be appointed to this board. A particular local authority wanted to raise a sum of, I think, R5 million. It approached a particular firm in its effort to raise that amount. A rate was quoted to it, and within a very short time—I think the rate was 15,5%—the whole of that issue was placed with the Public Debt Commissioner, who still functions of course, Mr Speaker, because the legislation in terms of which his post is to be abolished has not yet been brought into effect. It was placed with the Public Debt Commissioner at a much lower rate, which resulted of course in a very substantial capital profit.

It may of course be that the local authority concerned may be quite happy with that arrangement. There may also in the circumstances be 101 explanations for it. The reality is, however, that if that local authority had approached the Public Debt Commissioner in the first instance, they could have arranged the whole thing themselves right from the very beginning. They would then not have needed the intermediary, who made a very substantial profit in the process. That is why I believe that merely to appoint people to the board on the strength of their experience in local Government, or merely to appoint public servants who are only familiar with their normal day to day activities in this field, without also appointing at least one person who knows the market from the private sector’s point of view, actually amounts to depriving this board of considerable expertise. It could also lead to a repetition of the same kind of incident to which I have just referred the hon the Deputy Minister. I shall give the hon the Deputy Minister the name of that local authority privately because I do not believe it is desirable to bandy names across the floor of the House. That is indeed what can happen, and that is why the expertise of the banking and financial field is absolutely essential for the proper operation of this board. I therefore hope that the hon the Deputy Minister will see matters in that light, and that he will help the board to function in the way in which we hope it will function. We therefore give this legislation our blessings.

Mr Speaker, it is a pleasure for me to thank the hon member for Yeoville for his support for this legislation. I also want it placed on record now that since I became a member of this House it has always been a pleasure for me to listen to the hon member for Yeoville when he discusses financial and economic matters. I have always been able to learn something from him in this connection, too. Of course this has not always been the case as far as politics is concerned. [Interjections.]

During the Committee Stage of this Bill there was a lengthy debate on clause 14. In particular, concern was expressed because of the power being vested in the council to levy a special rate. One can understand the concern in the minds of hon members in this connection because it is a sensitive matter.

With specific reference to this, I want to say a few words on how I think this legislation is going to be implemented. One must realize that loans in terms of this measure are not simply going to be given out left, right and centre. This is going to be done in a responsible way. I believe that every loan application is going to be assessed on merit. Before a loan is granted, therefore, everything possible will have been done to ensure that clause 14 need ever be implemented. After the loan has been granted, I think that the situation will be closely and regularly monitored with the same objective. Because we do not live in an ideal world, however, there must also be remedies in the legislation which can be applied in case things do go wrong.

Let us assume that it becomes clear that a specific local authority might not be able to meet its obligations. According to clause 14, the board may then recover the amount due and payable from the local authority. It need not do so, but it may do so. If the board wishes to do so it may not in any case do so until 60 days have elapsed after the expiry date. I foresee that the board is not simply going to remain idle during those 60 days. Surely it is going to negotiate with that local authority. It will see whether an extension of time cannot be granted, or whether a payment cannot be made in two instalments, or whatever. The circumstances of each case will determine the alternatives. If nothing works, the recovery process will have to be resorted to.

What will then be done first? In the first place, as much as possible will be taken from the revenue and the assets serving as security in terms of clause 13(2) of the Bill. It will not, however, be possible to take possession of all the revenue and all the assets of that local authority. Perhaps the board will not be able to take anything because the local authority must, after all, still meet its obligations in respect of salaries, etc. For example, one cannot simply sell all the garbage removal trucks of a local authority, because how will it then be able to render this service? I want to emphasize that if one has reached this stage one is already dealing with an exceptional case. In any event I do not think that this stage will be reached, but if this were to happen, the board could not simply write off the entire debt. The board works with public funds, and in any case what incentive would there then be for the defaulting local authority to meet its obligations? That is why clause 14(l)(b) is necessary as an extreme measure, and it is a good thing for us to agree to it. In my opinion, its mere existence will, in fact, be the reason why it will never be implemented.

During the previous debates on this Bill, and particularly on Friday during the Committee Stage, hon members of the CP realized for the first time that people of colour could serve on the Local Authorities Loans Fund Board. Some of those hon members were not here when the hon the Deputy Minister had something to say in this connection in his Second Reading speech. But those hon members must surely have read the Bill, and clause 5 makes it clear how the board will be constituted. Clause 5(l)(c) provides that at least one and not more than four other persons will be appointed on account of their special knowledge of local authority affairs. I want to emphasize the fact that mention is made here of persons. Since when have “persons” been Whites in the vocabulary of hon members of this House? What are people of colour if they are not persons? After all, the Bill deals with a wide spectrum of local authorities that include non-White local authorities. Persons are going to serve in all those authorities, people with dignity, ability and a knowledge of local authority affairs. How on earth can hon members of this House possibly think that only White people will be able to serve? Honestly, some hon members of this House constantly amaze me.

I welcome the measure because with the creation of the Local Authorities Loans Fund a more flexible instrument is being established than was the case with the Local Loans Fund in terms of Act 19 of 1926. Thus far the Local Loans Fund has mainly given assistance to local authorities of smaller and very small rural towns. In terms of this measure, as the hon member for Yeoville also pointed out, a wider spectrum of aid will be possible to a more comprehensive group of local authorities.

In conclusion, I just want to make this point. It is my standpoint that local authorities able to do so should, as far as possible, be self-sufficient as regards the financing of their own capital needs. A local authority undertaking a high degree of self-financing is not only more autonomous, but also enjoys many other advantages. Self-financing enhances the financial scope of a local authority. Such an authority can do its financial planning more systematically and continuously and what it has planned it can implement according to the principles of scientific determination of preferences. They are less subject to the changeability on money and capital markets. They can wait to raise loans until interest rates and other prospects are most favourable. A local authority that succeeds in satisfying a large part of its capital needs from its own resources without taxing its residents excessively, will find that its credit status will be enhanced. This will also improve the marketability of its stock. A sustained, balanced and purposeful policy of building up internal funds for self-financing eventually leads to large savings in respect of external payments of interest, and the entire local community benefits from that.

The ideal of maximum self-financing is within reach of all metro-core cities and non-metro greater cities, and some of them have already achieved tremendous success in this regard. With this I support the Third Reading of this measure as part of a process of expanding and promoting local government in South Africa.

Mr Speaker, we are now dealing with the Third Reading of this Bill. We discussed it at length during the Second Reading and also during the Committee Stage. Of course the main purpose of the Bill emerges from the fact that the Public Debt Commissioners are now falling away. The function they performed must now of course be transferred to some body or other. That is the reason why this Bill has been introduced in this House.

The hon member for Stellenbosch referred rather disparagingly to the CP. I think he is the last hon member who should do that. [Interjections.] The hon member referred to clause 5(l)(c) which provides:

From this we must now deduce that this is quite clearly going to be a person of colour. We must accept that it is going to be a person of colour. We must understand this and put up with it. This again shows what subtle methods the NP have been resorting to recently when it comes to legislation. [Interjections.] They are misleading the public with this kind of thing. Eventually they tell one this is the case. No, we must be honest with each other. The voters will have to look at every little word now and not only at the sentences to see where the Government is taking South Africa. It is quite clear to us that this is the case. [Interjections.] And when they are hurt a chorus of voices is heard here. I think I should go on tour with them; they would make a splendid choir.

We discussed the Bill quite thoroughly but there is one point I want to make. There is a certain amount of concern and the hon member for Stellenbosch had quite a bit to say about this. The concern is for clause 14, in terms of which money may be lent, which may possibly not be repaid. The fund will then have to take certain steps to recover that money. In the first place we must realize that the purpose here is not to give a local authority a lot of money to incur heavy current expenses. The idea is project financing. What I want to emphasize here is the necessity for such projects to be investigated properly. They should not be haphazard projects which are undertaken by a local authority to make a name for itself or to show off. In the second place the creditstanding of that local authority must be investigated. This is trust money and not money that can simply be thrown away. If a local authority does not qualify for a loan under this scheme other ways must be found to assist it. The fund for which provision is made here must not be squeezed dry, and I would be glad if the hon the Minister would convey this message to the management of the fund.

In other respects we support the legislation.

Mr Speaker, it is a pity that the hon member for Sunny-side saw fit to make colour a matter of controversy with regard to appointments to the Local Authorities Loans Fund Board, as proposed in clause 4(1) of the Bill. The underlying principle of the new dispensation we are entering, is that rights are being given to other population groups as well. These rights go hand in hand with obligations, however.

By means of this legislation a loan resource is also being created for Coloured, Indian and Black local authorities. All these people contribute to the Treasury. A resource is now being established from which local authorities for our Coloured population groups can also be assisted.

Concern has been expressed regarding the repayment of loans, and the hon member for Stellenbosch wanted local authorities to act very carefully as regards these loan funds and asked that the management board of the fund should give thorough consideration to the projects in regard to which the local authorities apply for assistance. Because Coloureds, Indians and Blacks also contribute to the Treasury, does the hon member for Sunnyside not accept the principle that they should also serve on this control board and in that way accept responsibility for the administration of the fund?

May I ask you a question?

No. I do not have time for that. I maintain that no one can disagree with that principle. I therefore think it is inappropriate for the hon member to drag colour into this matter.

The principle underlying the system of local authorities is that the subjects of those authorities contribute collectively to the provision of services to their respective communities. We know, however, that the Coloured and Asian local authorities do not have substantial financial resources. Usually there are not many industries in the areas of those local authorities and for that reason their sources of revenue are relatively small.

Perhaps now is the time and the place to ask White local authorities not to undertake projects that are beyond their means. The temptation to make use of the fund will be particularly great if an attractive capital project can be created. The question also arises whether local authorities do not compete among themselves for one to be grander, bigger and better than the other. I do not want to generalize, but one does gain the impression that some local authorities borrow money too readily and undertake projects which are really not within the means of their inhabitants.

I believe that this is a good Bill and that it can be used very fruitfully by smaller local authorities, particularly our Coloured and Indian local authorities. If it merely assists in making these local authorities viable, it is already worthwhile.

Mr Speaker, I am very pleased that most hon members who have taken part in this the Third Reading debate on this Bill have referred to the very subject which I raised in the Second Reading, namely clause 14. During the Second Reading I issued a warning to the hon the Minister regarding the implications of this clause, in particular the powers given to the board to recover funds from local authorities should they be unable to repay the loans in the normal manner. I dwelt at some length on this matter and told the hon the Minister that we had certain reservations about these powers, especially those which will enable the board to levy a special rate on the inhabitants of a local authority should the existing revenue and assets not be sufficient to cover the loan. During the Committee State I told the hon the Minister that we felt that because of the circumstances in which local authorities in South Africa may find themselves in the future, such action could create a lot of disagreement amongst the local inhabitants. I think I made the point very clear at the time. This afternoon most members have referred to this. The hon member for Hercules did so by pointing out that one needs to ensure that a local authority does not engage in projects beyond its means. We agree with him on that.

One of the important aspects of this Bill is that in future the board will be able to make funds available not only to White local authorities, but also to Black, Coloured and Indian local authorities. As I have stressed, our people have rising aspirations and as more and more Blacks, Coloureds and Indians move into local government and as they become involved in the political process—as I said during the Committee Stage, knowing politicians as I do, especially those who are more liberal than what I am when it comes to financial matters—there is the possibility that a local authority may have great aspirations in regard to what it would like to do and may be prepared to borrow sums of money which it can ill afford to borrow, and then when the time comes to repay those loans, the problems which I have posed might present themselves. I should like to say that when it comes to financial matters, whether relating to local government, provincial government or national government, we in these benches are basically conservative. We do not believe that individuals, or nations should overspend. We read daily in the Press of how South Africa has overspent. Every single day we read about how the State has overspent. This country could go down the spout if we continue to spend the way we are and if we do not heed the warnings that are given to us. If we do not do that we are utter fools. Therefore I am calling for a conservative approach to finance …

Hear, Hear! [Interjections.]

I am talking as a true blue conservative and not as a CP reactionary conservative. [Interjections.] We call for a conservative approach to financial matters.

Let me give an example. My hon colleague for Umbilo served on the Durban City Council for many years. As MEC in Natal he was also for many years in charge of local government. During his term of office on the City Council of Durban he pushed the idea of having a capital development fund for the local authority of the City of Durban. Today that city has more than R400 million in its capital development fund and it no longer has to go to the money market in order to find capital to finance its capital projects. That is the type of philosophy which we believe in. In other words, one must be able to pay one’s way.

I want to say to the hon member for Hercules that the day may come when a local authority does borrow beyond its means. We in this party are already anticipating that this could happen. When it does happen the hon the Deputy Minister, his successor or the officials of his department will have to implement clause 14. I sincerely hope that day never comes. I sincerely hope that all the talk we have had here this afternoon will stress the fact, not only in the House but also in every local authority throughout the country, that we should not over-borrow. However, if that day ever should come I appeal to the hon the Deputy Minister that this clause be implemented with great circumspection and care because it could cause lots of problems for local authorities. Having issued these warnings, let me say that we are pleased with the very responsible attitude which has developed among hon members of all parties. We take pleasure in supporting the Third Reading.

Mr Speaker, I listened to what hon members said during the Third Reading debate on this Bill. The hon member for Yeoville expressed the hope that favourable conditions would be laid down in terms of which these loans would be granted. The truth of the matter is that at present rates are considerably more favourable than are market-related rates. I foresee this continuing to be the case in future. The hon member tried to pinpoint a specific problem. He mentioned the case of a local authority that first wanted to negotiate a loan with a private body, which then apparently transferred the loan to the Public Debt Commissioner and made a profit. If I understood the hon member correctly, that is what happened. That was obviously a local authority that had not been informed that it could approach the Public Debt Commissioner directly for a loan, thus presenting an intermediary with an opportunity for making money. Firstly this signifies that it was an uninformed local authority, but, secondly, having a banker serve on the board of the fund would not solve that problem, because he would not know of such a case either. The fact of the matter is that after this amendment we have brought about to the legislation—the hon member himself pointed that out—it is now possible for people with financial experience to be made members of that board.

I should like to thank the hon member for Stellenbosch, who gave a reasonable and penetrating analysis of clause 14, the clause to which the major portion of the discussion during the Committee Stage was devoted. What would happen in practice is that when those rights, to which the majority of the hon members on the Opposition side objected, are given to the board in terms of this legislation, it will probably never be necessary to have recourse to that remedy, because before the board lending the money can impose the levy, the local authority does so itself. The mere existence of that legal remedy is enough to ensure that those conditions are complied with.

The hon member for Sunnyside complains about having been misled, but he interprets things incorrectly. He was merely uninformed and unprepared. In any event, the principle contained in this legislation is not all that strange at all, not as far as the hon member is concerned either. Let him feel free to ask the hon member for Kuruman about it. It is exactly the same principle as that proposed by the Hoon Commission that must apply in regard to the Council for the Environment. [Interjections.]

I should like to thank the hon member for Hercules for his contribution. He referred to the fact that if there were members of the various population groups jointly represented on that board, they would have to accept both the obligations and the rights that local authorities obtain, as well as the responsibility for the granting of loans.

If the Blacks also have to contribute to this fund, and are also to serve on the board, must the Blacks, who make a contribution to the State coffers in the form of taxes, also have seats in this Parliament? [Interjections.]

Mr Speaker, once again the hon member gives an indication of how uninformed he is. Surely he knows what the Government’s policy in regard to Black people is. After all, he argued the matter with us. In point of fact, the hon member is now merely trying to conceal how uninformed and unprepared he is.

†The hon member for Amanzimtoti once again issued a warning in regard to the implications in recovering money from a local authority who is in difficulties to meet its commitments. He said that to raise a levy on the inhabitants of that local authority could be dangerous. I would like to correct the hon member on this point. It is not a levy on the inhabitants, but a levy on the property of that particular local authority. [Interjections.] It is not the same thing. It is a tax. However, it is a very dangerous philosophy that the hon member is advocating, namely that all one need do is to say that one cannot pay.

No.

And so threaten them. This is a very dangerous philosophy. Somebody must pay, and the only people who must pay are in this instance those who have benefitted from a loan. However, we will be reasonable.

Mr Speaker, I should like to ask the hon the Deputy Minister whether he could tell this House how many companies and also individuals have been declared bankrupt in recent times because lending institutions such as banks—it can also be the Local Authorities Loans Fund Board—have lent money to people who could ill afford to borrow that money? Those figures will show the House why we in these benches have voiced our fears in this regard.

It is a different situation altogether. However, the fact that they have been declared bankrupt, shows that the creditor does have a remedy to recover his money.

Yes, but to get 20 cents in the rand perhaps?

Yes, but that will be a concurrent … [Interjections.]

*This Bill makes provision for a well-organized and well-administered body—by way of the Auditor-General it will be responsible to Parliament—specificially to look after the loan needs of the smaller local authorities. Provision is also made for having all interested parties represented on that board, without the body having to be unnecessarily cumbersome.

In the Committee Stage the hon member for Yeoville referred to one of the South American countries that is so over-burdened, virtually stupefied, by debt. He thus wanted to draw an analogy with local authorities that might come into being or that exist already and are supposedly so poor. Why did that situation arise in that country?

You are taking my words out of context.

No, Sir. Why, then, did the hon member make any mention of that at all? We do not, after all, want to lend any money to South American states. Let me tell the hon member why those conditions arose there. In those countries there is no legal remedy to prevent them borrowing. Let me now tell him who is in even greater difficulties than that South American country. The ones who are in even greater difficulty are the institutions who loaned the money to that country. Am I not right? All that is happening in terms of clause 14 of this Bill is that we are trying to prevent the board from landing up in that position. The hon member also said that we could not compare 1926 conditions with those of 1984. I concede that a great deal of water has flowed under the bridge since then. There is a principle that has not changed since 1926, however, and that is that it is good business, when lending money, to ensure that you will get that money back, and that will be the principle for as long as the capitalist system remains in existence.

In conclusion I want to emphasize that this measure enables the fund to properly and responsibly look after the needs of small local authorities and to assist them, but also affords the management of the fund an opportunity and the means to ensure that the taxpayers’ money that is loaned out is administered in a proper and responsible manner.

Question agreed to.

Bill read a Third Time.

Mr Speaker, I take pleasure in continuing the Second Reading debate on this Bill.

This Bill provides that in future the Police Reserve will have the same service commitments as the reserve units of the Defence Force. In the second place the Bill deals with the penalties applicable to members of the Force. Clause 3 proposes an increase in the fine an officer may impose upon conviction on a non-commissioned officer. The fine is to be increased from R30 to R50. Perhaps I should just point out that this penalty is imposed for disciplinary contraventions.

Clause 4 envisages, in the first place, to simplify and speed up the procedure to be adopted in the case of the alleged misconduct of an officer. The proposed procedure prescribed by regulation will result in the alleged misconduct of an officer being investigated, like any other case, with the relevant officer being able to put his case before a decision is taken as to whether he should be charged or not. In the second place a deficiency in the Act is made good in that an officer who is found guilty will, in future, be notified of the recommendations of the board and of the Commissioner to the Minister. In terms of the arrangements, an officer will then be given the opportunity to have recourse to the Minister in advance if he feels that too high a penalty has been recommended for the offence he committed. In the third place the fine the Minster may impose on an officer upon conviction has been increased to R200. Inflation has necessitated this increase. I also think it is a reasonable and acceptable increase.

Clause 5 introduces a new principle, namely that of giving the Police Act extraterritorial effect for disciplinary purposes. The hon the Minister has referred to this matter in full in his speech. I should like to emphasize this again, because I also feel it is important for our police to be subject to the necessary discipline outside the borders of South Africa. It is so much more important to behave correctly there, because through their behaviour there are policemen enhance or detract from the image of the SA Police.

In conclusion I want to say that I think this Bill will play an important role in keeping the discipline in the Police Force up to standard. By maintaining strict discipline in the Force, the Police will always act responsibly in public, which will further reinforce and enhance the public’s respect for, and image of, the Police. I take pleasure in supporting the Second Reading of this Bill.

Mr Speaker, the CP gladly supports all the clauses of the amending Bill before us. In his Second Reading speech the hon the Minister explained the clauses very thoroughly, and there is little that one can add.

It is strange that so often in a debate on a matter about which there is actually so little to comment on, someone has the knack of putting the cat among the pigeons. Then you must know, Sir, the discussion is in full swing again. That is what happened when the hon member for Durban Central made his speech, and I have a copy of that speech here. When he saw that there was little one could add to what the hon the Minister had said, he put the cat among the pigeons by dragging section 27B of the Police Act into this debate. He does, of course, have every right to do so. When an amendment to a law is being discussed, one can cover a wider field in one’s discussions. I noticed that the hon the Minister interrupted him every once in a while by asking: “Tell me, what clause are you discussing now? In regard to what clause are you now dragging that in?” Be that as it may, I shall be coming back to that aspect.

At this stage I should just like to say that it is perhaps necessary for us to look, for a moment, at the powers of delegation of the Commissioner of Police. In speaking about the powers of the Commissioner of Police, I think it is necessary for us to note that his task and his activities are divergent and cover a very wide field. The Commissioner’s work programme is undoubtedly increasing by the day. As the activities and involvement of the Police Force increase, amongst other things in regard to internal security as well, it is also becoming essential for the Commissioner of Police to play a very important role at various levels. And the hon the Minister indicated the role played by the Commissioner of Police; his advisory role in the field of national security, his active membership of various bodies, the role he plays in regard to the initiatives in Southern Africa and also his role in regard to decision-making and policy-making processes. The truth of the matter is that the Commissioner of Police’s services are increasingly in demand elsewhere. In addition to all his many duties and responsibilities, it is necessary for the Commissioner to organize his programme of activities in such a way that he can delegate the workload resting on his shoulders to officers of lesser rank. Somewhere somebody must assist the Commissioner of Police with a view to relieving that workload of his. That is why it has become essential for him to be able to transfer his powers to officers of lesser rank.

It is important to note that in addition to the many duties and powers of the Commissioner of Police, he also has the major responsibility of ensuring that he is not isolated from the Police Force as such. I think that is one of his most important responsibilities. I think we should emphasize the fact that it is essential for the Commissioner of Police to guard against becoming excessively involved in spheres that could subsequently alienate him from his own department. I trust that in this regard the hon the Minister will be able to set our minds at rest by informing us that everything is under control. We also know, of course, that every power delegated by the Commissioner of Police is always subject to the approval of the hon the Minister.

To get back to the cat the hon member for Durban Central let loose amongst the pigeons by referring to section 27B of the Police Act, 1958. The relevant section reads as follows:

1. (1) Any person who publishes any untrue matter in relation to any action by the Force or any part of the Force, or any member of the Force in relation to the performance of his functions as such a member, without having reasonable grounds (the onus of proof of which shall rest on such person) for believing that the statement is true, shall be guilty of an offence and on conviction liable to a fine not exceeding R10 000 or to imprisonment for a period not exceeding five years or to both such fine and such imprisonment.

According to the hon member for Durban Central, the existence of section 27B of the Police Act still proves an embarrassment to the SA Police Force. He made the statement that in spite of the wording of the said clause remaining unchanged—and he also extends this to the wording of section 44 of the Prisons Act remaining unchanged—one detected a more lenient attitude in the Directorate of Prisons. The hon member for Durban Central also said that he wanted to know whether the hon the Minister was going to do something about this state of affairs. As is customary when someone tries to reach conclusions merely by way of insinuation, of course, he should at least also bear in mind that at times the hon the Minister can also give him an answer that is very short and to the point. I therefore think that when the hon the Minister replies to this debate he will again be referring to this. When, at the insistence of the hon member for Durban Central, the hon the Minister indicated that it was not his intention to amend or repeal section 27B of the Police Act, nor even to relax its implementation, I gained the impression, after having read through the hon member for Durban Central’s speech, that the hon member had become a little obstreperous about it. I am sorry to have to say it, seeing that the hon member for Durban Central is not present here this afternoon. It seems, however, as if he grew a little obstreperous when the hon the Minister dealt with him so tersely. [Interjections.] Because section 27B of the Police Act provides that the media should stick to the truth if they want to publish anything, the hon member for Durban Central contends that that section leads the South African public to assume that the police are covering up certain iniquities. The hon member for Durban Central therefore wants the hon the Minister of Law and Order to follow in the footsteps of the hon the Minister of Justice who stated recently, in his discussion of his Vote, that he would possibly be more accommodating in regard to the provisions of section 44 of the Prisons Act. As I have said, the hon member for Durban Central made the point that owing to the refusal on the part of the hon the Minister of Law and Order, South Africans now suspect the South Africa Police of wanting to cover up iniquities.

The question that now arises is: To what South Africans is the hon member referring? Who does he have in mind as being the people harbouring these suspicions? It is probably true that the PFP most certainly do have the constant obsession that the SA Police are hiding things and want to cover up certain iniquities. One need only read the 1979 debate, when the hon member for Houghton very strongly emphasized the point when she entered the lists on behalf of her party.

What was it that motivated the hon member for Durban Central, simply out of the blue, by a virtually unsolicited comment, to put the cat among the pigeons? Surely the media are free to stick to the truth. If they did so, South Africa would never lack any knowledge in regard to the SA Police and their activities. They must just stick to the truth. If there are indeed any iniquities, and if they stick to the truth, they would be quite within the law if they published the facts. They consequently have no need to fear any fine of R10 000 or imprisonment for a certain period.

We know, of course, that the media are not very fond of the truth. We know that their motto is very often: The truth, the whole truth and anything but the truth! [Interjections.] Just the other day, in the Standing Committee on the Justice Vote, I specifically said that the media should guard against making martyrs or heroes out of criminals. These efforts—which one is continually encountering when one has anything to do with the SA Police—at digging something up that could possibly put the Police in a poor light, are unjustified. I think we should get away from the idea that one should conduct a witch-hunt in regard to the SA Police, on the strength of an assumption that there is some or other iniquity that they want to cover up. Let me say again that if the media publish the truth, they have nothing to fear.

Why did the hon member for Durban Central try to compare the actions of the Directorate of Prisons with those of the SA Police? Let us look at what the attitude of the directorate is. I have here a considerable number of newspaper cuttings in which attention has been paid to this in recent times. The standpoint of the directorate is: “Publish what you want to, whether false or not. Publish it, but also give us an opportunity when publishing your reports, to publish our comments in the same issue, side by side with your report.” What I am saying is that that is fair, after all, and I think it is also the view of the hon the Minister of Law and Order. The Directorate of Prisons has a 24-hour liaison service by means of which the Press can, merely by contacting them, find out what the standpoint of the Directorate of Prisons is. I think that is also the case as far as the SA Police are concerned. The standpoint of the SA Police can also be ascertained in this way, I should think. So it is very easy for the Press, before publishing any report about which there is any doubt, to get in touch with the department and to obtain the comment of the SA Police. I would be glad if the hon the Minister would, when replying to the debate this afternoon, inform the House about this so that it can be clear to all hon members what action the SA Police takes in this connection.

The Directorate of Prisons also says: You can publish what you want to, but be careful, because you must remain within the law, and if you transgress by not consulting us or asking us for our comments, you must know that the law will take its course. I think the hon the Minister will also spell out for us the standpoint of the SA Police in that regard.

Let us look at the penalties that can be imposed. In the case of the Police Act it is a fine of R10 000 or imprisonment for a period of five years if one makes an untrue statement about the activities or alleged activities of the SA Police. In the case of the Directorate of Prisons the penalty is a fine of R2 000 or imprisonment for two years. There is consequently a fundamental difference in the sentences that can be imposed in the respective cases. This immediately gives one not only to assume, but also to realize, that at that stage there is an important difference between the task of the SA Police and that of the Directorate of Prisons. Frequently the SA Police are still engaged in an investigation, and I think that when the media begin to publish articles about the activities of the Police, it is necessary for them to bear in mind that they can hamper the Police in the activities and the work they are doing if, in their reports, they deviate from the truth.

We have confidence in the SA Police Force and also in their conduct, in spite of this cat that has now been put among the pigeons with a view to unnecessarily placing their functions and activities under suspicion.

Mr Speaker, all one has to do in this House to start a debat is to put the word “Police” on the Order Paper. Then everybody starts looking for magnifying glasses and microscopes, and alarm bells start ringing—things then start happening. Even when we have a piece of Police legislation which, unusually so, is supported by all parties, we still find that somewhere someone manages to ferret out something or to find something on which he can hang his hat, and then he starts speaking about things which basically have nothing to do with the content of what is before us this afternoon.

We have heard a lot about section 27B of the Police Act, but that section is not included in this piece of legislation, and therefore I am not going to concern myself with the subject matter of a debate which was started by the hon member for Durban Central and has been continued, I must say, at some length by the hon member Mr Theunissen.

This Bill is unusual in the sense that it is not often that we do get a Police Amendment Bill before the House that enjoys the support of all the parties. It does so for the simple fact that it happens to be a good piece of legislation, a piece of legislation which all of us can welcome because it introduces improvements, and I should like to refer to these improvements under three main headings.

The first improvement I particularly welcome because I am one of those old-fashioned disciplinarians who believes in using the rod if you do not want to spoil the child. [Interjections.] It is incredible, Sir. The minute one uses the word “discipline” members of the official Opposition start to carry on like a farm-yard. It is incredible. They hate the word. I say this Bill addressed itself to a form of discipline which is necessary in any Force such as our SA Police. This Bill does much to tighten up that discipline. In the second place this Bill sets out to assist the Commissioner. He is an official with onerous tasks, as other hon members also have pointed out. This Bill assists him by providing for something which has so far been lacking in the Police Force, and that is delegating authority. Up to now too much responsibility has fallen on the shoulders of the Commissioner. He has been the man who has to face the music in the last instance for everything that happens. I submit he should have the wherewithal to spread responsibility, and this Bill assist him in that by allowing him to delegate certain of his powers. In the third place, and this is the most important of all, this Bill streamlines and speeds procedures up. This is a good thing because what we are doing here today is to allow disciplinary action to take place more visibly and more quickly than in the past, more visibly in the sense that the public can now see that disciplinary action has been taken. They will know that disciplinary action has been taken and they will get the result of that action far quicker than has been the case up till now.

Having set out these three grounds for our support of this Bill I must say that we also welcome the provision for disciplinary action for offences outside the Republic as though such offences have taken place within the borders of the Republic. This certainly plugs a loophole that has existed for many years. Further, I think members of the Police Reserve will be the first to accept that their service should be brought into line with the regulations that apply to the SA Police. Any member of the Police Reserve will be the first to say that he has a commitment and that he is prepared to meet his obligations in that regard. He will be all the more ready to do that under the amended regulations in terms of this piece of legislation. I like the way it is being spelt out here so that all members of the Police Reserve will know exactly where they stand.

Finally, let me say it is nice to have a Police Amendment Bill that does what I believe we should always be doing in this House, and that is improve legislation to the benefit both of the community and, in this instance, the SA Police.

Mr Speaker, let me thank those hon members who, on behalf of their respective parties, supported the legislation, and although there is no contentious provision in the legislation, it was nevertheless pleasant to have listened to such a positive debate on a Bill such as this.

The hon member Mr Theunissen spoke about the cat the hon member for Durban Central had put among the pigeons during the debate. The hon member for Durban Central did that in a kind of roundabout way, apparently because of not having anything to say. The hon member then simply decided to refer to section 27B, which has nothing to do with this Bill. Section 27B, however, is now part of the debate but, like the hon member for Umhlanga, I shall not be referring to it in any detail.

What did the hon member Mr Theunissen do, however? He put an even larger cat among the pigeons.

Are you not grateful for the fact?

No, I am not grateful, because I do not agree with the hon member when he says that the media have no fondness for the truth. [Interjections.] Because we are on friendly terms, when it comes to the provisions of the Police Act, we do not necessarily have to agree with each other on something like that as well. That is not my experience of things. The media in South Africa do indeed seek the truth, and if on occasion there are certain elements that do not do so, I regret the fact, and there are many such examples.

None of that flattery now!

No, it is not flattery; I have no need of that. I have been in the House for 18 years now, and I do not need to use flattery. I have a great responsibility, and although the hon member Mr Theunissen made a fine contribution, I hold it against him that he said that the Press in South Africa is not very fond of the truth. He spoke of “the truth, the whole truth and everything but the truth”. It is unnecessary for us to bring such a false note into the debate. It is completely unworthy of the hon member. If there is anyone in South Africa that can speak about the Press, it is certainly I, because my portfolio is one of the most sensitive, owing to the fact that the South African Police are involved in every facet of the community. There are few departments that are as involved with the Press as the Department of Law and Order. So when it comes to what is the truth and what is not the truth, I can largely endorse what he says.

Why do you not fight with Gastrow?

Ah, no, hon members need not be that sensitive. Is everything that appears in Die Patriot the truth? Is everything that the hon member for Rissik says here in the House or in Die Patriot the truth?

What I say here is the truth. What are you insinuating? Mr Speaker, on a point of order: May the hon the Minister insinuate that what I say in this House in not wholly the truth?

Order! The hon the Minister merely asked whether everything the hon member said was the truth, and the hon member for Rissik replied that everything he said was indeed the truth.

Mr Speaker, on a further point of order: May the hon the Minister make the insinuation that hon members here in the House do not speak the truth?

Order! The hon the Minister made no insinuations, having merely put a question to the hon member. The hon member need merely say that he is, in fact speaking the truth.

I thank you for your guidance, Sir.

You are a “waarheidsridder”.

Why is the hon member for Rissik so sensitive that he calls me a “waarheidsridder”? Is that parliamentary?

You are a “Kakieridder”.

Sir, is the use of the word “Kakieridder” parliamentary?

Order! The hon member for Kuruman must withdraw “Kakieridder”.

I withdraw it, Sir.

Is it parliamentary for an hon member to say that another hon member is a “waarheidsridder”?

If it is unparliamentary, I withdraw it, Sir.

I thank you for your protection, Sir. [Interjections.]

The hon member for Durban Central referred to section 27B of the Act, and I think he did so because of having had nothing to say.

†What is very interesting is the way in which he referred to section 27B. I quote from his unrevised Hansard. He said:

And then he said:

Why does he not state categorically what the hon member Mr Theunissen referred to, namely false information? He does not say that. He talks about “certain information”. He then refers to a reply which I gave him, and referring to the Minister he said:

This particular provision in the Police Act is no embarrassment to the South African Police. It is no embarrassment to the Government. What is the provision? it is exactly what the hon member Mr Theunissen quoted. What is required is that one should publish a true matter. One must stick to the truth. That is what is required in this particular section, which states:

Why should that be an embarrassment?

[Inaudible.]

Can the hon member for Houghton, who is now taking part in the debate, tell me why it should be an embarrassment to publish the truth?

Because one can never establish what is the truth.

Yes, and because this cannot be done, according to the hon member, one must be entitled to publish an untruth? To the detriment of whom? To the detriment of the South African Police, of course; not to be the detriment of anyone else. [Interjections.] That is the position.

†Mr Speaker, it is interesting that whereas hon members of the PFP are so touchy on this particular subject, as are some elements of the Press, the Rand Daily Mail publishes the following report on 23 May:

Where does that appear in the Police Act? Where is that provision in the Police Act? [Interjections.] There is no such provision.

*The hon member for Houghton, who makes such a sanctimonious fuss here about the truth, must tell us where this provision appears in the Police Act. [Interjections.] That is simply one small, insignificant example of the sort of thing one comes across daily. The hon member for Houghton, however, does not want to listen to anything relating to the truth. That is what it is all about. That is why I am once more telling the hon member for Durban Central, whether the hon member for Houghton likes it or not, that as far as section 27B of the Act is concerned, the SA Police cannot see why trying to publish the truth should create so many problems. Owing to the circumstances in which we find ourselves, I am not prepared to consider any amendment to section 27B. That section does not bother us and can simply remain on the Statute Book.

†I once again thank hon members for their support of the Bill and for their very positive remarks in respect thereof.

Question agreed to.

Bill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr Chairman, clause 1 embodies three of the main purposes of this Bill. Firstly, it proposes the reduction of the amount that is going to be raised from the public by means of taxes on fuel, distillate fuel, petrol, etc, as set out in paragraph (a), and we support that part of the clause. However, the second main purpose of this clause is to expand the purposes of the State Oil Fund, and this is where we have serious problems. The State Oil fund originally related to oil and coal. This was the purpose for which the Act was passed in 1977 and this purpose was reaffirmed in the intervening years by two amendments that were passed. We ask ourselves why it is now necessary to expand the purposes of the fund so dramatically. Why is it necessary now to provide for the acquisition, generation, manufacture, marketing or distribution of any other form of energy? That is a very far-reaching proposal. When this Act was originally passed, it was for a specific purpose, which was put to the House and which was accepted unanimously. That purpose was the erection of Sasol, to provide funds for Soekor and for the acquisition of strategic stockpiles. Those were the accepted objectives. But we are now being asked to accept unspecified objectives across an enormously wide front, and we find that objectionable. Why broaden the objects of the present State Oil Fund and, especially, why do it behind a cloak of secrecy?

The original objects have very largely been fulfilled, as Sasol 2 and Sasol 3 have now been erected. The hon the Minister yesterday leapt on this side of the House when the possibility of a Sasol 4 was raised. We of course have no objection to funds in the State Oil Fund being used for a Sasol 4 at some stage in the future. That would be fully consistent with the original objects of this fund. However, the fact that we support a Sasol 4 in principle cannot be regarded as support for such a broad change in the objects of the fund as to encompass any other form of energy. That is an unfair argument, and I am sure the hon the Minister will concede that.

We are, of course, not opposed to general research and development in the energy field as we need it in this country, but why this vehicle? Why this secret vehicle? We can embark on energy projects through the normal departmental estimates. The House is eager and willing to support sensible energy projects. What we do not want to do is to give a blank cheque for energy projects which are carried out behind a veil of secrecy, beyond the control of Parliament and beyond the scope and authority of the Auditor-General. There is no need for this kind of mechanism. All the projects mentioned by the hon the Minister yesterday, which by no means encompass the whole field, can be incorporated in departmental estimates in the normal competition for general State revenue like all other departments, and we would be happy to support those that we agree with.

The point we wish to make—and we cannot emphasize it enough—is that daylight is the best auditor; so we need to look at these projects in the full light of day, in the full light of public scrutiny.

This leads me to the further point that we still object strongly to the principle that the Auditor-General is not involved in controlling this fund, and has not been involved since the inception of this fund. It remains a fundamental point of objection. Naturally we welcome the hon the Minister’s indication in the debate yesterday that he is considering changing the structure so that next year we may expect legislation which will give the Auditor-General authority. We obviously welcome that. In fact, I am constrained to say that it is with great pleasure that we note that the hon the Minister is finally accepting our wisdom and the pleas we have been making for years. It seems to be happening on a broad front these days. It seems that slowly but surely the wisdom of the Progs is seeping through. In that respect this hon the Minister is perhaps better than his predecessor, because we have not had this particular fight with this hon Minister. However, I am also constrained to say that the announcement now, after all these years of refusing this request, raises the intriguing question as to whether this announcement, coupled with the recent shift of control to the IDC of the oil funds, in fact amounts to a tacit admission by the hon the Minister that the present system has indeed given rise to serious problems in the past. As I have said, our quarrel is not with this hon the Minister who has only recently taken over this hot potato portfolio, and therefore when I warn, it is a warning to the Government; that this announcement of a future change will not allay our grave concerns about the past. We are still waiting impatiently for the report of the Advocate-General into all the alleged irregularities and we would like to know when this report is going to be made available. Will it be before the end of this session? For the information of the hon member for Boksburg who seemed to call it into question, I can tell him that the evidence we have has been passed on to the Advocate-General and other relevant authorities.

The third purpose of this clause is that money should be retained in the SOF at the hon the Minister of Mineral and Energy Affairs’s discretion. We said that we object to the State allowing the State Oil Fund money to be held by one Ministry when it is desperately needed elsewhere in the economy. In this respect we are very pleased that the hon the Minister has given us figures which show that at present in the State Oil Fund together with the Equalization Fund there is R1 087,6 million. This raises the point that if that is all that is left, a great deal has been spent since 1977. At least R2 billion has passed through this fund and we do not know how it has been applied. Has it all been well spent? The point remains whether the Government should hold that money in one hand, while taking another R880 million from the consumer with the other hand by way of a further increase in GST. Why should one Ministry, in a very real sense, be allowed to determine national priorities in this way?

In the light of these objections, I move the amendments standing in my name on the Order Paper, as follows:

1. 1. On page 3, from line 23, to omit paragraphs (b) and (c).
2. 2. On page 3, from line 32, to omit “in the opinion of the Minister of Mineral and Energy Affairs”.

In the short time I still have at my disposal I would like to respond to certain matters the hon the Minister raised yesterday. In response to our expressions of concern about the possible misapplication of funds over the years, he replied to the one contract I referred to where there was a premium of 50 cents per barrel offered at the time when the maximum authorized premium by the Minister was $1,90 per barrel. The hon the Minister made the point that he was now buying below that level, in spite of the higher authorized premium. We congratulate him on that. This hon Minister has been in charge since the beginning of this year; so perhaps he is a new broom. However, what he did not say, was whether or not, when this offer was made in July last year, the 50 cents premium was offered, we were not paying a much higher figure. At that stage the premium was also $1,90. He also did not answer the other question which I raised with regard to the other offer which was made in September 1982, which was for 60 million barrels of oil spread over a two year contract period. At that stage the authorized premium, on a comparative basis, should be taken as $37,50 per barrel. This offer for that amount of oil netted out at $30,60 FOB per barrel, which works out at more than $6 per barrel difference in the maximum authorized price at that time compared to the offer which was to hand. This does raise questions about the spending of that money at that time. [Time expired.]

Mr Chairman, we have looked at the amendments of the hon member for Constantia very carefully. My colleague the hon member for South Coast, who unfortunately is not able to be here today, stated this party’s standpoint that use should be made of the Auditor-General in order to ensure that the money spent and the way in which it is spent will become known at least to the Select Committee on Public Accounts of this House. We support that principle, and we were encouraged to hear from the hon the Minister yesterday that it is his intention to see whether ways and means can be found to bring that about.

However, we have also found that unfortunately we are unable to support the amendments of the hon member for Constantia and that for two reasons. In the first instance, the State Oil Fund does not undertake research itself, nor does it undetake production, but it is merely going to become a source of capital to be employed in a specific direction, or in a number of directions, relating to research, manufacture, marketing and distribution of alternative forms of energy or the extension of known sources of energy. It is therefore very likely that the amounts of money made available will be known publicly. If, for instance, the hon the Minister decides in his wisdom that a certain amount of money must go to Escom so that it can further its research into say, hydro-electric energy generation in South Africa, then undoubtedly the relevant amount will be made known through the report of Escom. So, we do not have the same fears the hon member and his party have regarding subparagraph (1A) on page 3 of the Bill which the hon member proposes in his amendment should be deleted. We believe that a reservoir of capital for energy generation and retention in South Africa is essential. If the needs which the Fund was originally designed to meet, namely the establishment of Sasol, the financing of Soekor and stock-piling, have now basically been satisfied, we would prefer to see this capital remain within the orbit of energy research, manufacture or marketing as it is stated in the Bill.

Secondly, the hon member objected to the Ministerial discretion regarding such money. We would prefer to see that the Minister has the discretion as specified in the Bill, because in that way he is made accountable to the House. That principle is extremely important to us. If one removes that Ministerial discretion, how are we going to get the Minister to account for how that money is expended? I think that the hon member should rethink that particular deletion he is proposing.

It would obviously be through the Minister of Finance.

Does the hon member then not have confidence in this Minister who is charged with the responsibility for this portfolio?

It is a question of setting national priorities.

Well, I think we must also set priorities in terms of Ministerial responsibility. We cannot burden the hon the Minister of Finance with everything. The utilization of capital in the field of energy, in particular, is the responsibility of this particular Minister. I think it does not make sense to give this Minister the executive authority to control the funds and then to ask the Minister of Finance to be accountable for it. I do not think that that works. The hon member must realize that, for instance, the money spent on defence is the responsibility of the Minister of Defence. He has to explain its utilization. In the case of energy, it is this Minister who is responsible. In fact, the hon members of the official Opposition are arguing against themselves. They are saying there should be Ministerial responsibility, but they want to take it out of this Bill. [Interjections.] I am afraid that we cannot agree with the hon member for Constantia’s logic, although we are also concerned about the need for accountability to the House in respect of these funds. For those reasons we will not be able to support the hon member’s amendments.

Mr Chairman, I do not want to reply in detail to the argument of the hon member for Constantia. Of course I am certain that the hon the Minister will do so himself. There are, however, a few aspects of the clause under discussion which I feel really require explanation. The first aspect I want to point out is the alleged secrecy which, according to the hon member for Constantia, is possible in terms of this clause. As far as I am concerned, there is no question of secrecy in the clause under discussion. Even in the Second Reading debate there was a comprehensive indication what sums of money were involved. The hon member for Constantia referred, inter alia, to the sume of R887 million from the sale of Sasol shares. Every cent of that money has been accounted for, but the hon member for Constantia persists in his arguments. In this regard I should like to draw the attention of the hon member to the envisaged new section 1(1)(iA), which reads as follows:

The hon member professes that the State Oil Fund may do anything it wishes with this money. The specific words I have quoted to the hon member expressly indicate that the money in the State Oil Fund may only be used in connection with energy. The hon member also alleged that the Government could make provision in its Main Appropriation for the money needed to do the things proposed in terms of the measure under discussion. He said that he would be in favour of that. Does the hon member, since this money is in fact available, and an amount of R150 million of this could, for example, be used to relieve the cash flow problems of Escom, now want this to be done in the cumbersome way he suggested? In his Second Reading speech the hon the Minister did make it clear that the purpose of this was also to give assistance to the agricultural sector by suspending extension fees payable by the farmers to Escom. According to the hon the Minister, an amount of R18 million is needed to suspend extension fees for a period of nine months up to the end of 1984. It is therefore clear that there is R18 million that need not be repaid by the farmers. The emphasis, therefore, falls on the concept of suspension. Does the hon member for Constantia also want the R20 million, which is destined for the maintenance of fuel prices, also to be voted in the ordinary manner by way of the Main Appropriation? Does he want taxes to be increased in order to obtain that sum of money? For the money is available, and the Government wants to use it to help the farmers, to help Escom, and to accommodate consumers by keeping prices lower. Why is the hon member asking for this to be done by way of the Government’s Main Appropriation? The only consequence of such a step would be tax increases in order to obtain that money. Mr Chairman, I maintain that there is absolutely nothing secretive about this entire matter. I therefore do not want to waste the time of this House any further by prolonging this argument with the hon member for Constantia. Of course, the hon the Minister also pointed out that this fund as a whole is audited and that this is done by auditors from the private sector. We are, of course, investigating the possibility of also having it approved by Parliament by way of having it submitted to the Auditor-General for inspection. There are consequently no problems in this regard. The hon the Minister also promised that if it appeared necessary, he would also be quite willing to introduce legislation here in this regard. I therefore really cannot understand what the hon member for Constantia’s problem is with regard to this specific clause.

Mr Chairman, before reacting to the arguments raised by the honmember Dr Vilonel, I should want to refer breifly to a number of other matters arising from this clause. I was not here yesterday afternoon when the hon the Minister explained what he was going to do as far as the Auditor-General is concerned. Therefore I merely want to record my appreciation of the fact that the hon the Minister is indeed going to do something about the Auditor-General and these funds. I do welcome and appreciate that statement by the hon the Minister.

Furthermore I should like to make what may be the first of many requests to the hon the Minister by making it clear that I should like this matter to be dealt with not only by the Standing Committee on Mineral and Energy Affairs under the new dispensation, but also by the Standing Committee on Finance. We know that we are going to have standing committees for each of the various departments of State, and I believe that from a financial point of view this is a very important matter. It may also well set a precedent in respect of a number of other matters which are presentely being handled by corporations. I do therefore direct this request to the hon the Minister in the hope that under the new dispensation the Standing Committee on Finance will deal with this particular aspect.

The problem I have which arises both from what was said by the hon member Dr Vilonel and even more so from what was said by the hon member for Durban North is that there is a fundamental difference between us in regard to the way in which accountability to Parliament is dealt with. Accountability is not sufficient if in fact the Minister can be questioned in regard to the spending of money during the discussion of his Vote or during any other debate. Accountability involves in the first place being able to decide whether or not money has to be appropriated for a particular purpose. Once the money has been appropriated, then the way in which it is spent has to be accounted for. Therefore, there are two stages of accountability and, with respect to the hon member for Durban North, he dealt with the second stage only namely the stage of reporting to Parliament. Let me use the example the hon member gave in regard to Defence. I would be horrified if all that we had to do in regard to Defence was to ask the Minister certain questions in regard to what had happened, let us say, in Armscor or in regard to some other fund without our having to appropriate that money in Parliament. That is what this debate is all about. It is not just a question of accountability after having spent the money. There is first of all the authority of Parliament to appropriate money and to decide whether or not to appropriate that money for a particular purpose. Here we have a classic example. Not only is there nothing in the Estimates in regard to some of this money but the figures given to us by the hon the Minister of Finance in his Budget Speech did not include things about which the hon the Minister of Mineral and Energy Affairs is now telling us. Therefore, when we agreed to the Vote of the hon the Minister of Mineral and Energy Affairs and also other Votes, we did not have those figures before us, and it is a fundamental privilege of Parliament to decide whether or not to allow funds to be voted or not. That is the ancient tradition of Parliament.

If we look at the estimates now and compare them with the Budget Speech, we find that nowhere in his Budget Speech did the hon the Minister of Finance make mention of the fact that he was going to borrow R441,2 million of this money for the financial year 1984-85. That is what he has now said and we do not know when he is going to pay it back. However, he did not tell us this when he presented his Budget. It was never referred to. In this Budget the hon the Minister of Finance told us that he was going to raise a certain amount of money from taxation, that he would have a certain deficit before borrowing, and that he was going to raise certain amounts overseas and certain amounts on the local market. At no time, however, did the hon the Minister of Finance tell us that he also intended to finance his expenditure in the current financial year by means of an interest-free loan of R441,2 million. That is not the way in which to budget. It just is not on. That is not the way in which to run the finances of a country. One cannot present a budget and then weeks and weeks or even months later have another Minister come along and say that he is going to lend the Minister of Finance R441,2 million to help him with his Budget. That is not the way to run the finances of a country. That is precisely the problem in regard to this particular clause which is designed to legitimize a practice of which we disapprove and which is contrary to ancient Parliament traditions. If it is done in this case, it will be done in other cases as well, and one will find in the end that the powers of Parliament have been drastically eroded.

The principle has already been accepted.

Just because a person may have already committed one murder, must I stand aside and allow more murders to be committed?

This is an amending Bill. It has nothing to do with principle.

Yes it has. That is precisely my point. This is an amending Bill, but it also introduces a new principle. I have already pointed that out.

It does not.

Of course it does.

The principle has already been accepted.

Order! I cannot allow the hon member for Yeoville to discuss the principle of the legislation in the Committee Stage.

I am not discussing the principle, Sir, I am discussing the clause. The fact that the hon the Minister does not understand the principle of his Bill is not my problem. That is his problem. [Interjections.] Let me show you the Bill.

Order! The hon member is only allowed to discuss the contents of the clause.

But that is what I am doing, Sir, because if one looks at the original Act, one finds that it never contained these powers. These are new powers.

But that was accepted by Parliament.

Of course, but we are now dealing with the wording. With great respect, Sir, we have moved an amendment to delete certain portions of this clause, and I am now speaking to the amendments in order to show why we should support these amendments and why we should not agree to the clause as printed.

Order! The hon member may proceed.

Thank you, Sir.

Let me give another example. I want to put the point as follows: In terms of this clause, whereas previously one had to invest all money with the Public Debt Commission “or in such other manner … in consultation with the Minister of Finance” the position in future will be that money “not immediately required for a purpose mentioned in paragraph (a), shall be invested in such manner as the said Minister with the concurrence of the Minister of Finance may determine”. I do not believe that one must invest money in any way the Minister wants it to be done. I think one has certain recognized channels through which such money must go, and a broad discretion is an undesirable thing. Is that out of order? It is in the clause, and it is one of the reasons why I want to vote against the clause. If the hon the Minister says that this is against the principle of the Bill, then I want to know what the principle of the Bill is.

Read the long title.

On clause 1, dealing with the specific provisions of the clause, I am entitled to say why I do not want to vote for clause 1, and I am entitled to give those reasons. I try to indicate that I do not want to vote for it because firstly I do not agree with the principle of doing away with appropriations by Parliament and secondly I do not want to give an absolute discretion so that the money can be invested in any way which the Minister likes. That is the issue. I shall await the hon the Minister’s reply and then we can deal with the principle of the Bill. I should like to know whether one is not entitled to say why one votes against the clause. This is fundamental. As far as I am concerned, it is absolutely fundamental since these two issues arise.

Let us deal with the question of energy. It is provided here that the money can be used in respect of any “acquisition, generation, manufacture, marketing or distribution of any other form of energy”. The hon member for Durban North says he agrees with that, but I want to raise this issue. We have Escom under a separate statute and Escom is supposed to be a self-financing organization. I should like to know whether it is correct to use money which fundamentally comes from the motorist in the main, with very limited exception, for Escom. When Escom needs money and one wants it from the Exchequer, that is another issue, but here the field is now being opened so that it can be used for almost everything. [Time expired.]

Mr Chairman, I thank the hon member for Durban North for supporting the clause I think what he has said is quite correct. I agree with it and I subscribe to it.

*I also thank the hon member Dr Vilonel for his support of the clause.

As far as I am concerned, the principle has been accepted that moneys can be utilized in respect of other energy resources as has been set out. Looking at the principle that has been accepted, I do not even wish to argue the matter further and I cannot accept the amendments, because if I were to accept the amendments I should be rejecting the principle that these moneys can also be utilized for other sources of energy. I shall mention two examples which are perhaps most obvious. If we were to decide to begin exploiting Soekor’s gas finds tomorrow, we should need this clause to be able to do so, and that is why that principle is being confirmed at this juncture. If we were to decide tomorrow to carry out research into using hydrogen as an alternative source of energy, the principle has already been accepted, and we could use this fund to carry out that research. Without the principle we are unable to do so. It is a principle that was accepted in Second Reading that this fund can be used for alternative energy sources and therefore I do not wish to argue the matter further. Suffice it to say, therefore, that I certainly cannot consider the hon member’s amendment.

I want to place on record this afternoon that I object in the strongest possible terms to the insinuation of the hon member for Constantia that the SFF funds are spent under a cloak of great secrecy. That is a total untruth. Not a cent of SFF funds is spent in secret. I challenge the hon member to show me any section in any Act under my control in terms of which secrecy is imposed as regards SFF funds. I challenge him to do so. That is a total untruth, and he is misleading this House by making such a statement. SFF funds are spent in terms of the SOF Act and there is no secrecy whatsoever. I say this now, and I said it during the Second Reading, that every cent of the SOF funds …

Mr Chairman, on a point of order: Is the hon the Minister entitled to say that the hon member for Constantia misled the House?

Order! The hon the Minister is entitled to say that, as long as he does not say that the hon member did so deliberately.

Therefore I want to reject categorically the hon member’s statement that there is secrecy with regard to SOF funds. There is no secrecy. It is all public information and is available for inspection at any time. Therefore there is no question of any secrecy as regards these funds.

The second amendment moved by the hon member, viz on page 3, from line 32, omit “in the opinion of the Minister of Mineral and Energy Affairs”, I cannot accept either. The hon member for Durban North advanced two reasons to support the amendment. If it can be proved that this phrase is not in the original Act, I sympathize with the approach of the hon member for Constantia, viz that it is superfluous because it has not been embodied in the existing Act. But the existing Act also provides that after certain funds have been utilized in terms of certain instructions—for the most part the original Act concerned Sasol 2 and 3—and funds are left, they have to be invested with the Public Debt Commissioners.

This also brings me to the argument advanced by the hon member for Yeoville. This hon member insinuated that the hon the Minister of Finance had borrowed the money from the SOF. That is totally untrue. [Interjections.] The hon member must listen now. He has already had an opportunity and can speak again after this. The Act prescribes—and therefore this is specified by an Act of Parliament—that if moneys are not spent immediately they must be invested with the Public Debt Commissioners. I have no alternative; I have to invest them there. My only choice is to decide whether the Public Debt Commissioner should pay interest on it, or whether they can have it interest-free. With the approval of the Cabinet, it was decided that that money would be invested with the Public Debt Commissioner without interest. That is they only decision I took. The hon member is merely trying— and with this remark I want to conclude—to repeat the Budget debate. It has nothing to do with this legislation. I have a responsibility to Parliament and the Cabinet as far as this legislation is concerned, and I have to take my decisions in the light of that responsibility. The legislation specifically authorizes me to determine what is to be done with the money collected in terms of clause 1(a). The legislation gives me absolute power to determine what is to be done with that money. The legislation goes on to provide that if, after I have decided that the money can be spent on specific projects in accordance with specific directives, certain amounts remain, I may, with the consent of the Minister of Finance, determine whether the amounts should be invested in State organizations or elsewhere. An important second aspect is also involved, and I believe that the hon member for Constantia overlooked this as well. That is to say, I may also decide that a portion of that money be deposited in the State Revenue Fund, and in that event it would never be recoverable by the SFF. That is exactly what we did this year, and that is exactly why that clause is in the legislation. With the consent of the Cabinet, I decided to give 2 cents of the 4 cents levy imposed in terms of clause 1(a) to the Minister of Finance to deposit in the State Revenue Fund. That, however, I can only do if clause l(d)(ii) is inserted. Therefore I must have the right to decide. However, I am responsible to Parliament for the exercise of that power, as the hon member for Durban North rightly said. I want to let these few thoughts suffice. I do not want to make an oil debate out of this matter. The issue here is finance which is given to us in terms of an Act of Parliament and which we have to deal with in terms of and in accordance with directives. Therefore I am not prepared to make an oil debate out of this.

I convey my thanks once again to hon members who support this legislation. I certainly cannot accept the hon member’s two amendments.

With reference to the remark by the hon the Minister concerning the admissibility or otherwise of the amendments, I just want to say that I have examined them carefully and that, after considering all relevant evidence, I am satisfied that the amendments are indeed admissible and may be discussed in this Committee because no principle of the existing Act is affected by the amendments.

Mr Chairman, the hon the Minister says he does not want to make this an oil debate, but as I see it he does not want to make it a financial debate either. I have discussed finance so far, but he did not want to react to that. [Interjections.]

†Let me set a few things right. The provision in the original State Oil Fund Act of 1977 which provides that the funds which are not required for any such purpose shall be paid into the State Revenue Fund, is not included in this Bill. Therefore that matter is now open to debate. Secondly, the hon the Minister said that as far as he was concerned the principle of the Bill …

That is not all it says. You must also read the previous one.

Yes, I know. I am coming to that. Let me just finish. The hon the Minister objected to my interjections, but I do not have any problem with his interjections. He then said that the principle of the Bill is that one should be allowed to use this money for other energy purposes. Those were his words. If the principle of the Bill is that we must use it for other energy purposes, then I am in any case perfectly in order in debating whether in fact we do need the authority of Parliament for the appropriation of funds as opposed to merely leaving it to ministerial discretion.

What is also interesting—and I wrote the words down so that there should be no misunderstanding—is that the hon the Minister said—and I hope I am paraphrasing him correctly—that he had decided within the powers that he had that he was going to lend the money, interest free, to “die Staatskuldkom-missarisse”. Is that correct? Am I quoting the hon the Minister correctly?

[Inaudible.]

However, the hon the Minister did not do that. What he has done, is to give it to the Exchequer.

I gave it to the “Staatskuldkommissarisse”.

The hon the Minister says he gave it to the “Staatskuldkommissarisse”. Well, Sir, then I do not know what goes on.

No, you do not; that is the problem.

Just a minute, Sir. Let me quote the hon the Minister’s words. [Interjections.] The hon the Minister said: “Verder word ’n bedrag van R441,2 miljoen op ’n rentevrye grondslag aan die Skatkis tot die einde van die 1984 boekjaar beskikbaar gemaak”. “Die Skatkis” is the Exchequer; that is not the Public Debt Commissioners. Yet the hon the Minister says I do not know what is going on. With great respect, Sir, that is the reality; that is what the hon the Minister said. I have the printed speech in front of me. How can the hon the Minister now say that he gave it to the Public Debt Commissioners when he gave it to the Exchequer? [Interjections.] He must tell us where this money has gone.

The reality is, Sir, that until the law is amended to give this discretion, the hon the Minister has to rely on section 1(2)(a)(ii) as it stands at the moment. The issue which is at stake is a very simple one, and that is, should there be appropriations of money for use by the Exchequer—not investments with the Public Debt Commissioners—which are not mentioned in the Budget Speech, which are not referred to when we are told how the finances of the country is going to be run…

Order! The hon member must raise that point with the hon the Minister of Finance.

No, Sir, I cannot, and I will tell you why not. Here the power is being given to this Minister to give the money to another Minister, and that is what I am debating.

The fact that it is not reflected in the Budget Speech cannot be debated at the moment.

Mr Chairman, I have made the point and I do not need to repeat it. However, I think I am entitled to say that the hon the Minister should not use this power in terms of this subsection under circumstances of this nature. If there is accountability, will the hon the Minister please then explain what the two items are which appear in the Estimates of Revenue for the financial year ending 31 March 1985, on page 4— “State Oil Fund—Amount payable in terms of section 1 of Act 38 of 1977—R300 000 000”. We are debating that at the moment, Sir.

Order! The hon member is once again debating the Budget.

No, Sir, I am not. I am debating this clause because this money comes out of this clause. It says: “in terms of section 1 of the Act”, and I am debating section 1 of the Act.

The hon the Minister is only responsible for the Bill now before the Committee; he is not responsible for the Budget.

Mr Chairman, this has nothing to do the Budget.

But the hon member is discussing the Budget now.

No, Sir, I am asking the hon the Minister to explain whether he gave R300 000 000 to the Minister of Finance of whether he is getting it in. There is also a further amount of R150 000 000— “Miscellaneous income—State Oil Fund”, and I should like the hon the Minister to explain those two figures and tell us how he arrived at them.

Mr Chairman, if you care to look at clause 1 of the Bill, you will see that we are discussing the levy in terms of which we bring in certain moneys. We are discussing how that money is to be allocated and how it is to be invested. I have spoken about investment and now I am talking about the collection. Everybody is talking about accountability and I now want the hon the Minister to account. I should like him to tell me how he gets to those two figures. Those two figures must come from his department because he is responsible for them.

Mr Chairman, I feel I must respond to what the hon member for Yeoville has said regarding the principle of appropriation and accountability.

We have absolutely no difficulty regarding the idea of appropriation and annual accountability through the Budget, but in this case the principle that has been accepted, is that certain moneys will be raised via customs and excise duties. That principle has been adopted and is an on-going source of funds which will accrue to this hon Minister’s portfolio or to a particular fund.

Then it must be appropriated once it has been collected.

Only if we disagree that the customs and excise duty is not ongoing. However, in this case it is an on-going source of revenue for the hon the Minister’s fund, namely the State Oil Fund. As long as this money continues to flow, in terms of the powers in the Act the hon the Minister must be accountable for the expenditure and for what happens to that money, until such time as we change the source of the funds. Let me give another example. It does not fit the situation exactly …

May I ask a question? Does the fact that we have an income tax provision or a sales tax provision in respect of which there is an on-going source of revenue, mean that we do not have to appropriate the revenue we get for particular Votes? Is it not so that when it is obtained for a particular fund and it is going to be used for another purpose it should then be appropriated?

We have two cases here. The one is the appropriation of general revenue which goes into the State Revenue Fund, and the other is the money which is appropriated for a specific fund. By way of illustration let me use the Unemployment Insurance Fund. The principle of levying a charge on employers and employees is already on the Statute Book. Money accrues on an annual basis and is a constant source of income for the Unemployment Insurance Fund. The Minister of Manpower does not have to appropriate money in that sense on an annual basis. We have given him a permanent running source of revenue, until such time as Parliament decides that he is not going to have that source of revenue any more. That Minister is entitled to that revenue. In the same sense this hon Minister deals with a capital fund—and I use the word “capital” specifically—which is augmented annually by way of customs and excise levies. Although I can see the point the hon member for Yeoville is making, namely that he would prefer that all revenue should be appropriated on an annual basis and that we should go back to square one, I feel that is a complete change in principle of funding. In this respect I agree with you, Mr Chairman, that the hon member is dealing with a completely different principle.

With regard to alternative use, I want to point out that the hon the Minister has the power in terms of the Act to determine alternative uses, and the parameters are laid down by the board. When we voted at Second Reading for this, we laid down the parameters within the hon the Minister may spend that money and is accountable for it. It seems to me that the longer the hon member for Yeoville argues, the more we have a case of confusion worse confounded.

Mr Chairman, I just want to react to the astonishing assertion by the hon the Minister that the State Oil Fund is not a secret fund and has never been a secret fund.

It is not.

Let us just get the record straight. The State Oil Fund is a (Pty) Limited company, and one hundred percent of its shareholding …

Order! The hon member is not discussing clause I now. I allowed him one speech to discuss the broad principle but he must come back now to the contents of the clause.

Then I will raise it in the Third Reading debate.

Mr Chairman, I am merely rising to react to the point raised by the hon member for Yeoville, a point which, in my opinion, is a relevant point. I have reread my Second Reading speech and I note that I said the following:

This money goes back to the Treasury. There is no doubt about that, and I do not think hon members have any doubts about that either. I did, however, go on to say:

I do admit that the reference to the Treasury is incorrect. It should be the Public Debt Commissioner. This money is invested with the Public Debt Commissioner, according to the provisions of the Act—the hon member also referred to that—but the interest earned from that money, invested with the Public Debt Commissioner, goes to the Treasury. It becomes inalienable money in the Treasury. As far as I know, that interest is included in the Budget.

Sir, I cannot accept the amendments. I just wanted to put this matter straight with the hon member for Yeoville.

Mr Chairman, I am indebted to the hon the Minister for explaining this, but this actually creates another problem. [Interjections.] It is no use hon members sighing, because it is a reality of life that this has now created another problem. Investments, with the Public Debt Commissioners earn interest in the normal way. The function of the Public Debt Commissioners, as laid down by law, is actually to distribute interest to the investors and to deal with it in this particular form. If in fact the R441 million had been lent to the Exchequer interest-free to be used during the year, I think it would actually have made more sense than having it go to the Public Debt Commissioners.

It did not happen, so just forget about it.

Well, this money should not go interest-free into the Public Debt Commissioner’s funds because then other investors would benefit because that is how the system works. The hon the Minister now says that what is happening is that the amount goes interest-free to the Public Debt Commissioner’s but the interest is accruing to the Exchequer. If that is so, the rate at which interest is accruing is dependent upon the funds the Public Debt Commissioners are administering. That is how the Act reads. So, with great respect, I think this matter needs to be regularized. It does not help for the hon the Minister to become irritated or short-tempered. The fact is that that is what the law provides and that is how it should be administered.

Mr Chairman, I should like to talk quietly and calmly to the hon the Minister for a moment so that he can relax.

I am rather concerned about one aspect of this clause and I should like some assurances from the hon the Minister in this regard. In his Second Reading speech the hon the Minister stated that the Government was determined to keep fuel prices as low as possible. In this regard he said:

That is obviously what this particular clause is all about.

I should like to put two questions to the hon the Minister in this connection. In the first instance, is it certain that it is a wise decision to dispose of any of the reserve stocks that we hold? Secondly, will the hon the Minister give us assurances in regard to the remainder of the reserve stocks in the event of anything going wrong in respect of the availability of supplies to South Africa? I do not expect the Minister to tell us what our reserve stocks are and how they will see us through or anything like that. However, I must say that when one starts eating into one’s reserves one has to do so in a very careful and responsible manner. Therefore, I do not think we can allow this matter to pass us by without receiving certain assurances that can be placed on record in regard to this situation.

Mr Chairman, the hon member for Yeoville raised two very important aspects.

As far as the first of these is concerned, I can give the hon member the assurance he is seeking. This was also given in our statement at that stage. We very thoroughly discussed with the Defence Force, the Department of Industries, Commerce and Tourism, the Cabinet Committee and the Cabinet how much we could withdraw without fundamentally endangering the strategic crude oil position of South Africa if supplies were to be cut off. We also ascertained that the percentage we were using was in actual fact so small that it would have absolutely no effect on our strategic security position in South Africa. I can give this assurance, and I also wish to do so in order to have it placed on record, as the hon member said.

The second point concerns the balance. This oil was purchased some time ago. If the amount we have now decided should be withdrawn, is withdrawn during this financial year to cushion the petrol price, so that we need not increase it owing to the weakening of the rate of exchange position of the rand against the dollar, we shall be continuing with the process. We are going to withdraw the old supply, make it available to the refineries and replace it with new supplies. With our present knowledge we are convinced that the new supplies will be able to yield a larger quantity of white fuel. We are therefore going to refine the balance of our present supplies even further, and once we have completed that refining programme, our strategic supply position will probably be better than it was before we began with the process of withdrawal. This will be the result of the refining process. I am happy to give the hon member for Yeoville this assurance.

Mr Chairman, I rise merely to ask the hon the Minister whether this is the only purpose of this amendment or whether any other action is contemplated, for example the obtaining of commissions on the trading operations of the SFFA. Will there be any other diversion of money from SFFA into the SOF other than that which will arise from the part sale of the strategic stock pile?

Mr Chairman, I can give the hon member the assurance that this is the only objective. There is no other objective.

Clause agreed to.

Clause 3:

Mr Chairman, I have one query in respect of this clause. The clause now widens the powers of interrogation by including the other persons, and from this two issues arise. With reference to persons who are under section 1A responsible for the collection of levies, one would assume that this clause has some bearing on levies in order to avoid the evasion of the levies which are referred to in section 1A of the Act. I wonder whether the inclusion of other persons is designed to widen the scope of the possible inquiry. Let us assume for the moment that it is intended there would be an inquiry into some of the allegations which have been made in this House regarding oil as such. Is the intention of this to widen the scope of the inquiry by including those things, or is it merely intended that the other persons mentioned may inquire into issues related to the levy? I ask this because the fear I have arises from the way in which the clause is drafted. On the ius generis rule it may well be that it would be restrictively interpreted to relate only to matters pertaining to the levy. If that is so, then I think it may be unfortunate because I think it is not very often that one says the Minister should have a wider power of interrogation. I think it would be unfortunate if this were interpreted to apply only in relation to the levy.

There is another question which arises from this and also from clause 4. To my mind it does seem illogical—I hope this will be cleared up when the new legislation comes about—to put matters which are under the Department of Industries under the responsibility of the Minister of Mineral and Energy Affairs of vice versa for that matter. It does seem to be very strange to have this change and then to do this. Whereas there has been an explanation given I am hoping that with the new legislation, this anomaly will be removed.

I agree with the hon member. It widens the powers of interrogation, as he put it.

Clause agreed to.

Mr Chairman, before you put the clauses, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. To omit “accountant”, wherever it occurs and to substitute “accounting officer”

During the Second Reading debate yesterday I motivated this. During the debate several hon members made representations in this connection, inter alia the hon members for Yeoville and Amanzimtoti, as well as hon members on this side of the House. I feel that the amendment will resolve the problem that was raised.

Mr Chairman, I would like to thank the hon the Deputy Minister for moving his amendment. It clarifies part of the problem to which I referred during the Second Reading. It should satisfy the chartered accountants of South Africa because this should clearly identify the difference between a chartered accountant and an ordinary accountant who will in fact be the accounting officer of any of the close corporations. We will therefore be supporting this amendment.

Amendment 1 agreed to.

Clause 2:

Mr Chairman, one of the issues which arises here, is the number of people who may come together to form a close corporation.

Initially, when the first draft of this Bill was published and when consultation took place, the idea was to limit the number of people to 20, but eventually the number was reduced to 10. I do not find the reason for the deduction very convincing. To my mind certain problems may well arise. I want to give a simple example. One may find that in a particular area, for example Soweto—I have some knowledge of this—a number of people with dry-cleaning depots may decide to combine in order to establish a factory for the purpose of servicing their various depots. This might mean that, without any difficulty, 10 or more people may be involved, who in concept would be in the nature of a partnership where a number of distributors join to form a manufacturing entity. I can quote hundreds of examples of a similar nature. Therefore, to my mind to limit it to 10 is not desirable. The private company concept has a limitation of numbers which is very much higher namely 50. I just wonder whether in fact one should not encourage this idea of more people joining together to have this kind of organization. It may well also be that a lot of these organizations will really be in the nature of co-operative efforts. They will not be co-operatives in the legal sense of the word and be registered as such but co-operative efforts where one can have more than ten people involved.

In addition to that I raised during the Second Reading debate the issue of employee participation. To my mind one of the real ways in which to support free enterprise and in which to discourage people from adopting socialist or communist doctrines is to make them part-owners of the means of production. By share incentives and by participation schemes with one’s employees one actually makes them co-owners of the means of production. I am pleased that the hon the Minister for Constitutional Development and Planning is present now because this also affects him. He is concerned about economic reform …

Everything affects me!

Yes, that is what life is all about. The reality is that in a stable society the more people who actually have a direct say in the ownership of the means of production the more stable that society will be. That is why I now move as an amendment:

1. 1. On page 7, in line 14, to omit “ten” and to substitute “20”.

This will give effect to the thought of encouraging this process.

Mr Chairman, in the first place the hon member for Yeoville did not raise this point yesterday in the Second Reading debate. I have not yet had the opportunity to see his amendment.

Mr Chairman, does the hon the Deputy Minister not have copies of my amendments? I have a note from the Secretary to the effect that all the amendments were delivered to the hon the Deputy Minister personally.

According to my documents, I did not receive an amendment to clause 2 from the hon member, but that is not the point I want to make. The original draft Bill contained the idea of 20 natural persons who would be members of a close corporation. After representations had been received in connection with the draft Bill, and after further consultation and consideration, and particularly because the objective is for this legal form to be made available to smaller undertakings in particular, it was decided to restrict the number to ten. This implies that if, in future, the need should arise in practice, consideration could be given to the possible increase in the number of members a close corporation may consist of. At this stage I want to tell the hon member for Yeoville that I will forward the ideas he raised to the standing advisory committee which, as is the case with the Companies Act, will constantly be making advice available. We shall also be keeping an eye on the situation in practice. I want to give the hon member the assurance that we did not lightly decide on limiting membership to ten. I would appreciate it if he would accept it in the positive spirit, in which I am replying to him. At a later date we shall reconsider the matter as practical experience refines the Bill—an aspect the hon member also referred to yesterday. At this stage, however, after thorough consideration, we are of the opinion that the membership should be restricted to ten.

Mr Chairman, I am glad that the hon the Deputy Minister has adopted such a constructive attitude towards this suggestion. I should, however, like to put two additional points to help motivate the hon member for Yeoville’s amendment.

First of all, 10 is a very limited number; 20 would seem to be far more suitable because there is a tendency in an emergent business to open many small operations. No emergent business is suddenly going to move into a sophisticated type of manufacturing operation with some major plant. It is far more likely to duplicate stores or operations like the hon member suggested, for example, dry cleaning plants. There will be a multitude of similar units. Because of the fact that one close corporation cannot be a member of another close corporation, there is going to be a tendency to multiply the numbers if the expertise that one close corporation has built up is to be retained. Let us take the circumstances where there is one store operating as a close corporation in some area and doing well. It has developed skills in purchasing, selling and administration, and one wants to retain this. However, the organization wants to expand. Logically, if the expansion is going to take place in the case of a private limited liability company, it is going to be done through subsidiaries. That is, however, specifically what we are trying to avoid. Therefore, as one close corporation cannot be a member of another close corporation, one will tend to want to multiply the number of members involved. This will mean that 10 will restrict one to a very large degree. It will be far better to increase the numbers.

A further aspect is that close corporations, by their nature and by the fact that they really are emergent businesses in the free enterprise system, are going to be short of funds. How will they actually obtain more funds without bringing in major companies? The obvious tendency will be to have more members but still to tie them in with the same knowledge and expertise that was created in the first corporation established. For this reason I believe we should give very careful consideration to extending this number from 10 to 20. For instance, the private company has 50, and for the reasons I have mentioned it is actually more important that a close corporation should be able to have more members than a private limited liability company.

Mr Chairman, I do not think the hon member for Walmer followed me when I replied to the hon member for Yeoville. I am advised that our experience has been that by far the most private companies being incorporated have a membership of fewer than 10. After due consideration we therefore decided to limit the number to 10. However, it would not be too difficult to extend the number in the future should this be necessary or desirable.

*I explained to the hon member for Yeoville that this form of undertaking is in the first instance geared to the small entrepreneur. In my Second Reading speech I said that we gave specific consideration to the nature of this corporation. I agree that originally, in the draft legislation, the number was set at 20. However, after representations had been received and we had reconsidered the matter, we decided on 10. We did not do so capriciously, but after taking everything into account we decided that we could start with 10 members plus the addition in the case of a trust and other specific circumstances. We therefore foresee that this is in fact the appropriate number.

I have just received a whole pile of amendments from the hon member for Yeoville which I have not yet had the opportunity to consider. I shall refer to them in the course of the debate, but I think the hon member will understand that it is somewhat difficult to give due consideration to them at this point. However, I understand the situation and I trust that we shall be able to conduct a meaningful debate, because like the hon members on that side of the House, we desire to have the best legislation and that is at all times our point of departure.

Mr Chairman, the situation I would like to put to the hon the Deputy Minister which is likely to happen is what is called in the United States a co-operative wholesale organization. There you have a large number of little shops coming together for the purpose of buying in bulk because the manufacturers sell in bulk to a big organization and they can therefore get lower prices. You have the situation in a place like Soweto or any of the large Black townships throughout South Africa that there is a large number of small retail shops. They could form organizations to buy on a wholesale basis and this legislation offers them a very good opportunity to come together. Restricting the number to 10 in this clause will never give them the opportunity to buy wholesale. If, however, the number is 20, they can then form an organization which will be able to buy on a large scale from manufacturers. I think the number should be increased.

Amendment 1 negatived (Official Opposition dissenting).

Clause agreed to.

Clause 5:

Mr Chairman, may I say at the outset that I have in my possession a piece of paper which says that one set of amendments was sent to the office of the Deputy Minister of Finance. If it did not reach this hon Deputy Minister, I think the reason is that he is not the Deputy Minister of Finance. I think that something went wrong and I tender my apologies. The amendments were not sent by me and I am sorry that this transpired.

With regard to clause 5, I want to point out that in the preliminary briefing which was given to the groups of the various parties in the House, reference was made to the availability of certain computer print-outs which would be available in the larger centres for particular purposes, for example, to see whether a name already existed or whether it did not. The question I want to put to the hon the Deputy Minister is whether it is not possible that the records of the Registrar of Companies, which are obviously going to be completely computerized and which are available to the public, could not be keyed into a computer in order to get the print-out of the document required, virtually in one’s own office, instead of having to go to the registrar’s office to obtain copies of documents. I take for example the new system which is in the process of being tested by the Post Office, the Beltel system. All the records available to the public could possible be keyed in so that one could use that system by dialling what one requires and get that information. In this way the office of the Registrar of Companies will be saved a tremendous amount of work. One will also be in the position of being able to obtain information immediately and the fee is collected in the same way people are compensated by the pages which they get in the Beltel system. One of the things that always concerns one—the hon the Deputy Minister or someone else made the point yesterday—is that people do not make enough inquiries about a company before they allow it credit. In this way one can actually dial in and get all the information one wants. This saves the registrar office a tremendous amount of work. All in all it saves so much trouble that I would urge the hon the Deputy Minister to consider such a system.

Mr Chairman, the hon member for Yeoville has raised a very interesting point. It would of course seem to be a very technical matter and I shall refer it to the registrar with a view to his considering the possibilities the hon member has raised. I take it that such an arrangement will satisfy him.

Clause agreed to.

Clause 7:

Mr Chairman, this concerns a matter I raised yesterday. The clause provides:

The clause then goes on to deal with various mother matters. I indicated yesterday that I believed that liquidation was a serious matter for a company and that in my view it was not a matter for the magistrate’s court. Accordingly, I move as an amendment:

1. 1. On page 9, in line 42, to omit “including” and to substitute “excluding”.

The hon the Deputy Minister said yesterday that liquidations are very simple. My experience, if I may rely on that, is that liquidations are very simple if they are unopposed. If they are opposed, however, they can become very complicated. All sorts of issues can then be raised and all sorts of matters can flow from them. Therefore, considering the magistrates’ courts and the experience and training of magistrates, I am very hesitant to leave the liquidation of companies to the magistrates’ courts at this stage. I believe that the average magistrate has very limited training in company law. His field covers quite a different aspect of the law in the main. The fact that we have increased jurisdiction in regard to amounts is one thing, but in this case a particular type of training and knowledge is required and I would therefore ask the hon the Deputy Minister to reconsider his attitude towards allowing liquidations to take place in a magistrate’s court.

Mr Chairman, I gave the hon member for Yeoville my arguments in this regard yesterday in my reply to the Second Reading debate. I want to say that I have complete confidence in our magistrate’s courts. After all, this is new legislation. It goes without saying that regulations will also have to be published. Consequently we shall also have to start from scratch with the administration of this legislation. I think the training could also be concentrated on this. The matter of the liquidation of companies is actually a very formalized process. There are prescribed procedures which have to be followed. As the hon member rightly said the procedure adopted in the case of unopposed liquidations is simple. I think the hon member will admit that this applies in most cases. In addition there is no legal rule preventing an applicant from approaching the Supreme Court. If the applicant for liquidation were therefore of the opinion that the matter was complex—in any case he would receive an indication in advance as to whether it was going to be opposed—there would be nothing preventing him from approaching the Supreme Court. I feel that the provision as it stands here will speed up this process. The hon member will also admit that as far as costs are concerned it is actually in the interest of the creditors that the costs be kept as low as possible. All things considered, therefore, I am not inclined to accept the amendment. However, I undertake to refer this matter to the standing advisory committee as well so that they can make a recommendation in this connection at a later date, which I shall then consider favourably.

Mr Chairman, in support of the hon member for Yeoville I only want to draw the attention of the hon the deputy Minister to the fact that close corporations can have ordinary limited liability companies as subsidiaries, and that it is quite possible under a close corporation to build a vast structure of companies. This is still, I believe, one aspect of close corporations that has not yet been thoroughly investigated. It is an aspect which has not yet been adequately explained to me. Although close corporations are designed for small operations, they can, through this mechanism, actually become very large corporations. It is therefore evident that the liquidation of such a close corporation ultimately becomes extremely involved. This can happen quite easily it seems.

Mr Chairman, the situation is that if a close corporation is liquidated the provisions of clause 7 will apply in respect of the liquidation procedure. The liquidation of any private company will have to be dealt with in terms of the Companies Act. I doubt, however, whether it will ever become so complicated because a close corporation will have to be liquidated in a specific manner. If it does become so complicated the applicant can still approach the Supreme Court de novo and lodge the application for liquidation. The corporation can then be liquidated, after which the subsidiary private companies of that close corporation can also be liquidated if necessary simultaneously. I can therefore really not see any practical problem in connection with an application for the liquidation of a close corporation.

Amendment 1 negatived (Official Opposition dissenting).

Clause agreed to.

Clause 10:

Mr Chairman, there has been a considerable amount of talk about the fact that this Bill is far shorter and has far fewer clauses than the Companies Act have sections. One thing which does worry me is the clause contained in this Bill in terms of which regulations can be issued in connection with anything. If, as a result of the application of this clause, we are going to end up with regulations which are longer than the Act, I really do not know what the hon the Deputy Minister will have accomplished. I should therefore first of all issue a word of caution by pointing out that we should not use the power to issue regulations in order to make a thing which is intended to be simple more complicated. The hon the Deputy Minister may even end up by making it more complicated than the Companies Act, which, he says, is complicated. Therefore I feel I have to issue a word of caution because it appears that one can really issue regulations about anything under the sun in terms of this provision.

Secondly, I should like to point out that the regulations which are made should wherever possible be consistent with procedures in terms of the Companies Act unless the intention is completely to simplify procedures. If we are going to have these two things running side by side, unless we are actually going to have a degree of consistency—a point which I made in relation to certain penal provisions today—we are really going to have a problem. I do believe therefore that we should not depart from recognized procedures which have been shown to work, and also not from recognized wordings, which have been judicially interpreted, unless there are very, very good reasons for doing so.

The third point I should like to make is the following: Although I am not going to move an amendment I am somewhat concerned — and I feel I have to state it quite explicitly — about certain aspects of clause (10)(l)(m), in terms of which the power of investigation is given to inspectors appointed by the Registrar. The procedures as well as the question of admissibility are laid down in the legislation and I am a little chary as a lawyer — and I am sure other lawyers in this House will agree with me — of having rules in connection with the admissibility of evidence made by regulation as opposed to it being made by statute. I therefore wonder whether the hon the Deputy Minister would also merely bear that fact in mind and rather consider the necessity of rules in relation to the admissibility of evidence, and the rules in relation to inspections to be introduced into the legislation in due course rather than to have rules of evidence issued by way of regulation. I believe it is not a good principle.

Mr Chairman, I take the points made by the hon member for Yeoville, and I shall refer these matters and the hon member’s arguments to the standing committee. The hon member will of course realize that in formulating the regulations the standing committee will also advise us in regard to the final regulations to be drafted. As far as the hon member’s remarks in regard to clause 10(l)(m) are concerned I shall specifically ask the standing committee to go into the matter.

*The fact of the matter is that regulations will be made. I appreciate the argument of the hon member that we should in the first instance deal with these matters in terms of the provisions of the legislation, and that our premise should be that in so far as the legislation contains the necessary directives, we should deal with the matters pertaining to close corporations in terms of those directives. As far as the making of regulations is concerned, this matter will receive the necessary attention from the standing committee from time to time and in accordance with the legal form in practice.

Clause agreed to.

Clause 12:

Mr Chairman, I have an amendment to this clause. It is a minor amendment and is simply to the effect that the founding statement need not be signed directly by the person himself but may be signed on his behalf. The same position arises a little later in regard to having to do things personally. I feel that circumstances may arise in which the person himself cannot sign the founding statement and where a power of attorney is therefore desirable.

Mr Chairman, the founding statement which has to be signed, is a very important matter. We feel that a founder member or founder of a close corporation should sign the founding statement in person. The hon member for Yeoville referred to certain circumstances but in his argument he did not actually spell out under what specific circumstances he felt it would not be possible for the person to sign the statement himself. I did not have much time to study the amendment of the hon member either owing to the fact that he only made it available to me a moment ago. However, I repeat that it is preferable for the founding statement to be signed by the founder himself. The entire set-up of a close corporation is very personal. It is basically aimed at a partnership executive. However, I shall be glad to hear what the hon member has to say about this, in case he mentions the specific circumstances under which he feels it would not be possible for such a founder to sign that statement himself.

Mr Chairman, the clause provides that the statement must be signed by every person who is to become a member of the corporation. It may well be that such a person is physically unable to sign. For example, a handicapped person may be a partner in a business and participate in it but is unable to sign. He cannot sign the founding statement because he is unable to. Why should such a handicapped person be prejudiced in regard to becoming a member of a close corporation? He would then simply have to be a member of a company and forgo the advantages of this type of association.

One may also wish to found a business and the single person involved in it may be overseas or in some other part of the country, and the company is required so that certain things can be done virtually immediately. The whole matter is then held up. Such a person cannot become a member and other persons have to set it up. Therefore, to my mind the ability to sign for people because of absence or incapacity is one that should be catered for. I am also particularly concerned that people who suffer from some incapacity or other and therefore cannot sign should not be deprived of the right to participate in this kind of venture.

Mr Chairman, I have a great deal of appreciation for the argument of the hon member for Yeoville and I should like to consider his amendment further. However, I do not want to see the position arising in practice that there are founders of companies who have absolutely no intention of continuing with such a corporation. I am looking for an appropriate wording, and that is why I am inclined to suggest that we allow this clause to stand over until the end of the Committee Stage. If we accept the hon member’s amendment as it reads at present, this will establish the practice that steps may be taken merely by way of proxy, and I do not want that to happen because the idea is that this is a small intimate legal form which is being introduced and to which each person must bind himself personally. The hon member for Yeoville is welcome to submit an amended amendment to me in this connection. I therefore move:

Agreed to.

Clause 12 standing over.

Clause 15:

Mr Chairman, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 17, in line 3, after “situated,” to insert:

The amendment will result in it being possible to determine with certainty at what stage the fine imposed by the Registrar will have the effect of a civil judgment. I am moving the amendment in order to give absolute certainty in this regard.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 23:

Mr Chairman, I move the following three amendments:

1. 1. On page 19, in line 34, after “Republic)” to insert “and registration number”.
2. 2. On page 19, in line 38, after “there of)” to insert “and registration number”.
3. 3. On page 19, in line 60, after “thereof,” to insert “and its registration number”.

The purpose of these amendments is to ensure that wherever the name of the company appears, the registration number of the company will also appear. I think this will make it easier for people who deal with the company and who want to check up on it. It is already provided for that when one deals with the Registrar of Companies direct, one should give him the number. It obviously saves a tremendous amount of time and effort. It is already in use in Great Britain where one has to put the registration number on one’s letterhead for example if one deals with people. I think that it may help quite a lot if in these circumstances one has the registration number on the letters. I should actually like to see such a provision in the Companies Act as well because to my mind it saves a lot of trouble. It is being done not only in the United Kingdom, but in other countries as well.

Mr Chairman, the suggestion of the hon member for Yeoville was initially incorporated in the draft legislation. The comments received by the department and the committee were opposed to it, as the hon member definitely knows.

I have no objection to the hon member’s amendments. I think they make matters slightly more difficult in practice, but on the other hand, it may be more precise if the number is also inserted. Under the circumstances I accept the amendments of the hon member.

Amendment 1, 2 and 3 agreed to.

Clause, as amended, agreed to.

Clause 28:

Mr Chairman, having had a similar amendment turned down at the beginning of the Committee Stage, I will not waste time by moving the same amendment to this clause.

Clause agreed to.

Clause 29:

Mr Chairman, I move as an amendment:

1. 2. On page 27, after line 15, to insert:
   1. (d) a juristic person provided that the percentage of interest of all juristic persons in a particular close corporation shall in terms of section 30 not exceed 25%.

The hon the Deputy Minister indicated clearly yesterday that he does not want juristic persons involved in close corporations. Having read the argument put forward by Prof Naudé and others in regard to this, I find this unconvincing for certain reasons. If the fear is that a juristic person will dominate the scene, then by stating that juristic persons cannot own more than 25%, one overcomes that situation. Secondly, the advantages of having a juristic person involved, are fundamental. I want to refer to a simple example. If the hon the Deputy Minister were to decide that he would like to encourage people who have been in his employment, to start a close corporation and he would like to invest money in it—he would normally be a participant in it—he would probably prefer to have that participation through the medium of a private company. That would enable him to a large extent to participate in such a close corporation where he would be responsible for the management and where the company would have the responsibilities. He will not be able to escape it, but at the same time he will to some extent be able to limit his liability in that regard. One may, in other words, find a person who would be happy to go into a close corporation, make his expertise and money available but not expose himself to a risk. There is a clear risk as stipulated in the latter part of the clause in terms of which due to certain actions complete and absolute liability can be imposed on a person.

In the same way I suggested yesterday that people who have particular expertise in the field may encourage the formation of businesses. Somebody may encourage people to start businesses all over South Africa, finance them, provide expertise but also wants an interest in the business himself. That cannot be done unless a juristic person is allowed, with a degree of limitation of the extent of the interest, to participate in such a close corporation. This has been the subject-matter of a lot of discussion and debate and I believe it is something which the hon the Deputy Minister should consider.

I am also unhappy about his amendment that only testamentary trusts should be involved in this. I believe that ordinary trusts should be involved and there is no reason why a trust cannot be involved in a close corporation.

Mr Chairman, as the hon member rightly pointed out yesterday, I am not entirely happy with this matter. After very thorough consideration the Bill was worded in such a way that no juristic persons, other than a trust, may be members of a close corporation. However, I shall move an amendment to this later.

With all due respect I want to put it to the hon member that if his amendment were agreed to, it would complicate matters and that a situation would then be created in which close corporations could be dominated by another juristic person. There are also other grounds. The hon member knows that even if one has a 25% share-holding in an undertaking, one can still control that undertaking if one has invested a great deal of money in it. I do not think the hon member will argue with me about that. In that way one actually has effective control over the company.

[Inaudible.]

It seems to me as if the hon member for Bezuidenhout has experience of the possibility of this happening. [Interjections.] With all due respect, we did not consider this aspect lightly. We are therefore not inclined to move in this direction. I do not want to say that the practice could develop in that way over the years in a direction where more than just natural persons may become members of a close corporation. This is, however, a legal form for the small businessman in particular and for the development of the small business sector. I should like to see this form of undertaking we are establishing getting off the ground. If members of a close corporation really have a specific project in mind or need a great deal of finance which they cannot obtain in any other way than through another juristic person taking up shares in the corporation, it may be converted into a private company, and there is therefore the possibility to proceed in that way. In this connection I therefore want to ask the hon member for Yeoville to afford us an opportunity to proceed with the method of membership proposed in the legislation.

While I am on my feet, I should like to move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 27, in line 3, after the first “a” to insert “testamentary”.

As the clause is worded at present a juristic person or a natural person who is a trustee of a trust will be able to become a member of a close corporation under certain circumstances. This means that a trustee of a trust inter vivos, which includes any business trust, will be able to become a member. In this way the rule that only natural persons may become members could be circumvented and there is also the possibility that certain malpractices in connection with taxation may take place. The intention is for the close corporation to be used inter alia for estate planning, and the amendment will mean that a trust will only come into the picture for this purpose. I trust that hon members will also be satisfied with this amendment.

Mr Chairman, I cannot really support the amendment moved by the hon the Deputy Minister. Let me put a very simple point to him. If I want to go into business with my children, for example, and they are not of age, I cannot go into business with them unless I create a trust for them and then go into business with a trustee for an inter vivos trust. What is wrong with doing that? The reality is that the concept of an inter vivos trust is well recognized in our business practice today. It is much better that one should have a trustee representing a trust for minor children, which is created inter vivos, than have an agreement with one’s minor child where one is assisting him to enter into the agreement with one. There is far less independence in the latter circumstance than in the former. With great respect, the case why it should be limited to a testamentary trust is not based on business efficacy. What the hon the Deputy Minister has in mind is that he does not want trusts at all, but because there can be a question of inheritance therefore the executor or trustee can become the participant in the close corporation. That to my mind is not an acceptable concept.

The argument which the hon the Deputy Minister advanced against a juristic person is so full of flaws it is unreal. If one wants to get control of a business by lending it money, what one does is what we talked about earlier this afternoon, namely that one lends it an excessive amount of money and then puts the company into liquidation, and because one is then the biggest creditor one buys the business. It is that simple. It is done, unfortunately, again and again. If one is a shareholder and has an interest in the business, then one has one’s equities to lose. However, if one is only a creditor, one can do exactly the same thing that the hon the Deputy Minister suggests and in fact one does not have one’s equities to lose. Therefore, Sir, with the greatest respect, if there are people who are going to be oppressive because they want to use their money-power to lend money to people and then destroy them, they can do it as effectively, if not more effectively, when they are not shareholders then when they are. I am sorry that I cannot convince the hon the Deputy Minister but I can only tell him that the arguments he advances are, with great respect, in my view not convincing.

Mr Chairman, the hon member for Yeoville and I will simply have to agree to differ because once again I do not find his arguments in connection with this matter convincing. As I read the Bill, there is nothing to prevent the hon member from taking his children into a close corporation with him. This would in any case be far easier for the hon member to do than to establish a trust. I can understand that a man in his specific personal circumstances would prefer to function with a trust, but if the hon member wanted to use a close corporation for the purposes of his own planning, his children could easily go into it with him. I feel this is a valid argument in favour of eliminating the trust inter vivos.

There is a specific problem—and I also referred to it in my motivation—which concerns taxation inter alia. This could also cause a problem in the case of a trust, and that is why we moved this amendment.

I can, however, give hon members the assurance that we shall draw the attention of the advisory committee to all the arguments that were raised. We are acting very carefully because this is a measure which has to be of value to the small business sector in particular and we should like to place it at their disposal. In the interim I do not, however, want to leave a loop-hole so that, by means of a smaller share-holding, companies may gain control of close corporations and eventually dominate them owing to the monetary contribution the companies made. In my opinion there are sufficient measures enabling a close corporation to obtain funds without it being necessary for a money supplier or a financing institution to acquire shares in the corporation.

Under the circumstances I am afraid that the hon member and I shall not make progress with one another in regard to these amendments this afternoon.

Amendment 1 agreed to (Official Opposition dissenting).

Amendment 2 negatived (Official Opposition dissenting).

Clause, as amended, agreed to.

Clause 34:

Mr Chairman, the point that I should like to raise with the hon the Deputy Minister—I deliberately did not draft an amendment—is that I am somewhat concerned that in the smaller close corporation where the members do not have the means to buy out the interest of an insolvent member, it may well be that they can be saddled with a member in their company or their corporation of whom they really do not approve. That worries me, despite the safeguards in subsection (2). It appears to me that one can actually be saddled with someone who is unacceptable to one because one does not have the means to take over his interests. I think one can overcome this problem if, in fact, it really could be like a partnership where the remaining members would then have the right to pay out the insolvent member’s share over a period of time. If the company does not have the means and you foist somebody on them I think it might well be an undesirable situation. I feel it is something which needs a little further investigation and I do not think that it is something which we can decide across the floor of the House. So I would ask that further consideration be given to it.

Mr Chairman, I have listened very carefully to the hon member for Yeoville. As the wording of the clause is at present it would appear that that is the maximum protection one could give to the members of a close corporation in the event of an insolvency. But I will ask the law advisers and the standing committee to have a closer look at this. This is the protection that one would normally also see in respect of a private company and I therefore do not think it is a new situation.

Mr Chairman, the difference here is that in the case of a private company provision could actually be made in its articles of association preventing an unacceptable person being foisted on the company. I think that is where the distinction arises. One may have the same problem in respect of clauses 35 and 36. If the matter is therefore investigated, as the hon the Deputy Minister has indicated, the other clauses should be examined as well.

Clause agreed to.

Clause 36:

Mr Chairman, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. In the English text, on page 31, after line 46, to insert:
   1. (c) any other matter regarding the cessation of membership which the court deems fit.

Because of a printer’s error this paragraph was omitted. This amendment will rectify the position.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 42:

Mr Chairman, I move as an amendment:

1. 1. On page 35, in line 44, after “the” to insert “written”.

I think that in this kind of situation where it is a question of people contracting with a company, where it is a question of the disclosure of interests and things of that sort, that to avoid dispute the written approval of members should be obtained. It is very easy to say that someone did approve and then you have a credibility issue as to whether the approval was given. In my view the insertion of the word “written” will lead to less dispute in a company in respect of matters where a man might well otherwise benefit himself at the expense of his co-participants in a corporation.

Mr Chairman, the hon member for Yeoville is making me work hard today. In fact, I ought not to accept his amendment, but having listened carefully to the hon member I am prepared to accept his amendment.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 43:

Mr Chairman, subsection (1) of this Clause reads:

Then subsection (2) reads:

It appears to me that one can actually get somebody to agree beforehand to one’s acting without the necessary degree of skill, which is not an objective test here but a subjective test. That to me just does not make sense. I think that, if a person is liable because he failed to act “with the degree of care and skill that may reasonably be expected from a person of his knowledge and experience”, that is fair enough, except that it is going to be a problem to determine what knowledge and experience that person has. However, the clause goes on to say that liability in this regard is not incurred if the conduct “was preceded or followed by the approval of all the members where such members were or are cognisant of all the material facts”. That means that, if I were in a close corporation with say, the hon the Deputy Minister, before I do anything, I should get him to sign a document in terms of which he agrees what I will not be liable if I do not act with the degree of care and skill that may reasonably be expected from me with my knowledge and experience in regard to anything I do in the business. Sir, I think that that is ludicrous. I think that what is probably intended here, although it is not stated, is that, if there is something specific somebody says one must do and approves of that, one is not responsible if one lacks skill in that regard. [Interjections.] I think that the hon the Minister of Transport Affairs actually understands this point. I am very impressed.

I am not the Minister of Transport Affairs now, but I am the Leader of this place!

With great respect, I should like the hon the Deputy Minister to react to my comments before I do anything further.

Then, of course, the issue arises whether the clause should not specify that the “written” approval of all the members should be obtained, because there again “approval” would be a credibility issue. If the hon the Deputy Minister thinks that that is better, we can amend the clause accordingly, but in any case I think that, with great respect, there is a little bit of a mix up here.

Mr Chairman, I think it is highly improbable that the circumstances sketched by the hon member would arise. I accepted the insertion of the word “written” in respect of a previous clause, and I have no objection if it is inserted here as well. After all, the hon member will concede that if people want to go so far as to enter into an agreement with one another to make fools of themselves, no one can stop them from doing so. I think that this provision will in fact only be concerned with the intimate relationship that will exist between members in the close corporation. Hon members will note that there is throughout a special relationship of confidence that will exist among members of such a corporation. The aim of this clause is to attempt to promote a spirit of mutual confidence among members. The hon member is most welcome to propose that the word “written” be inserted here. In any event, I shall refer his arguments concerning possible problems with the clause, to the Standing Advisory Committee.

Mr Chairman, I move as an amendment:

1. 1. On page 35, in line 53, after the second “the” to insert “written”.

I just want to react briefly to the points made by the hon the Deputy Minister. I think that this matter does need further attention. I think that what the draftsmen had in mind here is that, in the case of a particular action for which specific approval has been obtained, one cannot complain about the person concerned carrying out that particular action as long as he does it with a reasonable degree of skill. However, to make it possible for this problem to be overcome by means of a written approval or otherwise of general negligence or a general lack of skill, I believe, is highly undesirable. I appreciate the fact that it is difficult to deal with this matter now. Nevertheless, I also believe that at some future stage it will have to be done.

Mr Chairman, I have already intimated that I am prepared to accept the amendment moved by the hon member for Yeoville. Furthermore I have also indicated that I will refer the contents of this clause, as well as the possible implications thereof, as set out by the hon member for Yeoville, to the standing committee for further consideration.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 46:

Mr Chairman, I have an amendment to this clause seeking to substitute “66 per cent of the members” for “all the members”. I want to make it clear to the hon the Deputy Minister right at the outset that I am not wedded to the 66%. My problem, as I indicated during Second Reading, is in respect of the four subparagraphs of subsection (b), which precede the proviso contained in this clause. That is in respect of a change in the principal business carried on by the corporation, a disposal of a whole, or substantially the whole, of the undertaking of the corporation, the disposal of all, or the greater portion of, the assets of the corporation, and, any acquisition or disposal of immovable property by the corporation. According to my interpretation, and also according to the advice I have taken from other people, this means that notwithstanding whatever is provided for in the association agreement, one cannot contract out of the unanimous consent in respect of these four issues. In other words, the proviso indeed overrides the terms of the association agreement. That is the way in which the clause had been drafted.

If it meant that one could contract out of this agreement, it would have been stated here that one should have the unanimous consent of the people concerned unless the association agreement provided otherwise. However, the clause actually deals with the association agreement providing otherwise before one even gets to the proviso. As I indicated yesterday, my problem relates to the fact that an employee can be given a small share in a business, or that someone can obtain as little as 1% of the interest in a particular business, and that that person can then hold up the whole show as it were. That is what I am trying to avoid in terms of the amendment I envisage.

Mr Chairman, the hon member for Yeoville raised this problem of his yesterday, during the Second Reading debate. Like the hon member I, too, have in the meantime obtained legal advice in this regard. According to my legal advice the answer I gave the hon member yesterday was indeed quite correct. It may be true, as the saying goes, that when one asks five lawyers for a legal opinion, one often gets six legal opinions. Therefore, it is quite possible that lawyers will differ in their legal opinions.

However, I want to point out to the hon member for Yeoville that in the English text the word “notwithstanding” does not form part of the introductory sentence to the proviso. If we had wanted to insert the meaning that the hon member attaches to it, the Afrikaans text would have contained the word “ondanks”. However, that word is not used in the relevant clause. Therefore, as we see the matter, the interpretation attached to this by the hon member for Yeoville is not correct. The introductory sentence of the clause states clearly that everything that follows is variable. If the proviso, as the hon member for Yeoville contends, ought not to be variable, that would have to be expressly stated and it would have to be clearly stipulated that this should not be made subject to the rule embodied in the introductory section. Therefore I cannot accept the amendment of the hon member for Yeoville. I am convinced that the present wording of the clause does state clearly that one can agree on the matters in the association agreement and that if they cannot be dealt with in accordance with the association agreement, the clause does apply.

As far as the question of the 66% is concerned, the hon member for Yeoville said that he did not feel strongly about that. In the circumstances, then, I take it that the hon member for Yeoville is satisfied with my answer.

Mr Chairman, I feel that the whole object of this legislation is to enable close corporations to be established. However, a provision of this nature would have a very strong influence in making a person opt for a limited liability company, an ordinary private company, in preference to a close corporation. Even if the provisions of this clause are to be interpreted according to the way in which the hon the Deputy Minister interprets them, a close corporation will be placed in a far more vulnerable position than a limited liability company. The facility that exists here for somebody to bring such a business to a complete standstill and to prevent the most important decisions that may be life or death decisions in the business from being taken may give some very small shareholder quite unreasonable powers which he would never, never have in a conventional company structure.

Even if one changes the 66%, I still strongly support the hon member for Yeoville in his plea that some percentage be arrived at so that one person should not be able to hold up the operations of a corporation under certain circumstances—in fact, hold it to ransom—for some purpose of his own.

Mr Chairman, I want to say to the hon the Deputy Minister let us wait for the first court case and then we shall know who is right and who is wrong.

However, let me put the following point to the hon the Deputy Minister. Even if his interpretation is correct, we still have the position that there is an association agreement in existence which cannot be altered except by the unanimous consent of all the parties. Therefore, if somebody is admitted thereafter and no provision has been included to the effect that a majority will prevail—for example, in regard to these matters—the 1% shareholder will still in effect be able to hold the rest to ransom. Therefore, even if the interpretation is correct that the association agreement can provide that a simple majority of, let us say, 51% will prevail, if it is not done and one persons is brought in who is a 1% shareholder, he can hold up the whole operation. Even if the hon the Deputy Minister is correct, I still believe that the percentage is wrong.

In view of the fact that it is already 18h00 and we are in any event not going to complete the Committee Stage of this legislation today, may I suggest to the hon the Deputy Minister that this clause stand over so that he can give it further thought overnight and obtain further advice, on the assumption, naturally, that his advice is correct. However, even if his advice is correct, the position is still wrong.

Mr Chairman, the legal arguments advanced by the hon member for Yeoville in regard to this matter do not convince me. Our aim is to establish good legislation. That is our ultimate aim in respect of all legislation. I have no objection if, in the opinion of the hon member for Yeoville, we are not going to finish this afternoon. I had of course hoped that we would, in fact, be able to finish. To tell the truth I was sure we would be able to finish, but then I received 20 amendments from the hon member when I walked in here this afternoon. If I had not been given them we should have been finished. Very well, I am no longer angry at the hon member, because by this time I have come to terms with it. However, all I want to say to the hon member for Yeoville is that hon members on this side of the Committee would have liked to take part in this discussion but unfortunately they have not had the opportunity to study the amendments of the hon member for Yeoville.

I am sorry. This is the third time I am apologizing.

No, I am not attacking the hon member. I am merely putting the circumstances to him. Notwithstanding all these things, and just to make sure of the points the hon member raised, I am now inclined to move:

Agreed to.

Clause 46 standing over.

Clause 48:

Mr Chairman, I move as an amendment:

1. 1. On page 39, from line 52, to omit paragraph (c).

Clause 48(2)(c) provides:

It may happen that one has a meeting called and a day or two days before the meeting somebody becomes ill, and then there is no possibility of giving a proxy. The association agreement does not provide for proxies and then a person cannot vote. All that I am seeking to achieve here is voting by proxy, because there seems to be no reason why one cannot vote by proxy or in person when one is present at a meeting.

Mr Chairman, this is of course a matter which can be arranged or agreed upon in the association agreement.

*It is a variable rule, therefore. If I have to consider the matter quickly, I think it is in order for us to delete the provision, as the hon member suggests. I accept the amendment, therefore, but I shall refer this provision to the Standing Advisory Committee in any case, to make sure that we do not perhaps frustrate the ends we had in view.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 56:

Mr Chairman, I move as an amendment:

1. 2. On page 49, from line 11, to omit subsection (5).

The following is the motivation for the amendment: The Close Corporations Bill is being introduced with the specific aim of making it easier for the small man to find his way through the labyrinths of the business world. The legislation makes it easier for him to run a business undertaking together with certain other people whose numbers are limited. While the entire Bill is aimed at making matters easier for such a person, we are now imposing a restriction in a close corporation. What do we seek to achieve with a restriction of this nature, for which provision is made in the clause?

As I indicated yesterday, this restriction arises out of the Share Blocks Control Act which was placed on the Statute Book in 1970. However, that is in no way analogous to the present case. In that case it is a matter of control of shareholders’ money which is dealt with and invested by the controlling body. The people who invested it were not personally responsible for what they did, but in this instance the person who invests the money outside the prescribed field of investment as expounded in the Bill is personally responsible for what he does. Accordingly we are not protecting the creditor to a greater extent than we would have protected if this clause had in fact applied.

I must also point out that the close corporation will have a wide field of application in the informal sector. Perhaps the point of departure was that because the informal sector would be involved here, one should protect the close corporation against itself. I do not think that it is a valid point of law to contend that an Act should be made to protect a person against himself. People must be permitted to invest their money where it will give them the best return.

Mr Chairman, I support the amendment of the hon member for Heilbron as I intended moving the same amendment.

I also want to move an amendment, namely:

1. 1. On page 49, in line 4, to omit “adequate” and to substitute “reasonable”.

I also raised this issue during the Second Reading debate and I indicated then that I did not think it was possible to provide adequate precaution against falsification because then there would never be falsification. One can only take reasonable precautions against falsification and that is why I do not think the word “adequate” is capable of being fulfilled. In as much as clause 56(6) imposes a penalty in respect of failure to take adequate precautions, I think it is wrong to legislate for penal provisions and consequences in respect of something which it is actually impossible to do.

Mr Chairman, on this I am prepared to go fifty-fifty with the hon member for Yeoville.

*I take pleasure in accepting the amendment moved by the hon member for Heilbron. Yesterday, during the Second Reading, the hon member and other hon members provided the motivation for this and the hon member for Heilbron elaborated on it this afternoon. The hon member for Yeoville also wished to move such an amendment.

I am, unfortunately, unable to accept the amendment which was in fact moved by the hon member for Yeoville. Yesterday, during his Second Reading speech, the hon member referred to it and I had the opportunity of discussing the matter with the State law advisers. The opinion is that in this clause we are dealing with a criterion of reasonableness and not an absolute test. According to the Handleiding van die Afrikaanse Taal the word “voldoende” means “toereikend, bevredigend, genoegsaam”. Not one of these meanings has the connotation of absoluteness and therefore the facts in every case will have to be considered on every occasion to determine whether adequate precautions were taken. Nor can the criterion be reduced to the level of reasonable precautions, because then the problem as regards evidence could be greater and the side effects of lax precautions could enter the picture. Criteria as formulated at present are not, therefore, an absolute text but at the same time do not constitute a test with low requirements.

In the circumstances I cannot, therefore, accept the amendment of the hon member for Yeoville and I trust that he will be content with the explanation.

Amendment 1 negatived (Official Opposition dissenting).

Amendment 2 agreed to.

Clause, as amended, agreed to.

Clause 59:

Mr Chairman, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 51, from line 48, to omit subsection (6).

This amendment arises out of the replacement of the word “accountant” by the expression “accounting officer” and as a result subsection (6) serves no further purpose in the Bill.

Mr Chairman, I just want there to be no misunderstanding. It is true that we are changing the terminology in regard to “accountant” but I assume that there is not going to be any objection, if we delete subsection (6) of clause 59, to a person being the accounting officer for more than one corporation. I think that should be made quite clear. It might well be inferred that by deleting subsection (6) we are actually saying that one now cannot be an accounting officer for more than one close corporation.

Mr Chairman, I wish to state very clearly that it is the intention that such an accounting officer can act on behalf of more than one corporation; indeed, it is not the intention that he need be a full-time person in the employ of the corporation. My advice is that adequate provision be made for this point in the Bill, so that I need not elaborate on the matter further.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 63:

Mr Chairman, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 55, in line 3, to omit “24” and to substitute “24(4)”.

All that this amendment entails is an improved cross-reference in the Bill.

Mr Chairman, I am a little concerned about the liability in paragraph (a), which reads as follows:

1. (a) Where the name of the corporation is in any way used without the abbreviation CC or BK as required by section 22(1), any member of the corporation who is responsible for, or who authorized or knowingly permits the omission of such abbreviation, shall be so liable to any person who enters into any transaction with the corporation from which a debt accrues for the corporation while he, in consequence of such omission, is not aware that he is dealing with a corporation.

The use of business names without using the “limited” or “proprietary limited” attached to it is unfortunately already a relatively common practice in our community. The rules of court, for instance, make provision for one to find out who the owner is, and it could be a corporate body. What I am concerned about is that to some extent we are here trying to create legislation which will help relatively unsophisticated people to go into business. I think this is going to be the most common mistake that is going to be made. I just wonder whether we should impose personal liability where a trade name, the name of the company, is used and not the letters CC or BK. Whereas I would perhaps take a different view were we dealing with private companies and public companies, here we are dealing with unsophisticated people, and I wonder whether we should actually do that.

Mr Chairman, I have taken cognizance of the standpoint of the hon member. I am also pleased that the hon member has mentioned the fact that we shall be dealing here with unsophisticated people. In fact, this supports an argument with reference to an earlier clause. The hon member referred earlier to the possibility of other juristic persons that could become close corporations and this argument he has now advanced is in fact in conflict with the amendment he moved earlier. Unfortunately I am not able to take the matter further. As in the case of the Companies Act, in terms of which it is an offence when a company does not add the words “Pty Limited” to its name, the intention here, too, is that there should be absolute clarity as regards the set-up of a close corporation. When commercial transactions take place the creditor must have an indication that he is doing business with a close corporation. However, I shall pass the hon member’s remarks on to the standing committee. The hon member has not, however, presented an alternative at this point.

Hon members will note that joint liability for commitments can be applicable here. Moreover, this is a clause which is specifically aimed at decriminalizing the Bill and at ensuring self-regulation. Therefore, in the circumstances I am unable to take the matter further as far as this clause is concerned.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 64:

Mr Chairman, I should like to get the reaction from the hon the Deputy Minister on a point that I raised yesterday about the similarity of the wording between this clause and a section in the Companies Act which I quoted. The same principle applies in respect of some of the other amendments in regard to the use of the word “negligence” where it does not appear in a similar section in the Companies Act. I wonder why there should be the difference between the imposition of liability here and the imposition of liability in terms of the Companies Act where the wording should, in my opinion, as far as possible be the same. Before I therefore move the amendment I should like the hon the Deputy Minister to react.

Mr Chairman, if I remember correctly the hon member referred to this aspect yesterday during his Second Reading speech as well, and I want to point out to him that the Supreme Court has on occasion stated that the word “reckless” as used in section 424 of the Companies Act means gross negligence. In the comparable provision in the Bill we are at present discussing, gross negligence is being inserted from the outset so that the court need not again, at a later stage, issue a ruling on the interpretation of the word “reckless”. In practice, therefore, companies and corporations are in fact dealt with in the same way in practice in terms of this provision, and that is why the word has been inserted there.

Mr Chairman, if in fact the term is already included in the term “recklessly” then there is no point in including it because, in fact, the courts would then assume that there was some other reason for including the words when they would otherwise be unnecessary. I therefore move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 55, in line 58, to omit “, with gross negligence”.

Mr Chairman, with all due respect to the hon member for Yeoville, I wish to point out that if a judgment already exists in respect of section 424 of the Companies Act that does not necessarily apply in respect of any other Act. In the light of experience this legislation is now being drawn up in such a way that what was previously specified by way of a judgment of court, is now being covered here specifically to avoid the need for interpretation in the future. In the circumstances I am unable to accept the amendment.

Amendment 1 negatived (Official Opposition dissenting).

Clause agreed to.

Clause 65:

Mr Chairman, we shall vote against this clause. I raised the issue yesterday and I do so again now that the common law makes provision for so-called abuses of juristic personality, and there are a number of decisions in this regard. However, I actually asked the hon the Deputy Minister yesterday to tell us what he had in mind by including a provision where a corporation constitutes a gross abuse of the juristic personality of a corporation. What does the hon the Deputy Minister actually want to prevent in these circumstances?

Mr Chairman, the principle contained in this clause is a principle of company law which is derived from common law. In this clause, the principle is being made applicable to close corporations as well. It will be the task and function of the courts to interpret the relevant words, therefore. I may just inform the hon member that the Standing Advisory Committee originally suggested the words “unconscionable abuse”—“gewetenlose misbruik”—but during the legal editing this was changed into the present wording, because it was felt that the courts had already laid down many guidelines in respect of the word “gross”. This clause also plays a very important part with regard to the principle of self-regulation which is contained in the Bill, and that is why the specific wording in this clause has been used.

Clause agreed to (Official Opposition dissenting).

Clause 69:

Mr Chairman, I move as an amendment:

1. 1. On page 59, in line 61, to omit “five” and to substitute “two”.

We are dealing with close corporations which are in the main intended to be for small businesses, and in respect of the relationship between debtor and creditor I think the figure of R500 is too high. I think that if it cannot pay R200, that should be adequate grounds for it to be deemed unable to pay its debts.

Mr Chairman, I accept the amendment.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 70:

Mr Chairman, I move the amendment printed in my name on the Order Paper, as follows:

1. 1. On page 61, in line 45, after “situated,” to insert:

The motivation for this is that the amendment will make it possible to ascertain beyond any doubt from what stage the certificate given by the Master in terms of this will have the effect of a civil judgment.

Amendment 1 agreed to.

Clause, as amended, agreed to.

Clause 71:

Mr Chairman, I wish to move the following amendments:

1. 1. On page 61, in line 60, to omit “, in the opinion of the Master,”.
2. 2. On page 61, in line 62, to omit “Master” and to substitute “court”.

I motivated these amendments yesterday at Second Reading and I do not want to go into detail on this point at this stage. I do not believe that the Master should in this instance decide whether a payment was bona fide or reasonable and direct a repayment. I believe this is a judicial function which should not be exercised by the Master in the circumstances. There is a different approach in regard to clause 70 with regard to the payment which is made there, but I feel that in respect of clause 71 we should not have the Master exercising that judicial function.

Mr Chairman, as far as this matter is concerned, I disagree with the hon member for Yeoville, and I want to tell him why. Then he may debate the matter with me further. The function which is being given to the Master here is a quasi-judicial function which is closely connected with the process of liquidation of close corporations. More specifically, it is closely connected with the question of prejudice to the creditors of the close corporation and the process of decriminalization which has been built into the Bill. Several hon members referred to this aspect of decriminalization as a characteristic of the Bill yesterday. Rather than to prohibit matters of this nature by creating offences, the Master is being given a quasi-judicial power in terms of which he may determine whether or not a certain payment was bona fide. The Master is a legally qualified person, in any case, and he has all the relevant information available to him to enable him to come to decisions. Furthermore, I put it to the hon member that the matter does not end when the Master has given his decision, but that the person involved can of course go to the magistrate’s court to have the ruling set aside. Then there is a full appeal procedure, and it is also possible, therefore, to appeal against the decision of the magistrate’s court. Therefore I believe that sufficient remedies have been built into this provision to accommodate any person who may feel aggrieved.

Amendment 1 negatived and amendment 2 dropped (Official Opposition dissenting).

Clause agreed to.

Clause 73:

Mr Chairman, I move as amendments:

1. 1. On page 63, from line 33, to omit “or negligence”.
2. 2. On page 63, in line 42, to omit “, breach of trust or negligence” and to substitute “or breach of trust”.

Yesterday I drew the hon the Deputy Minister’s attention to section 423 of the Companies Act in which those words do not appear and I suggest that they be deleted here in order to have consistency between the Companies Act and this legislation. In respect of clause 64 the argument was that the words “gross negligence” were already included in the word “recklessly”, but in section 423 there is no reference to negligence at all. I do not think there is any reason why we should include “negligence” in clause 73 of this Bill.

Mr Chairman, I do not feel strongly about the present wording of the clause. Now the hon member for Yeoville has not motivated his case very strongly. He simply said that a comparison could be drawn between this provision and a similar provision in the Companies Act. Upon consideration, I am inclined to accept the hon member’s amendments in this connection.

Amendments 1 and 2 agreed to.

Clause, as amended, agreed to.

Clause 76:

Mr Chairman, I move as an amendment:

1. 1. On page 65, from line 36, to omit the proviso.

I must say immediately that the provision in this clause also appears in the Companies Act, but it is a provision which I think is actually meaningless. If one says that a man should give a reason for not appointing somebody and one then says that it is a sufficient reason if the man says that in his view that person should not be appointed, that is not giving a reason. I think that the Companies Act is also wrong in this regard and I believe that the proviso should be deleted. If there is a valid reason why a man should not be appointed as a liquidator, the Master should be prepared to state what that reason is and should not merely say that he thinks there is a good reason why he should not be appointed.

Mr Chairman, I cannot accept this amendment. The hon member correctly referred to the corresponding provision in the Companies Act. The wording here is actually a rule of practice which is simply being perpetuated. The Master is a legally qualified person and a senior official who has to ensure that the best person is appointed as liquidator at all times. If the Master has to give reasons every time for not wanting to appoint a person, he will be placed in an almost impossible position. Conducting unpleasant arguments about who should be appointed cannot be in the interests of all the parties involved. Surely someone has to have the final say about the appointment of a liquidator, and we consider it advisable that the present wording should be retained.

Amendment 1 negatived (Official Opposition dissenting).

Clause agreed to.

Business interrupted in accordance with Standing Order No 22.