When the Committee reported progress on 25 May, the Schedule had been put and the Votes agreed to.

Mr Chairman, I move:

Agreed to.

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

Schedule

These amendments refer to: (a) the increase of certain amounts in column 1 and column 2 of the schedule to the Appropriation Bill; and (b) the addition of a new column 2 item under Vote 18: Industries and Commerce. The total supplementary amount involved in the amendments amounts to R493,346 million—R383 million more than the R110,346 million that appears in the first print of the Supplementary Estimate (RP 4—1984) and which was Tabled and distributed on 22 May 1984. Hon members will recall that in my Budget Speech on 28 March, 1984 I envisaged and motivated supplementary expenditure of some R112 million. Because we are here dealing with an extraordinary situation, I decided to amplify the tabled second and final print of the Supplementary Estimate, (RP 4—1984), as seen, with an explanatory memorandum.

As Minister of Finance it is no pleasant task for me to inform the Committee that conditions in agriculture are still not showing any of the signs of an improvement which I was hoping for in March. Apart from drought relief there is also the financial assistance which must be made available in respect of the serious floods which devastated certain parts of our country. As expounded in the explanatory memorandum in your possession, a further R100 million is required over and above the R125 million surplus for which I budgeted. Even with that amount there can be no certainty that the funding of this service will be adequate, such is the uncertainty about the future in this regard.

†The other large supplementation, of R158 million, is in respect of the cost of the recently announced improvements to the service benefits package of teachers and certain related groups as from 1 December 1984. The explanatory memorandum gives more information in this regard.

Of the total amount of R493 million before the House today, R237 million—R107 million additional for pensioners, R5 million for the Small Business Corporation and R125 million for drought relief—was financed in the Budget. This leaves an amount of approximately R256 million to be financed.

As I emphasized at the time, partly as a fundamental financial policy measure to ensure the basic strength of the economy and partly to provide for the financial imponderables inherent in the present uncertain conditions—no one I know can for example say where the already low gold price is going in the next few months—I increased GST with effect from 1 July 1984. By so doing I have provided adequately for the financing of the R256 million set out in the supplementary budget and I suggest for whatever unforeseeable or inevitable further contingencies or catastrophies that may overtake us this fiscal year. In other words, the total additional expenditure is R256 million. The other part has already been provided for in the Budget.

*I have now stated my case. There has been ample opportunity in the course of the appropriation debates for a discussion of the problems surrounding the supplementary proposals. However, if there are any further questions, my colleagues and I shall gladly try to answer them.

Amendments to Vote No 4—“Co-operation and Development” and Amendment to Vote No 10—“Internal Affairs”:

Mr Chairman, I do not propose to discuss with the hon the Minister the items that is provided for in the Budget because I think there has been an opportunity to discuss those during the Committee Stage of the Appropriation Bill. However, the further expenditure that has arisen to my mind requires further discussion and the detail of it will be discussed by my colleagues when the individual votes are put.

However, there are a number of questions that arise even at this stage. Firstly, the hon the Minister said that in his view he has now adequately provided for any other catastrophe that may befall us. We have had a number of catastrophes this year. We shall not go into what all those catastrophes are, but the question arises, firstly, that in so far as the revenue is concerned the hon the Minister has not explained to us whether in fact the additional amount of R256 million is now going to come out of the increase of the GST to which he referred and, secondly, that he has still not explained to us what has happened to the additional money in respect of the Sasol funds which we have debated so often in this House. Furthermore, he has not indicated to us in what respect the money that he says is going to be used for the drought is going to be used. I raised specifically what particular purposes are going to arise and I raised the position as to what is going to happen with regard to wheat and the bread price, and I also raised specifically the question as to what is going to happen with regard to agricultural products in so far as their prices are administered as to whether they are going to be allowed to rise in order to destroy the GST relief that has been given.

In addition to that, I think that one will find that in so far as the further amount is concerned that has been asked for in respect of teachers’ salaries, there has been no indication at the moment from the hon the Minister whether in fact he has the funds or not in order to make that increase that has been announced effective from an earlier date and why the Government is only bringing that into force on 1 December 1984.

In addition there is still no amendment to the Estimates which one would have anticipated in regard to the new dispensation in so far as the expenditure of the new Parliament is concerned. Whereas we raised this during the discussions on the Exchequer and Audit Amendment Bill which dealt with the internal apportionment of the funds which are being voted for different purposes once the new Constitution becomes effective, there is still nothing in these Estimates to deal with the new Parliament, the members of which are due to sit here and for whom new staff will be here to support them. This will happen in a couple of months, but there is no indication of that in these Estimates.

In the last instance, I should like to ask the hon the Minister to deal with one matter concerning the amendment which he has moved. In the original Estimates in regard to the Department of Co-operation and Development the schedule shows a column 1 item of R1 655 796 000, but the amended item in terms of the amendment which the hon the Minister has moved shows an item of R1 702 558 000 whereas the item in the printed Supplementary Estimates amounts to R1 929 543 000. It is correct that the column 2 item has also been altered from a figure of R718 852 000 to R743 230 000, but on an analysis of those figures, unless there are some other figures which have to be taken into account, they do not appear to balance. I should like to ask the hon the Minister kindly to explain the position.

Mr Chairman, on that particular point the Treasury will immediately obtain the information and I shall let the hon member have it as soon as possible, if not in this debate, then I shall make a point of letting him have it in the following debate

But that may require a further amendment.

Amendments agreed to.

Amendment to Vote No 12—“Improvement of conditions of service”:

Mr Chairman, this Vote makes provision for the improvement of conditions of service and relates to the long awaited and long delayed salary increases in respect of South Africa’s teaching community. The very fact that this item has to appear on the Supplementary Estimates is an indication of one of the most deplorable examples of thoroughly bad budgeting that we have yet experienced. Something is very wrong in the budgeting procedures if it is necessary for the Government, when they have known for many months if not for many years that it would be absolutely essential to grant substantial increases for teachers in 1984, to make provision for those increases in the Supplementary Estimates instead of in the main Budget. The main Budget was introduced quite a number of months ago but now the Government has to make provision for those increases in the Supplementary Estimates and I say, when this happens, there is something very wrong in the budgeting procedure of the Government.

The hon the Minister of Finance owes this House and South Africa an acceptable explanation of why he did not make adequate provision when he knew very well or should have known that substantial increases for teachers would have to be granted this year. His failure to do has caused unnecessary distress amongst the teaching community in our country. The harm that has been done, not only this year but over the years, to teaching in South Africa and to the interests of South Africa’s young people by the inability of the Government to adapt adequately the salaries and conditions of employment of South Africa’s teachers timeously, is incalculable. There has been unhappiness; there has been distress; there has been tension in the ranks of the teaching community and there has been conflict between the teachers and the State, and over a period of many months the attention of teachers has been distracted from their duties by their concern about their conditions of employment. In addition to the fact that teaching is a profession requiring great dedication and sacrifice from those involved, they also have to clothe their own families. Our teaching profession has lost some of the finest teachers, people with the required ability, qualifications and interests, because they could not remain within the teaching profession. They could not afford to do so. They were distressed by the uncertainty which surrounded their position. Those people are lost to the teaching profession. The fact that we are now going to increase salaries is not going to bring them back. The appeal I want to make to the hon the Minister is that I hope that the Government has now learnt a lesson and that in future they will adapt teachers’ salaries and conditions of employment to keep pace with inflation and with changing circumstances so that the country is not again landed in an unacceptable crisis similar to what we have experienced over the past few months.

Let us look at the amounts required. It amounts to about R57 million per month. The question that arises is why the Government is adamant that the teachers will have to wait until the end of the year for their increases. Surely the Government can find the funds that are necessary in order to make these long overdue increases effective as soon as possible. I think the Minister of Finance owes South Africa an explanation, not only for the delay but also for their ham-handed and totally incompetent way in which it has handled this aspect of the Budget of South Africa. I wonder if the hon the Minister of Finance is not prepared to take a richly deserved retirement at this stage. I want to make this point, and that is that when it comes to real catastrophies the Government will find that the Opposition is sympathetic to them in their dilemma. Catastrophies have hit this country consistently since 1948. This year the biggest catastrophe that is going to hit this country is the new constitution. [Interjections.] Just wait. But the adjustment of teachers’ salaries and conditions of employment is not a catastrophe. It is the result of the incompetence of the Government and its inability to meet the just aspirations of a very important and valuable section of the South Africa community.

One wonders whether the Government really thought that it could perhaps avoid adapting teachers’ salaries and whether they thought that if they played them along long enough, if they withheld increases long enough, maybe they could put it off until later and would therefore not have had to make provision this year. Or maybe it is just total incompetence, which is the sort of explanation which we have come to accept for the bungling of this Government. Maybe there was some money available somewhere but has in the meantime been lost into one or other of the bottomless pits that this Government seems to pour money into from time to time. Whatever the situation is, South Africa deserves an explanation. If the Government is facing serious financial difficulty, if the Government has painted itself into a corner as far as its finances are concerned, if it does not know where to turn or if it is its intention to spring further shock tax increases on the South African public, the hon the Minister of Finance must not do what he did in the past but take South Africa into his confidence now and tell us what the problems are so that we can face them.

Mr Chairman, I have noticed over the years that when the hon member for Bryanston talks about finance we have to be prepared for the biggest nonsense we have ever heard.

What the hon member is of course doing is to try to make cheap political capital out of a very important issue. It is cheap political mischief-making. It discloses his complete ignorance of sound budgetary procedures. He does not understand the budgetary procedures of this country.

If you are offering me your job let me tell you I do not want it.

Order! The hon the Minister did not interject when the hon member for Bryanston was speaking and he must now accord the hon the Minister the same treatment.

He is a man who squeals very easily when he is getting a hiding.

† He does not understand the budgetary procedures followed in South Africa. If he did, he would know that to put this item of R158 million for salaries in the supplementary budget under these conditions is a classic example of the proper use of a supplementary budget. It is an integral part of our financial system, but the hon member does not understand it. He tries to make out that he is omniscient, but I want to point out that until a few weeks ago the Treasury had no idea whatsoever what the amount would be for increasing teacher salaries. I now challenge the hon member, the man who talks so glibly, to tell me what figure I should have put in the Budget in March. As my hon colleagues who deal with education can tell him, this matter has been the subject of the most thorough investigation by competent authorities. This figure was eventually submitted to the Cabinet and the Treasury. When it was decided precisely what that figure had to be and from when it would date, we obviously made provision for it as soon as we could. Does the hon member think that I should have put a hypothetical fictitious figure in the Budget in March? What is he talking about? That would be completely irresponsible budgeting. When you have a finite figure like we have here, you put it in the Additional Budget if it is late during the year, but if there is still time you put it in the Supplementary Budget as we have done here. Does he not understand that? He talks about incompetence, but he should talk about things he knows about. There is no way in which I could have given a meaningful figure in any budget prior to the figure in the Supplementary Budget today.

The position is completely under control. The hon member talks about a financial crisis, but he must not let himself become completely mislead by these destructive, superficial misguided critics who at the drop of a hat talk of a crises. They do not know what they are talking about. I will deal with that at Third Reading because I have a few things to say on that.

The finances of this country have been studied, assessed and pronounced upon by world authorities infinitely more competent to speak on them than that hon member will ever be. What do they say? They tell us that our finances are in very good order and that our financial system is very sound indeed. I will quote the hon member authorities if he wants to deny that. You see, Sir, one has to listen to this complete nonsense about finances while there is proper provision in this Budget to cover all our expenditure. I want to make the point here today that the finances of this country are completely under control and that the financial administration is completely sound. If the hon member doubts it, let him go and talk to the big international banks who study these things in depth as a matter of course. Let him go and talk to the International Monetary Fund, the greatest authority in the world on finance, and hear what they have to say about South Africa’s finances. He does not do that and then we have to listen here to this absolute nonsense.

The hon member asked why a decision in this regard was not taken earlier. That makes one almost laugh with pity. Had we done this earlier and spent more, the cry would immediately have gone up—and he would have been in the forefront—that there was excessive Government spending. What we have done is that we have reached what I believe to be an extremely fair dispensation here in the light of the pressures on this country, pressures to which the whole world is being subjected. Indeed, pressures being experienced elsewhere are far greater than those being experienced here. We do not have unlimited finances, or does the hon member want us to put up taxes again? Then he can squeal again.

You will probably increase them again anyway.

No, we have made adequate provision.

You have said that twice before.

That may be. Then the hon member can test it. I have not said it twice at all. [Interjections.] Sir, this dispensation for teachers from 1 December is, in my view, an extremely fair and, I believe, in the circumstances a generous dispensation for an important profession. I say that to have applied the salary increase earlier would have put a quite unnecessary strain on the whole position; but the hon member is not interested in that. He wants to make political capital.

Sir, I absolutely refute any kind of criticism that this was not a most prudent and a most considered step we took. I believe it meets the situation extremely satisfactorily under difficult conditions. The finances are there, they are absolutely sound and there is absolutely no cause for any kind of concern on the part of this House.

Mr Chairman, my hon colleague the Minister of Finance has replied in detail to those aspects that are directly related to the Budget per se. I rise merely to make the supplementary remark, with reference to the attack made by the hon member for Bryanston, that the hon the Minister of Finance had already intimated in his Budget speech that an announcement would be made later and a decision taken in regard to teachers’ salaries. He also indicated that certain investigations were still in progress. The position is that since 1979, in accordance with a system introduced by this Government, the teaching profession itself has been involved in scientific investigations with regard to the dispensation for educators, including inter alia their salary package. That is to say, there is an official committee, the Committee for Education Structures, on which are represented not only the interested parties but also experts from the private sector. Since a short time ago all education departments have also been represented on it—prior to that not all had representation. This committee is a highly expert committee on which both the teaching profession and the State are represented. Deliberations take place in that committee and conclusions are reached in respect of facets such as teachers’ salaries, on the basis of scientific investigations. The Committee also has a substructure known as Reces. This is the Research Committee for Education Structures which serves as a working committee. The package that has now been announced, and in regard to which a certain amount is being voted in terms of the Supplementary Appropriation, is the result of the activities of this committee.

I should just like to say for the sake of information that to my knowledge this committee held its last meeting as recently as on 30 May, and that the report was only received on about 6 June. This enabled us to take final decisions at Cabinet level only on approximately 12 June. Those are the factual circumstances underlying the decision not to work on rough estimates but, pending the scientific investigation of this unique research committee made up of experts, to be able to submit a correct figure to Parliament.

Mr Chairman, the hon the Minister of National Education is very quiet. I think he ought to say something.

According to newspaper and other reports, there is not a single teachers’ organization that is not deeply unhappy about the whole matter. One has to draw inferences from newspaper reports; otherwise one does not know what is going on, and I should like the hon the Minister to inform this House in this regard. According to certain people, this matter has been dragging on since 1981. The hon the Minister of Internal Affairs pointed out that investigations were in progress, but the impression we gained—I have not spoken to people in education, but draw my inferences from newspaper reports—is that there were delays in this regard. Certain promises were made and guidelines laid down that were not complied with. Some time ago the hon the Minister of National Education said that new guidelines had been laid down, but that he was unable to provide details. The hon the Minister of National Education states that he cannot furnish details, but Mr Franklin Sonn announced that it would be based on a sliding scale—it is not very clear—and that the increase would be 22% plus 12%. The hon the Minister must now tell us whether Mr Franklin Sonn was right or wrong. If he is right, why did the hon the Minister not announce it, and why was it left to Mr Franklin Sonn to announce it?

If these details are correct and teachers are, in fact, to obtain these increases, why—this question has been put to me over and over again but I have not yet been able to answer it—will it only come into operation on 1 December? Will teachers definitely receive it on 1 December, or will they again be told that there is no money for it? These are questions that are put to me over and over again and as yet I have not been able to reply to them. The hon the Minister must now tell us what the situation is.

Mr Chairman, I am taking part in this discussion because this matter falls under Vote 12, which is my responsibility as the delegate of the hon the Prime Minister in so far as the Commission of Administration is concerned. This money is being appropriated under this Vote.

In the first place it is not our policy to make particulars regarding the salaries of public servants and teachers public. If leaders in the sphere of education want to do so themselves that is their affair. Our standpoint is that a person’s salary is his own affair. We have given certain indications, however, that the package will consist of a number of facets. There will, for example, be a general salary adjustment which is aimed at making up the greater part of the remuneration backlog and, in the second place, there will be a considerable provision of greater opportunities for promotion which will contribute to the elimination of the overall remuneration backlog, and which will improve the career prospects in the teaching profession in particular. In the third place salary parity between men and women will be extended to post level two.

The hon member for Sunnyside also asked why the package would only come into operation in December. The hon the Minister of Finance will be able to elaborate on the availability of money. The fact is that we were faced with a choice. The committee of experts I referred to worked out a package and submitted it to us. In a certain sense this package fits together like a jigsaw puzzle. We had the choice of affording substantial relief earlier in the year with the same amount that is now being appropriated, but then we would have had to break up the package by having to implement some of the facets of the recommendations that had been accepted earlier, while postponing others. The new dispensation would therefore have had to be phased in. They would have received less earlier and the remainder later. Because this package forms a unit, it was decided that it would be better to implement the entire package simultaneously. Within the framework of the funds which could be made available, the earliest possible date was 1 December.

Mr Chairman, I should like to ask the hon the Minister a question. He said in his first speech this morning that the hon the Minister of Finance had indicated during his Budget Speech that there was likely to be an increase in respect of the salaries of teachers and that provision would be made for it. I have a copy of the Budget Speech with me. I want to put it to the hon the Minister that when the hon the Minister of Finance referred to the increase in the National Education Vote there was no mention of a possible further increase. The only reference in the whole speech was to the fact that there was going to be an announcement in respect of the position of qualified teachers in due course. There was no indication that there would be increased expenditure. I can show the hon the Minister this speech; it is not correct what he said. Does he agree with that?

I had the last sentence to which the hon member for Yeoville referred in mind when I made that statement. What does an announcement mean other than a notification that something is going to happen? [Interjections.] After all, everyone knew that an enquiry was in progress [Interjections.] The hon member is now trying to advance a technical argument. What I said was that the hon the Minister of Finance had said in his Budget speech that further announcements would be made on this matter and that an enquiry in that regard was in progress. A wise person does not need anything more than that to know that there will be developments. [Interjections.]

I want to point out to the hon member for Sunnyside that of course the Government would want to implement this dispensation for teachers at the earliest possible date. If we had been able to do so at an earlier date than 1 December, it would have given us great pleasure to do so. I have already had occasion to say that there is one matter with regard to which we should not bid against one another, and that is the appreciation we have for the great and important task performed by the teaching profession, the necessity for the teaching profession to be held in high esteem, and that it should receive the recognition it deserves.

I should like to quote from the Press statement on the announcement:

Then we went on to motivate this:

We also said:

We are therefore not saying that they do not have a backlog; we are admitting it. We are saying that through this scientific investigation we are now finally achieving the rectification, the equality, we have always been striving for.

Mr Chairman, I am grateful for the information provided by the hon the Minister. However, I want to say to him that certain expectations have been created. If I were to tell my child that I was going to buy him a bicycle and I failed to do so, I would be up against it. What were the expectations created in the teaching profession? What indication were they given, in negotiations and discussions, as to when the new salary scales would come into operation? I think that answer will clear the matter up for us. We should like to hear this from the hon the Minister.

Mr Chairman, to supplement what my hon colleagues have said, I should like to reply to the remarks of the hon member for Bryanston and the hon member for Sunnyside. I wish to state very categorically and clearly that in the negotiations with the teaching profession and other interested parties that I have been involved in, no date was laid down for the implementation of a new dispensation. In September last year the Government announced that fully qualified educators would enjoy top priority early in the new financial year. Therefore it seems to me as if the real question to which we are owed a reply is the question why the final specified figure that the Minister of Finance is requesting by way of a supplementary budget, was not available earlier. The Minister of Internal Affairs has already furnished part of the reply to this, viz that since 1979 the process in accordance with which renumeration structures for the teaching profession is negotiated has, in terms of agreement between the Government and the various sectors of the teaching profession, been embodied in the two committees to which the Minister referred, viz the Committee for Education Structures and the Research Committee for Education Structures.

I want to emphasize that as far as I know, no other professional group in the employ of the Government has been involved to the same extent, from the first phase of negotiations and bargaining with regard to new remuneration structures, as in the case of the teaching profession in this regard. However, such a process takes time. In the first place, it takes time because the two committees, CES and RECES, as they are generally known, are representative of the entire education family. In both the working committee and the top committee they are representative of the universities, the technikons, the teacher training institutions, the inspectorate, the schools sector and the technical colleges. Each of those sectors has its own perception of what should be given top priority in their specific subgroup of the teaching family and what is in their best interests. We also get conflicting claims. They compare their positions with one another and in a certain sense there is also a degree of competition among them.

The great advantage of these two committees, Ces and Reces, is percisely that in that forum a consensensus can eventually be reached, as in this case, by way of discussions, scientific analyses and mutual convictions; a consensus that satisfies all the parts of the family represented there. This in itself takes time and therefore I believe that it is a notable achievement that the Government received a report from Ces which, as regards all the aspects of the new dispensation, has been unanimously accepted by the various elements of the education family represented on it.

However, there is a second factor which influenced the period of time involved. As we announced earlier in this House, the composition of these two negotiating bodies, Ces and Reces, has since May last year been extended to accord representation to the education departments and organized professions of all the population groups. For the first time these two structures were charged with education not only from the point of view of the White educators but from the point of view of all educators. The result of this is that for the first time the task was not left to the Commission for Administration subsequently to achieve co-ordination with the educators of the other population groups after the White educators had achieved consensus on their proposals. In this regard there was involvement from the outset of the education departments, the teaching groups and the various education sectors of all population groups. This in itself was also a factor which required a considerable element of additional time. It involved people who had not been involved in the process at all and it was necessary first to build up mutual trust. New needs and new priorities were set which had to be discounted and which were eventually handed over to the Government in the final report of Ces and Reces, consensus having been obtained.

Mr Chairman, if the hon the Minister had not been aware of what the amount would be for which provision had to be made in the Budget, why, then, is there an amount of R70 million in the Budget in connection with this salary increase? Did the hon the Minister not expect that a further R150 million would be needed for this year? Surely the hon the Minister could not have been under the impression that R70 million would be adequate. He must have been under the impression that in the circumstances, provision would have to be made for more than R70 million.

Mr Chairman, as far as I know the R70 million is the amount which was provided in order to proceed in this financial year with the process of occupational differentiation for the less well-qualified teachers which has so far never come up for discussion. I am referring here to the teachers who have not had a period of at least three years of post-matriculation training. Those people came up for discussion at a late stage in the whole phase of occupational differentiation, whereas at the time, the fully qualified teachers were the very first to have their turn—in April 1981. It was for that specific group that provision was made and in this new package an improvement is proposed, as was stated in the announcement which applies to both the fully qualified and the less well-qualified educator.

I want to mention one further point which is of considerable importance, and that is that the normal budgeting procedure is based on inputs, and also, therefore, data and figures, dating from the end of the previous financial year; in other words, the normal budget inputs to the Treasury for the current financial year starting on 1 April 1984 should really have been made in April last year and should therefore have been based on data in respect of the relative backlog of the education sector compared to the rest of the Government sector as it stood more than a year ago. As we worked on this process, my colleague the hon Minister of Internal Affairs and I obtained the approval of the Government to direct these working groups to restructure the whole calculation and instead of basing their work on the data of the relative salary position of March 1983, to base it on the position as at the end of February and the beginning of March 1984. This entailed substantial re-calculation and re-orientation of the details of the package, but it also entailed the considerable benefit that the relative salary position of the educators was comparable to the rest of the Government sector as of now, calculated on the basis of the latest, most up-to-date data, and also at a stage when the Government said that the whole round of occupational differentiation improvements had now been finalized and that as a result no further significant backlog could enter this calculation. This was a considerable benefit but it did of course take several months of additional recalculation which, I believe, will in the long term be very much to the benefit of the education profession as far as determining the value of the package is concerned.

Mr Chairman, Mr Franklin Sonn issued a statement after conducting an interview with the hon the Minister of Internal Affairs. In this regard the hon member for Sunnyside put a question to an hon Minister but he did not reply to it. I therefore wish to repeat the question.

Mr Sonn issued a statement in which he said that the salaries of teachers were to be increased by 22% plus a further 12%. I want to ask the hon the Minister whether Mr Sonn’s statement was correct, and if so, why the Minister himself did not issue this statement.

Mr Chairman, in the first instance I want to repeat that it is not our policy to provide details when a new package is worked out. In the second instance, in drawing up this statement we considered whether we could specify a fixed percentage as far as the first point was concerned, viz:

You did not give anything of the kind to Mr Sonn?

Mr Sonn served in Ces. He is perhaps better acquainted with all the details than any hon member of this Committee. It is true that from a certain point of view one could draw the conclusion that this facet of salary adjustment is in the region of 22%. In that respect Mr Sonn is not wrong.

The reference to the 12% is a reference to the allowance of 12% granted at the beginning of the year as a general increase to everyone, and that 12% will be paid on this re-adjusted salary scale. That is where the reference to 12% comes from. It is not an additional 12% over and above the 12% granted at the beginning of the year.

Amendment agreed to.

Amendment to Vote No 14—“Health and Welfare”:

Mr Chairman, under this Vote we are spending an additional R25 million approximately on welfare promotion. If one looks at the total sun we are spending on this under this vote one sees that it is in the neighbourhood of R527 million. If one looks at the various Votes, because there are actually three Votes where we have spent increased money on welfare promotion, ie Votes 4, 10 and 14, one sees that just the increase is approximately R102 million. Let us put this figure into its true perspective. If one refers back to in 1973 one sees that the total amount then spent was R95 million. In other words, the increases in 1984 alone are more than the total amount that was spent in 1973. If one looks at one particular Vote, ie Vote 4—“Co-operation and Development”, the increase there is something in the order of R22 million. In 1973 a total of R17 million was spent. I want to say to the hon the Minister of Finance that I am not against the increase of R100 million. One is for it, but I want to say that I am concerned and if I can express my concern I get the feeling that we are somewhat like the mouse who because it is bored, goes round and round and round in its treadmill. When I look at the welfare situation in South Africa I get the same sort of feeling, ie that we are just going round and round and round. What is our problem? If one looks at the amount being spent on welfare promotion for Whites, one sees that it is considerable. It is R527 million. If one is White in South Africa one has in all honesty a fairly good social security type system. One gets free education or education at a very low cost. We look after people who are old and we also look after people who are disabled. But what is the problem? I am glad the hon the Minister of Constitutional Development and Planning is now present because the problem that we face in South Africa is that Whites have become used to a welfare system which relates to Western Europe. They have become used to a system which relates to a First World economy while we actually live in a Third World country. The Third World people, the Coloureds, the Indians and the Blacks, want what the Whites now have. One can understand this. I think that it is a legitimate political aspiration, but the problem is that we cannot afford to give it to them. Our economy is not growing rapidly enough at the present moment to actually do that. Some time ago Mercabank made a study where they actually showed that if we could grow at 4,5% we could give to the non-Whites what the Whites have. But the hon the Minister of Finance will tell us that, we are not growing at a rate of 4,5%. Our real growth rate is something like 3,2% or 3,3%.

We are at present experiencing a negative growth rate.

That is taking it over a 10-year period. Over the last few years we have experienced a bad period, as the hon member for Yeoville pointed out. The more money we spend on welfare now, the less money we are going to have to spend to develop the economy for the future because from the economic point of view, money spent on welfare is money that we have got to take away from spending on things like developing the economic infrastructure and creating job opportunities. The key point is that the more we are spending, the less we are actually doing to solve the problem because we all know that if all one has is a social old-age pension one is living very close to the poverty datum line.

So what is the answer? The Government often says that we in these benches can point out the problems but often do not give the solution. If we look at the question of welfare, this is what I should like to suggest to the hon the Minister of Health and Welfare and the hon the Minister of Finance. We have to divide this aspect into three parts.

The first problem which we have to tackle—this is predominantly a problem concerning the White population—relates to those who work in the industrial economic system, the First World economic system, and who enjoy a lot of the benefits like belonging to pensions funds and so on. What is the problem there? The problem there is that a lot of that money is wasted. If one has a look at 1981, one finds that we paid out on resignations something like R354 million. That is an incredible amount of money. If one looks at the private pensions and the civil pensions, one finds that we have approximately 300 000 pensioners in South Africa from that sector. We have something like 700 000 social old age pensioners.

The first problem is to stop this wastage of pension benefits. If one looks at the decade between 1970 and 1980—I was quite shattered when I looked at those figures—one finds that on resignation withdrawals we paid out R1 160 million. Over the same period we paid out R1 311 million on annuities, on actual pensions. We therefore wasted nearly as much as we actually paid out in pensions. This is the first problem. This is predominantly a problem which we have to tackle in the White community. We must get them to stop wasting their pension benefits, and if necessary, we shall have to compel them when they leave one pension fund to take their contributions to another.

The second problem concerns those groups who are coming into the industrialized economy and how do not belong to pension funds. Somehow we have to lock them into the pension fund system. The message that we have to send out to South Africa—this applies to all the race groups—is that the choice is not whether we are going to continue with the existing welfare system because we cannot unless we increase income tax and GST. I think we have actually reached the stage, as far as individuals are concerned, where we are very much at the limit of the tax increases that we can bring about. If we can lock in the people who belong to the pension funds and if we can get into the system those who do not belong now but who operate in the westernized economic system, we would have done a tremendous amount to solve the problem. Then we can actually use our welfare payments for the third group which are those who tend to operate on the farms and so forth, in the non-formal sector and these who cannot provide for themselves.

There is one point which I should like to raise. In 1970, on a pension of approximately R420 per annum, if one actually deferred taking a pension for four years one had an additional R120 per annum and that gave one quite an encouragement to deferring one’s pension. If one looks now at a pension close on R2 000 and one defers for five years, one gets an additional R132 per annum. I should like to ask the hon the Minister of Health and Welfare if we should not actually look at this, if we should not in fact give people more encouragement to remain working for a longer period.

Mr Chairman, I should like to ask the hon the Minister of Health and Welfare something, and I want to refer specifically to one group of people in our private sector, viz the social pensioners. All of them are receiving increased pensions, but the social pensioners have to wait until 1 October before they can receive their increased pensions, notwithstanding the fact that the increases were announced when the Budget was introduced earlier in the year. Surely the number of people involved is not large, but there is no other group in our country that is having as hard a time of it as they are. Does the hon the Minister not care about those elderly people? [Interjections.] When I say that I really mean it, because what does it mean to them to wait six months? What does their meagre pension amount to? it is now to be R166 per month. Why should they have to wait so long before they receive their increases? I should like to know from the Minister what the total additional amount is that would have to be paid to social pensioners if the increase were to be paid to them retrospectively to 1 April. The hon the Minister of Posts and Telecommunications is sitting here in front of me. He once said that they could live on R20 per month. But I am concerned about these people. In my constituency there are several thousand of them and they are having a hard time of it. Whereas in the past they had to pay R90 for a flatlet, they now have to pay far in excess of R200 per month. As a result many of them were compelled to give up their flatlets and approach their children for help. I am, of course, in favour of children contributing to the maintenance of their parents, but not all of them have children. On a later occasion I shall come back to this and show how our White pensioners are becoming impoverished. They are simply unable to make ends meet any more.

Mr Chairman …

Before the hon the Minister goes on I want to point out to him that I shall permit him to reply to the points raised, but that I shall not permit him to say anything about the result of the match between Northern Transvaal and the Free State at Loftus Versfeld on Saturday. [Interjections.]

Sir, I thought you were going to say something about that!

The hon member for Edenvale touched on an important point, namely the question whether the State will be able to afford the payment of pensions in future. This is a matter which the hon member has raised here before. I myself have raised the matter here before. The social pensions that the Government has to pay and the contributions it has to make in the field of welfare, plus all the other expenditure on social services, is growing at such a rate that according to projections it will amount to more than R3 000 million by the end of the century. In this regard the hon member made certain suggestions which we shall certainly consider. He and I have already discussed the matter and as a result we have already appointed a select committee to investigate this specific matter. The hon member is himself a member of that committee. I hope that on completion of its investigation the committee will come forward with proposals that will assist us in finding a solution to this problem.

Basically the problem is that there has to be transferability of pensions. There has been an Act before Parliament in this regard but people threatened to go on strike because of it. We are now trying to obtain the co-operation of everyone. We cannot permit the present situation to continue. South Africa simply cannot afford it. The points made here by the hon member have, therefore, already been considered.

The hon member raised a further point, and that point, too, I want to concede at once. Indeed, I have already instructed the department to consider it. It is that the disincentives for the elderly to apply for pensions are inadequate. The hon member mentioned certain figures in this connection. But as I said, the department is at present considering this matter and I hope that I shall have the opportunity at a later stage to come to Parliament with proposals in this regard. I think that the age at which the income from personal earnings is no longer deducted as a consideration for the award of a pension should perhaps be reduced, say from 70 years to 68 years. Everything a pensioner over the age of 70 years earns by working after the age of 70 no longer counts as revenue to be calculated against his pension. I think we could perhaps achieve more by reducing that age limit somewhat instead of keeping it at 70 years and providing the encouragements which are no longer disincentives—I concede that point to the hon member—because a pensioner loses his basis by not applying for a pension in good time after 65 years. We shall consider this and I appreciate that viewpoint of his.

As far as the hon member for Sunnyside is concerned, I just wish to say that all of us in this House are concerned about our elderly people. However, there are certain things we must bear in mind. We in South Africa have already achieved the position, as far as the Whites are concerned, that a larger percentage are in old age homes than is the case in any other country in the world. The State, together with the private charity organizations, is doing its best, to a greater extent that in any other country. However, this also implies a different charge against us as children, and I am pleased that the hon member for Sunnyside associated himself with this, viz that we as children have an obligation to our parents. One does not always see this in South Africa. The department had an investigation carried out into reports which appeared in Rapport over the past few Sundays. Those stories are not always correct and it will amaze hon members to hear who is spoken of in this newspaper. I am not prepared to mention names, but that is the fact of the matter.

The hon member also asked why pension increases only took effect from 1 October and why the elderly had to wait for six months after the announcement before they could obtain it. This was a question that was asked on the first day I came to this Parliament, more than 18 years ago. Those were the days when the hon member was concerned about mini skirts during the Budget debate. That question was asked then. Pensions are to be increased on 1 October, and this problem to which the hon member refers could only have been a non-recurring problem, viz on the first occasion that pensions were increased from 1 October. Since that time it cannot create problems because pensions are increased from that date every year. Whether pensions are increased six months earlier or six months later, the situation remains unchanged as far as the budget is concerned. Apart from that we need time to process those things due to the vast number of pensioners who have to be paid. Therefore it is the practice in South Africa that the pensions for the elderly be increased from 1 October. Moreover, this year the hon the Minister of Finance granted a bonus during May, because there was a need for it, and in order to show goodwill to the people in question.

One can never give the elderly enough to satisfy everyone or to satisfy oneself. We cannot care for our old people enough. However, there are limits, too, in regard to what the State can afford in future, as the hon member for Edenvale also pointed out.

Mr Chairman, I am pleased at the replies given by the hon the Minister, particularly his statement that these questions were asked many years ago. I have been asking for years that the date of the increase be shifted back to 1 April. Moreover, I am pleased that the hon the Minister referred to my appeal in regard to miniskirts. That just goes to show that I am a champion of my people’s morals, customs and decency. [Interjections.] As the hon the Minister puts it, one might think that he wanted them to walk around naked.

I must say to the hon the Minister that his answer does not hold water. He says that it involves a tremendous amount of work to calculate these increases for the elderly and to advance the date of payment. However, this is a drop in the ocean in comparison with all the other pension increases and salary increases paid from the first day. It can be worked out on the computer within 10 minutes. After all, he knows what a computer is capable of doing. There are not so many things at stake. The hon the Minister must now spell out to us what tremendous amounts of work are involved in advancing that payment, so that the elderly may know what is involved.

The hon the Minister added that it did not matter whether it was 1 April or 1 October. If it does not matter, let him make it 1 April. Then it will be in order. If it involves so much work—and I say that this is not the case; this is merely an argument advanced in an effort to get away with this—why is it not being made retrospective? After all, the Minister could also begin working this out for next year.

There is another argument, too, that I wish to put forward. As far as the elderly are concerned, I want to say that there is not so much work involved. This morning a package was announced for the teachers, the public servants and everyone in all sectors as regards a single sum concerning which they …

It is for 1 December.

Very well, Sir. Then we might as well announce here and now that the elderly will be given an increase on 1 April next year. The work that is involved can be done from now until 1 April. It really takes a long time for the NP to work something out. Why can it not be made retrospective? The hon the Minister also referred to the bonus. I am on record as having thanked the Minister of Finance for that bonus. It is a non-recurring bonus of, I think, R30. However, I think that it may have taken a great deal more work to calculate that bonus than to make the increases retrospective. I repeat: What is the large amount of work as a result of which the increases could not be paid out earlier?

Mr Chairman, I just wish to say to the hon member that as far as the payment of pension increases to public servants is concerned, negotiations in that regard take place in September and October. It takes months of work to complete the programming in order to pay the increases on 1 April. And then the hon member talks about 10 minutes! That just shows how stupid one can be. He has no idea of what goes on.

Amendment agreed to.

Amendment to Vote No 23—“Agriculture”:

Mr Chairman, during the discussion of the Appropriation Bill we told the hon the Minister that in our opinion he had appropriated too little money for assistance to be provided to agriculture. Circumstances today show that the point of view we adopted then was correct, although we were severely reproached at the time for having called the hon the Minister’s figure into question.

The position of agriculture, particularly in the summer grain areas, indicates to us very clearly today what we may expect. We are grateful for the additional aid programme announced by the State to assist agriculture, and I want to refer in particular to the increase in production loans, in regard to which the limit has been increased to R75 000. Now, however, there is something that troubles me. Initially, only R18 900 was budgeted for loans in respect of means of production, and this is now being increased by a mere R8 million. I realize that it is somewhat early in the season to make a precise estimate of what will be required in this regard, and therefore I should like to know from the hon the Minister how he sees the situation at the moment. In the greater part of the summer grain production region the farmers suffered a total crop failure, and we know that the vast majority of these farmers will be dependent on special assistance to enable them to grow a crop in the coming season. In March an amount of approximately R19 million was budgeted. The hon the Minister of Finance said later that at that stage he was not yet aware of the serious proportions that the drought had assumed. Later, when GST was increased, the hon the Minister put the blame on agriculture. GST was then increased by 3%, which is expected to bring in an additional R800 million. Agriculture was blamed for the fact that an additional R800 million had to be found. Now, however, we find that for agriculture as a whole an additional R100 million is being budgeted.

I want to place it on record that to everyone concerned with agriculture it has become somewhat wearisome that everytime the hon the Minister needs to balance his books and consequently increases taxes—not only at the time of his budget but in between, too, as has become his custom—then agriculture, which is in a crisis situation, is cast as the scapegoat time and again, whereas the figures show that it is not the farmers who should be cast as the scapegoats. The true reason is to be found in the poor budgeting of the Government.

I should like to know from the hon the Minister of Agriculture whether the guidelines have been laid down for the bodies that have to agree to production loans to farmers, and whether they have been told that an amount of only R26,9 million will be available to them and that as has happened in the past, late applications by fanners will have to be turned down? Or has the hon the Minister received the assurance from the hon the Minister of Finance that the amount for which provision is now being made, viz R26,9 million, may be exceeded if necessary? Everyone knows that it is necessary that that amount be exceeded.

Mr Chairman, the hon member for Barberton wants to know whether the Government has already made adequate provision for drought situations in the future. That is a very difficult question to reply to. The hon member himself pointed out that particularly in the summer grain areas the season is not yet over and that changes in the situation may occur. If good rains were to fall at the beginning of the summer, it could happen that districts which have been declared drought areas could be delisted, and in the present situation this will entail a considerable saving. However, we are budgeting on the assumption that the drought will persist. However, the hon member himself knows how a season can change.

In the Budget the hon the Minister of Finance mentioned an additional amount of R125 million that could be utilized in the event of the drought becoming more serious. In this Budget a further R100 million is being added which means that we therefore have a total of R225 million available. We are of the opinion that this amount will be sufficient to meet the needs properly in the course of the season. It is not possible at this stage to say what further amounts could be added to the Additional Appropriation because we do not know what the position is going to be with regard to rain in the future. If the drought persists, there will be a cumulative effect which will result in higher demands. Feed becomes more expensive; the price of maize has risen, and the subsidy in this regard are increasing steadily. However, we are of the opinion that at this stage we have made sufficient provision to move ahead and proceed with the planning of loans, particularly those in regard to co-operatives, as well as interest subsidies in respect of the cash credit accounts of co-operatives. The co-operatives are already planning their programmes with regard to the transfer dates of their members.

Mr Chairman, I thank my hon colleague for his very reasonable and practical approach in his reply to that question. It is an extremely difficult exercise to make financial provision for months or even a year in advance for the provision of drought aid because it is impossible to be aware in advance of the magnitude of the amounts.

I should like to reply to one remark by the hon member for Barberton. He says that I make the farmers the scapegoats. I have never done so in my life. For interest’s sake I could point out to the hon member that I have received dozens of letters from our farming communities in which the farmers, in contrast to the hon member himself, express their great appreciation for what we are doing in very difficult circumstances. I just wish to set that point straight. I have never in my life made of a farmer a scapegoat. I myself grew up on a farm, and I know what farming entails.

We have three appropriations—a main appropriation, a supplementary estimate and an additional appropriation—and we cannot be sure what the final amount for drought aid is going to be. It is totally impossible. If it were to happen that the situation did not improve, we would take another look at the position. At present, however, we are in the position that we have already made reasonable provision for what may happen in that sphere. I give the hon member that assurance.

Mr Chairman, a moment ago I asked the hon the Minister of Agriculture a question. When the Budget was discussed on 9 April, the only amount that the hon the Minister voted for drought aid was the amount of R125 million, the surplus of possible loans. That amount is now being supplemented. Surely the hon the Minister must know that in April, when the Budget was agreed to, the whole of the Western Transvaal had not yet had rain. The farmers were unable to plough or plant. The Bushveld and other places were also dry because it had not rained. In parts of the Eastern Transvaal and in certain areas in the maize triangle, crops had been planted, it is true, but at that stage it was already clear that those crops would not produce the normal yield. I should like to ask the hon the Minister who advised him at that time that there could still be a good harvest. What information did he have, and who gave it to him? [Interjections.] If at that stage the hon the Minister under-budgeted, he either omitted to provide the Minister of Finance with the correct information, or else he himself was not correctly informed. This matter must be ironed out, and if mistakes have been made they must be rectified. I want to know from the hon the Minister what the problem is and how it arose.

Mr Chairman, at the time when the Minister of Finance introduced his Budget, the South African Agricultural Union and my department were intensively engaged in a quantification of the creeping drought situation. However, a drought situation changes from day to day; if it were to rain tomorrow the position would improve. After an intensive study and surveys by the South African Agricultural Union, my department and the Jacobs Committee, that investigated the whole matter, we were only then in a position to quantify precisely what the extent of the drought would be. At that stage I obtained the approval of the Cabinet to announce a drought package at four different meetings attended by approximately 3 000 farmers. Therefore the farmers knew exactly what the position was. On the basis of that quantification of the extent of the drought, we were able to make provision for a supplement in this Supplementary Budget.

Amendment agreed to.

Mr Chairman, earlier in the discussion I undertook to obtain certain information and to endeavour to answer the point made by the Hon member for Yeoville during the discussion of the amendments to the Co-operative and Development Vote.

The discrepancies between column 1 of the schedule to the Appropriation Bill, B69 of 1984, and the second and final print of the supplementary estimates, RP4 of 1984, are entirely ascribable to statutory amounts. These are included in the supplementary estimates but excluded from the schedule to the Bill and the amendments, because being statutory amounts they do not require voting.

Mr Chairman, I am indebted to the hon the Minister for the explanation, but I should also like a reply to an issue that I want to raise in connection with the Agriculture Vote. I should like to know what is going to happen in regard to subsidies, particularly in regard to the bread price, and in regard to administered prices, so that the benefits from the exemption of certain foodstuffs from GST is not cancelled out.

Mr Chairman, as far as food subsidies are concerned, what I can tell the hon member is what I think he knows already. It is absolutely impossible for us to say precisely what food subsidies will be this year, because we will have to determine the wheat price and the bread price at about the end of September or the beginning of October. Everything depends on what those prices are. We have made the sort of provision that we hope is as realistic as we can see it. Further than that I simply cannot go.

Mr Chairman, arising from the hon the Minister’s reply, is he prepared to give us any assurance of any kind whatsoever in regard to, firstly, whether an endeavour will be made to keep the present bread price and, secondly, whether the whole issue of the administered prices is not going to result in the benefit from the exemption of certain foodstuffs from GST being swallowed up by the increase of the administrated prices before we know where we are?

Which administered prices?

I am talking about the administered prices for instance in respect of dairy products where already there is the indication that their exemption from GST is going to be swallowed up. I am thinking of every single one of the agricultural products the price of which is being administered and which falls under the category of the exempted foodstuffs. There are a whole series of these.

Mr Chairman, if the hon member for Yeoville will think about it for a moment, he will realize that it is absolutely impossible. I do not have such prescience as to be able to say whether the bread price is likely to rise or not. We will of course provide the very best subsidies we can. As the hon member knows, last year we provided a record subsidy of R275 million just to keep the bread price within bounds. It is absolutely impossible to go further than that.

Schedule, as amended, agreed to.

House Resumed:

Bill, as amended, reported.

Third Reading

Mr Speaker, I move, subject to Standing Order No 56:

Impressions from my recent visit to Europe:

1. (a) Credit rating

   Within the past month I had the opportunity to visit the financial capitals of a number of European countries and to meet with a very large number of Finance Ministers, Governors of central banks, leading bankers, industrialists, politicians and so on. Among the most vivid impressions I came back with is the exceptionally high credit rating this country enjoys abroad. At a time when the capital markets of the world are reeling with doubt and uncertainty about the consequences of the massive foreign indebtedness incurred by developing and Third World countries, the South African Government, to take but the past six months, has most successfully concluded six loan issues in five major and highly competitive markets, viz Deutsche Mark, Swiss Franc, European Currency Unit, Euro-dollar and Euro-sterling—four of them public bond issues.

   The ECU issue was a novelty for us—and a highly successful one—and the just concluded 40 million pound Euro-sterling issue is the first to be launched by South Africa in London in 14 years. It is well known that the sterling market is a difficult one, and I saw a Euro-sterling public bond issue as a real challenge to our financial standing abroad. In the event, the issue went extremely well and is also trading well on the secondary market, so much so that firm investors are finding it very difficult to obtain the bonds they demand.

   Most recently of all, on Friday last, I signed an agreement with a consortium of European banks, lead-managed by one of the bigger Swiss banks, to renew, for a period of six years, a 100 million Swiss franc note issue on very favourable conditions. The term of the loan is the longest for a South African Government issue of this kind in the Swiss market for many years.

   These latest capital market transactions, as well as the other regular public sector loan issues which are continuing, serve to underscore the confidence and high regard which knowledgeable international financial institutions and investors have for the economic potential and stability of the Republic, and also—and this is something they never fail to emphasize—for the way in which we conduct our financial affairs.

   None of the transactions I have mentioned is particularly large but, taken together, they place the Government comfortably on the road to attaining the target of R425 million in new foreign loans which we set ourselves in the Budget for 1984-85.

2. (b) International debt crisis

   Another striking impression my overseas visit has left with me is the concern which the massive debts owed by so many countries today to hundreds of banks world-wide is causing not only the world of finance but informed opinion generally. I came away from the annual meetings of the IMF and the World Bank last year with a feeling that the financial world generally was perhaps too complacent about this explosive issue, and I said so at the time. If financial authorities and banks were in fact complacent then, they certainly are not so now. In point of fact, there is extreme unease about the whole matter today.

   In a speech to the recent annual meeting of the Bank for International Settlements, its president, Dr Fritz Leutwiler, repeated what he in fact said to me a few weeks ago in Zurich. He said:

He went on to say:

Of late the whole situation has been exacerbated by the near collapse of one of the biggest American banks, Continental Illinois of Chicago—as one observer put it, it was the biggest bank run since the 1930s—also by a moratorium declared by Bolivia on its external debts, including interest payments, and by Argentina’s confrontation with the IMF as to the conditions laid down by the IMF in return for financial accommodation. The worry is that if Bolivia can declare a moratorium on her foreign debt, other countries owing huge amounts may be tempted to do the same, with tremendous strain being placed on the world banking system.

I need hardly remind the House that the proximate cause of the worst depression the world has ever experienced, the Great Depression which set in after 1929, was precisely the defaulting by a number of countries on their external commitments. The far-reaching adverse effects of the debt crisis on international trade and investment and the stability and efficiency of the world’s financial system require no emphasis from me.

In the course of an address to an international audience of some 4 000 people at New Orleans last November, I was asked what single factor I thought was most likely to arouse the gold market from its lethargy and set a really significant gold price rise in train. I replied: “Any large-scale default by debtor countries on the vast debts owing by them to the banking system, particularly that of the United States. That would be a negative reason for a substantial escalation of the gold price, but it can most certainly not be left out of account.”

In the face of this dire world situation, and specifically in South Africa in the context of a killer drought, a low gold price and weak export markets, South Africa has no debt problem. South Africa is, in fact, and this is everywhere recognized, substantially under-borrowed. Our debt service ratio, that is the ratio of interest on foreign debt to the value of exports, is less than 6%, which is one of the very lowest in the world today.

The quality of some latter-day economic criticism in South Africa

I want to say something briefly about the sort of criticism, this latter-day criticism, that is being hurled about in certain quarters. It is difficult to escape the impression that the vogue that has taken hold amongst some local commentators and economists—or as someone said to me the other day, perhaps we should call them pseudo-economists—is to outbid one another in their negativism regarding the alleged state of the economy and the Government’s handling of it in so far of course as the Government handles an economy. Indeed, listening to them, one may be forgiven for believing that the day of doom has arrived. These generally superficial and over-hasty and extravagant views contrast sharply with those of leading and authoritative economists who take a constructive and positive view, and the authoritative IMF, which, while expressing constructive points of criticism, applauds our financial administration and various policy measures, including specifically the latest rise in GST.

In recent weeks, particularly following the announcement of an increase in the GST from the beginning of July—a decision which I shall argue was absolutely correct—there has been a concerted but most clumsy attempt by Opposition spokesmen to blame the Government policy for all South Africa’s current economic difficulties. The consumer is being told by these commentators that he is suffering great hardships and that this is all the fault of the Government. Let us have a look at this to see what it amounts to. While respecting the right and indeed the responsibility to criticize, I—if I may call myself that—as a member of the fraternity of economists, will neglect my duty if I do not express serious reservations about this new kind of trend. The cause of economists in general and the South African economy as a whole will be better served by more objective and constructive criticism which is based on all the relevant facts, instead of the present extremely selective and even arrogant criticism which is often apparently made purely for the sake of criticism. In his classic work The General Theory, Lord Keynes said:

This surely is food for thought for some economists, commentators and politicians in this country today, who seem to imagine their mission in life is to criticize destructively.

Inconsistencies and contradictions of the critics

The critics point to increases in the prices of bread, dairy products and other foodstuffs, with little or no reference to the vast increases in recent years in subsidies paid by the authorities to slow down these increases, and so grant direct relief to consumers. Likewise, the consumer is constantly being reminded that GST has been increased to 10%, with little or no reference to the fact that certain basic foodstuffs will be exempted not only from the increase in GST but from the tax altogether!

He is further told that mortgage rates are being increased, with little or no reference to the fact that hundreds of thousands of savers, are deriving well-deserved rewards for their thrift from a wide range of housing subsidies and—this includes pensioners—from the existence of substantial real rates of interest paid on deposits, building society shares and so on. The fact that many if not most wage and salary earners have received substantial increments to their total remuneration during the past year is conveniently forgotten. And, most important of all, the criticism is usually levelled at the authorities with scant reference to the adverse effects on the economy of the sharp decline in the gold price, the stagnant markets for South Africa’s other exports and the most serious drought in living memory.

Nobody will deny that South Africa has been experiencing its share of the world’s economic difficulties and that sacrifices have had to be made, and will still have to be made before we are out of the woods. But to try to put the main blame for this state of affairs on the authorities is naïve to say the least, if not completely ridiculous.

Moreover, the criticism is quite often totally inconsistent and contradictory. Often the same critics who say that consumers are being “hit too hard” by the Government, maintain, sometimes in the same speech or article, that the country’s economic problems have been largely caused by the Government’s failure to curb an excessive consumer spending spree, financed to a large extent by undue bank credit and money creation!

The critics cannot have it both ways. They must either criticize the Government for hitting the consumer too hard, or for not taking adequate action to curb the rapid expansion of consumer spending and thus fanning inflationary pressures. But they cannot criticize the authorities for being too harsh and too lenient on the consumer at the same time!

Similarly, if the critics believe that the Government has allowed government spending and the money supply to rise unduly, and that this has caused the cost of living to rise too rapidly and created balance of payments problems, then they should support the rise in interest rates as an essential part of the policy of reducing excessive monetary expansion. Or, if they do not want too much of the burden to fall on interest rates, they should support the rise in General Salex Tax or suggest increases in other forms of taxation. But they cannot have it both ways.

Then there were those critics who at the time of the introduction of the Budget declared, I submit completely unjustifiably, that the estimates of expenditure “lacked credibility”, and that the deficit before borrowing would be unduly large and have an inflationary impact on the economy. One would have thought that these commentators at least would have been driven by the logic of their own argument to welcome the subsequent announcement of an increase in GST. Surely, they should have acknowledged that this was an effective way of reducing the deficit in the Budget and therefore of relieving upward pressure on interest rates and downward pressure on the exchange of the rand. Yet, when I subsequently announced the increase in GST, these same commentators objected to that as well. There were even those who, piling inconsistency upon inconsistency, then pleaded for additional spending by the Government on large projects in order to provide more employment opportunities!

The reality of the South African economy

The reality is that the world is experiencing economic problems, as was again clearly illustrated by the discussions at the recent summit meeting in London. South Africa has not ascaped its share of these difficulties and has had to make certain adjustments which have entailed sacrifices. To ensure sound balance of payments adjustment and to hold down the rate of inflation, while at the same time preventing the South African economy from becoming even remotely “over-borrowed”, the Government has rightly decided to adopt conservative fiscal and monetary policies.

In the short term this has meant higher interest rates and certain tax increases, not only to prevent the deficit before borrowing from rising but in fact to reduce it to very moderate proportions. The recent increase in GST must be viewed as part and parcel of this strategy of financial discipline. As I stated in my Budget Speech, there is a time to reduce taxes and a time to increase taxes. The right policies are not always the most popular ones in the short term, but the Government will not be deterred from applying appropriate fiscal and monetary policies by unreasonable and inconsistent criticisms of the kind that has been in evidence in recent weeks.

To understand recent economic developments and policies it is important to grasp that the South African economy has been in a new moderate upswing—in fact, the Governor of the Reserve Bank has called it a “mini-boom”—since some time in the second quarter of the 1983. The cyclical downswing which began in August 1981 has not continued up to the present time, as some commentators have apparently believed. The cyclical downswing that began in August 1981 was reversed some time after March 1983, and since that time the South African economy has been showing a positive growth rate and moving forward quite significantly. This is borne out by most monthly economic indicators and also by the following quarterly national accounts which have now come to hand: Real gross domestic product, at a seasonally adjusted annual rate, increased by 6% in the third quarter of 1983, by 11% in the fourth quarter and by a provisionally estimated 4% in the first quarter of 1984, thus averaging about 7% during those nine months. Even more dramatically, real gross domestic expenditure increased by annualized rates of over 17% in the third quarter of 1983, nearly 16% in the fourth quarter and a provisionally estimated 9% in the first quarter of 1984, or 14% on average over the nine month period. Not bad, is it, for an economy which is said to be in some vague kind of crisis situation. This demonstrates how very careful one must be in interpreting the calendar year figures for 1983, compared with calendar 1982. These figures show a decline in real gross domestic product and in real gross domestic expenditure for the calendar year 1983 compared to 1982 as a whole, but that is a quite different comparison.

Recognition of this recovery during the past 12 months or more puts many things into proper perspective. It helps to explain, for example, the rise in imports and the emergence of a current account deficit during the fourth quarter of 1983 and the first quarter of 1984. It also throws further light on the depreciation of the rand and the upward pressure on interest rates since about the middle of 1983. Most important of all, it clearly demonstrates the need for the present emphasis on financial discipline in fiscal and monetary policy.

This improvement in economic activity also demonstates that the criticism levelled at the Government last year that it was “over-killing” the economy was totally unfounded. The downswing was reversed and the economy clearly moved upwards again during the second half of 1983 and thus far in 1984.

How should one view this generally unrecognized period of recovery in the South African economy? Was it a sound development or not? In my view there is no question that it was basically a favourable development which demonstrated once again the inherent strength and resilience of the South African economy. Production and economic activity increased and unemployment decreased.

At the same time an important qualification has to be made. That is that the upswing lost its solid foundation when the gold price declined sharply during the second half of 1983 and the first half of 1984 and when drought conditions re-emerged in the early months of 1984. The so-called mini-upswing was then sustained by rising aggregate expenditure, not only on the part of the Government, but also very substantially on the part of the body of consumers, and since it was no longer an export-led recovery, it began to run into new balance-of-payments and other constraints. This contributed to the depreciation of the rand and the emergence of new inflationary pressures—although those have been mild—particularly since salaries and wages both in the public sector and in the private sector had in the meantime been increased. It is to deal with this situation that both monetary and fiscal policies have been tightened in recent months.

Looking ahead, the latest indications are that, under the impact of the sustained drought and the low gold price, the recovery at the moment is losing some of its momentum and that the economy will first pass through a new consolidation phase before the real export-led and sustainable recovery makes itself felt. In present circumstances such a temporary consolidation process is highly desirable as a necessary prelude to the next major upswing. It therefore remains our policy to control the growth of the money supply and Government spending as far as possible and to keep the Budget deficit before borrowing to a level which can be financed comfortably without putting pressure on interest rates or having to rely on money creation.

Financial policy stands unscathed

What is the implication of this for financial policy? What is the conclusion then to be drawn from these facts? It is, firstly, that the South African economy has withstood the ravages of the drought and the low gold price far better than the destructive critics were ever willing or able to appreciate and that its performance in very difficult circumstances has been quite remarkable. It is, secondly, that official financial policy has stood the rigorous test of those difficult circumstances and stands unscathed and, in my view, absolutely vindicated.

One has but to compare the state of the South African economy today with that of the great majority of other countries to realize how fortunate we are. Among even the most advanced of the developing economies, we stand out as a beacon of solid achievement. If anyone wishes to doubt what I am saying, I suggest he consults the international banking community who make expert assessments in depth of these things as a matter of course.

Of course, the South African economy still faces a difficult period of belt-tightening and adjustment to the lower gold price and the drought. That is what the prevailing high interest rates, the depreciation of the rand, and the recent increase in GST are all about.

We must, however, get our facts right. We are not dealing with what is called a simple V-shaped movement of the cycle or of economic activity, that is, a continuous downswing and then an upswing. What we are dealing with in fact is what has been called a W-formation in that we came down, then we moved up part of the way and there is now a bit of a reaction, a consolidation, before we move up well to the top where we were before. That is, I think, the lesson to be learnt from the latest published national accounts statistics.

I suggest that recognition that we are dealing with a so-called W-formation of the cycle and not a V-formation, puts many things into better perspective. It helps to explain, amongst others:

1. (1) The rise in imports and the emergence of a current account deficit and why this deficit should decline again—I shall come back to that very briefly;
2. (2) The new depreciation of the rand, particularly since last September;
3. (3) The upward pressure on interest rates since the middle of 1983 and why interest rates have now probably peaked and should decline later in the year; and
4. (4) The essential need for the present emphasis on financial discipline and, specifically, the increase in taxation through the rise in GST from 1 July.

How else is the pressure to be taken off the high prevailing interest rates? How else is the depreciation of the rand to be halted? How else is the balance of payments to be safeguarded and how else the message to be got through that the public generally is spending too much and saving too little? How else, I ask, than by the recently announced increase in taxation?

As to the balance of payments, I see that a Pretoria-based bank has in the last couple of weeks spoken of a “crisis” in the economy, very largely because of the prevailing deficit in the current account of the balance of payments. There is much common sense in that article, but to say that the state of the balance of payments points to a crisis, is nothing short of amazing. South Africa is a developing country, and as such it is normal that there should be a deficit in the current account, which is of course financed by the inflow of capital. The annualized deficit—the calculation over a full year—in the current account, based on the most recent figures, is approximately R3 billion, fully one-half of which, by the way, over a full year will be contributed by the importation instead of the exportation, of maize. The fact is that we are exporting no maize, but are importing four million tons of maize. In normal times we export approximately six million tons a year. This means an adverse movement in the balance of payments of R1 500 million straight away, equal to one-half of the R3 billion deficit. That is also something which the critics never think of.

I suggest that a current account deficit of R3 billion is a moderate figure, even without regard for the low gold price and the drought, and one which closely approximates the post-war average. In fact, there have been occasions where it has been twice as big, and we have handled the situation without problem. The balance of payments is without doubt under full control and does not give rise to anything remotely approaching any kind of crisis.

I also want to refer to the extravagant outburst on the state of the economy a few weeks ago by the outgoing president of the Afrikaanse Handelsinstituut. My own relations with the AHI have always been, and are at this moment, of the very best, and I can only regret this outburst as much as do those senior and respected members of the AHI who have gone out of their way to convey to me their strong disassociation from the critical views he expressed. [Interjections.] Perhaps the hon the Leader of the Opposition would like to see the impressive fist of these people. There is no point in laughing about these matters.

I am sure all those who value objective, knowledgeable and authoritative analysis will appreciate the article—which is there for all to read and which many people have seen—which the financial editor of The Star published at the time under the heading—here hon members can laugh again—“Hor-wood’s policies stand up to critical analysis”. In the course of this he completely demolished the then president of the AHI’s criticism. The gentleman to whom I am referring is in the advertising business and when we extended GST to advertising services, he changed his attitude overnight, which is a pity. [Interjections.]

That is an ugly statement.

That is a fact. What does the hon member know about it?

There is also what I would call the wisdom-of-hindsight criticism that I should not have announced in May that GST was to be raised from 1 July. When, then, should I have announced the decision? The basic determinance of the Budget as assessed in February and March and indeed in some respects a good deal earlier, will have changed so drastically by July that I should have been failing in my duty had I not taken remedial action as soon as I was convinced of the impending changes.

If a businessman, faced with similar unpredictable and volatile changes, sits back and does nothing to adapt his policies, he is rightly accused of a lack of insight or the ability to take the right decision. If a Minister of Finance in similar circumstances makes the necessary policy decisions as soon as he believes they have become clear, he is accused of doing the wrong thing. What absolute nonsense! All the most effective Finance Ministers in my experience, and I have met many of them, seek to be as flexible in their policy decisions as they can. The greatest authority of them all, the IMF, expressed its surprise some years ago that the Finance Minister of South Africa had such limited discretion to impose or alter taxes, and recommended that steps be taken to put the matter right. This is stated in a written report. The days are past, in the highly uncertain and ever-changing conditions in which we live, that a Minister of Finance or a Government, or anyone else, can introduce a Budget in March of one year and pretend that it can remain unchanged for a whole year ahead. That is precisely why for example in accordance with the best practice, we have a supplementary budget and an additional budget as an integral part of our budgetary procedures, as practically all the leading countries of the world have.

* Control of Government expenditure on a monthly basis

In my Budget speech, under the heading “Control of Government Expenditure”, I referred to the need for the rescheduling of bunched payments with a view to spreading them more evenly over the whole financial year, and also in order to tighten control over the monthly issues of funds to departments and institutions.

During the discussion of my Vote on 11 May 1984, I explained why I was unable to limit Treasury issues for the month of April 1984 to one-twelfth of the total amount of the allocations for this financial year, largely because of an inability to spread certain payments over this financial year.

Issues during May 1984, however, moved closer to the target of one-twelfth, but still exceeded this limit, mainly because of drought aid payments by the Department of Agriculture and public debt servicing by the Department of Finance, items which cannot be cut back at will to one-twelfth of the total amount each month.

It is anticipated that the total issues for June will be comfortably accommodated within the target of one-twelfth. However, I want to warn that unless certain existing services are scaled down, the Treasury will not find it easy to maintain this strict discipline. The latest figures, those for June, are encouraging in this respect, however.

Speaking of Government expenditure, I should like to say something about the allegation which is made from time to time that Government expenditure is excessively high. This is certainly not the case. [Interjections.] In overall terms, the Government is responsible for only 25% of the total expenditure in South Africa. When Professor Herbert Grubel, a Canadian who recently visited the Republic for a few months and who is a well-known authority on public finances, learned of this percentage, his comment was that South Africa was a lucky country. He said: “You are a lucky country.” As he in fact said, this ratio of public spending to total spending is one of the lowest in the world. These are the facts.

I repeat what I said in an earlier debate in this House, namely that Government expenditure has increased by an annual real rate of only 3% on average over the past ten years, and that Government expenditure per capita has remained virtually constant over the ten years since 1975. Where then does the excessive Government expenditure come in, especially when we take cognizance of the fact that South Africa is a developing country which has to provide not only for security services, but also, to an increasing extent, for social services of various kinds, education, food subsidies and large-scale infrastructure, to mention only a few of the demands made on the Treasury?

† General sales tax

The comments in the Press on my recent announcement of the proposal to increase the rate of GST from 7% to 10% and the further proposal to exempt sales of various basic foodstuffs consist largely of criticisms of the selection of the items that are to be exempt and also of allegations or insinuations that the proposed changes will open the door to unscrupulous practices on the part of traders. As regards the selection of the items that are to be exempted, I reiterate what I have said before, namely that the list of items was very carefully considered. The exemptions will afford a substantial measure of relief from tax on quite a wide range of ordinary foodstuffs, which I am certain housewives will appreciate, as they understand the position. The purpose of the exemptions was to give relief from the increase in the rate of tax and to do so in such a way that the broadest spectrum of the general public would benefit.

In doing so fiscal considerations could of course not be entirely left out of account. The cost in terms of the sacrifice of revenue will probably be somewhat in excess of R600 million during the remainder of the present financial year alone and close to R1 000 million over a full year. People who plead for further items to be exempted from tax, could well bear these figures in mind. Here once more the value of the concession itself is apt to be ignored, and more and more is asked for.

I have received requests for the exemptions in respect of certain items to be extended to other similar items which, it is said, are “basic” foodstuffs. We have carefully considered all these requests and it will be seen that the definitions finally decided have in some respects been quite generously framed. For instance, samp and mealie rice have been included under the heading “maize meal” on the ground that these are variations of the same thing. Milk powder and sterilized milk have been included under the heading of “milk”, and so forth. The object of the exercise was not to define basic or staple foodstuffs as such, but merely to select such of those foodstuffs as are in general use so as to afford a real measure of relief. I do not pretend to infallibility but I would urge those who criticize so easily to have a good look at the general relief granted in practical terms. I may add that over the years the pleas by persons and organizations for the exemption of basic foodstuffs hardly ever extended beyond bread, milk, meat and mealie meal—a very much shorter and circumscribed list than that now proposed.

As to allegations that the system of exemptions will lend itself to exploitation of the public by unscrupulous traders, it is of course true and it is ironic that precisely those who have so fervently pleaded for exemptions in the past, are now apparently those so concerned about so-called “exploitation”. Inland Revenue and organized commerce and industry have been working together to ensure that not only traders but also the general public will be fully informed as to the items that are to be exempted. I have no doubt that the measures that are being taken will to a great extent eliminate misunderstandings on this score and that the vast majority of businesses will faithfully apply the exemptions. Pamphlets and other media news will continue to be used and I am sure that we will receive the full co-operation of everyone in informing the public in good time.

That there may be traders operating on the fringes of honesty is, of course, a matter which should give cause for concern. However, one cannot characterize the whole body of traders in that way. I may add that it is already a punishable offence under the Sales Tax Act to include or add tax in excess of the tax payable. Perhaps more detailed discussion of these various matters can be left over until the amending legislation is introduced.

However, I think there is one other matter I must refer to, and that is the application of the add-on or exclusive basis of taxation. I originally announced that, subject to certain unavoidable exceptions, the add-on basis is to be compulsory as from 1 July 1984. A number of requests have been received for a postponement of the date on the ground that traders on the add-in, that is the inclusive system, need more time to make the necessary arrangements for the change-over; or where they feel that for various reasons exceptions should be allowed, to make the necessary representations to Inland Revenue to be permitted to remain on the add-in basis.

In order to avoid uncertainty and to allow Inland Revenue sufficient time to deal with any such applications we have decided, the time remaining before 1 July being to my mind too short, to extend the date from which the add-on system will be compulsory—that is to say except in the exceptional cases where permission is granted to stay on the add-in basis—by two months, from 1 July to 1 September 1984.

I may add that the add-in basis will be allowed in the case of petrol, diesel oil, etc, sold from bowsers, and goods or services supplied through coinvending machines. The problems of certain mail order firms and persons who have submitted tenders for goods to be supplied at add-in prices at a future date are still being considered. Further applications are expected on the ground of trading conditions, but it is not the intention that the add-in basis should be allowed merely on the ground of convenience. Those traders who wish to remain on the add-in system during the period of grace, will nevertheless be expected to at least remark the prices of their exempted goods from 1 July 1984, as failure to do so on the part of a trader will, in any criminal prosecution, result in his having to prove a lawful excuse, the onus of having to do so being imposed upon him by the Act.

I take this opportunity to record my warm appreciation of the sustained efforts of the Commissioner for Inland Revenue and his staff to ensure the success of the revised form of general sales tax that will apply from 1 July of this year.

Fringe benefits

I should now like to make some brief remarks in regard to the taxation of fringe benefits. The decision to implement the recommendations of the commission of Inquiry into the Valuation, for Income Tax Purposes, of Fringe Benefits with effect from the middle of this tax year, that is from 1 September 1984, has been reviewed in the light of the exceptional burden of work being thrown upon the staff of Inland Revenue by the decision to exempt a number of basic foodstuffs from general sales tax. It has been decided after careful consideration and for the reason given to postpone the effective date until 1 March 1985. This postponement represents an effective further phasing in of the liability for tax, and will be specifically taken into account in the drafting of the final legislative proposals.

I am fully aware that, since the publication of the report, there has been a feverish rush by employers and employees alike and their consultants to devise new schemes, especially in the field of housing benefits, which are patently schemes for income substitution, in order to gain additional advantages from the proposed phasing-in provisions. These provisions, I must warn, were designed primarily to grant relief from any sudden increase in their tax burden to taxpayers who in the past enjoyed statutory exemption from income tax in respect of benefits derived from existing schemes, and certainly not to provide unwarranted additional benefits to any taxpayers in respect of new schemes that may have been devised since then. All employers and employees concerned are accordingly duly warned that this fact is being specifically provided for in the drafting of the relevant Bill.

Capital market issues committee

I spoke earlier about our operations in the capital market. I wish to deal very briefly now with a matter which I believe will provide increased order in the capital markets where public sector and private sector borrowers alike jostle for funds from a finite source if certain steps are taken.

To provide for a more rational approach to capital markets from the Public sector’s side, I have decided to institute a formal Capital Market Issues Committee in place of the informal committee that has existed for a long time. This committee will co-ordinate all issues of medium to long-term securities by public sector borrowers, including the so-called tap and secondary market operations. The present loans programme, which is re-issued every six months and which schedules only primary issues over the ensuing 12 months, has proved to be too flexible in the rapidly changing capital markets of today.

The committee will be chaired by the Deputy Director-General of Finance and will, among others, include a senior representative of the Reserve Bank. It will in future review on a monthly basis the public sector foreign and domestic loans program. It will also publish a monthly schedule of approved primary and secondary market operations by all public sector borrowers, and furnish statistics of such issues and operations relating to the previous month. The establishment of this committee to my mind signals the coming of age of the public capital market. I am convinced that the committee will be able to contribute significantly to a more orderly and planned money and capital market situation in South Africa.

Financing local government authorities under new constitutional dispensation

I want to refer now to the financing of local government authorities under the new constitutional dispensation. In the course of the recent discussion of my Budget Vote I stated that the Government had accepted in principle certain additional sources of revenue for local authorities originally put forward by the then Croeser Committee. Since then so much speculation has taken place regarding the detail of these proposals that I feel it necessary to clear the air of any uncertainty, real or imagined, that may exist. In a recent report in a Sunday newspaper certain highly irresponsible statements were made as to the proposed new form of taxation for local government. Even the specific tax rates involved were mentioned and, incredibly, it was said that the revenue so raised would amount, in their own words, to “an extra R2 billion a year to pay for the first phase of its (the Government’s) revised constitutional system”. Mark you, some “R2 billion” for only the “first phase”! I would like to state quite categorically that no decisions have yet been taken either by the Government or for that matter by the Permanent Finance Liaison Committee regarding the specific tax rates or the amounts involved. It is preposterous to argue that the new constitutional dispensation for local government will cost R2 billion extra, or that the proposed new form of taxation for local government, when implemented, will yield an additional amount remotely approaching that magnitude. Whatever the final decisions as to the revenues to be raised at local government level under the new dispensation, the fact is that such sources of revenue will to a significant extent replace the trade licensing fees and transport levies on employers as well as the other imposts currently levied by the various tiers of government to finance such services today.

Since I intend to keep my undertaking to the private sector and local authorities to the effect that interested parties will be properly consulted before any additional or revised sources of revenue for local government are introduced, it has been decided that the legislation required to give statutory effect to any such proposal, will stand over till the next session of Parliament, by which time legislation regarding the relevant structural reform of local government will have been disposed of. I do suggest that it is high time that the wild, sensational reports and speculation as to the financing of local authorities under the new constitution could come to an end.

The De Kock Commission

Finally I want to say something about the De Kock Commission. This is an extremely important and comprehensive inquiry into the monetary system and monetary policy in South Africa and it is now nearing completion. I hope the report will be in our hands within the next few months. Two interim reports have so far been issued. The first was entitled “Exchange Rates in South Africa” and the second “The Building Societies, the Financial Markets and Monetary Policy”. Both these reports were accepted by Government and most of the recommendations made in them have either already been implemented or are in the process of implementation.

I might just add that as far as the spot foreign exchange market is concerned, the present system in operation in South Africa is that recommended by the commission, namely a system of managed floating for a single or unitary rand with limited exchange control on residents only. The rand is no longer pegged to the dollar but is an independent currency with an exchange rate determined by demand and supply in a competitive market, subject only to Reserve Bank “management” by means of purchases and sales of United States dollars now and then.

It is quite generally accepted that the new system is functioning extremely well in the interests of the economy. The task of the Reserve Bank in managing the official gold and other foreign reserves has been greatly facilitated by the new system.

Progress has also been made in implementing the commission’s recommendations regarding the forward exchange market. This is a more difficult one. In this process many of the deficiencies that existed in the pre-1979 forward-cover arrangements have been removed. Thus, for example, and this is important, the losses made for the account of the Treasurey on forward cover extended to South African importers, exporters and borrowers are now considerably less than they would otherwise have been. More remains to be done in this field and the commission is at present drafting its further recommendations which will be in the final report.

I can say that the new exchange rate system has also reduced the pressure on exchange control and permitted the Government to take the major step in February 1983 of abolishing exchange control over non-residents and abolishing in the same process the financial rand and leaving us simply with the ordinary commercial rand. The resultant rearrangement of South Africa’s foreign assets and liabilities has also contributed to economic stabilization in the domestic economy without a doubt.

While on this subject I feel I ought to refer briefly to the remarks made by the hon member for Yeoville, in and outside this House, in which he queried the wisdom of this step, i e of abolishing exchange control over non-residents. He said that as a result of this step the country had “lost” over R1 000 million. This is simply not so. South Africa did not “lose” any money. [Interjections.] It did not lose; it gained. What did happen is that it allowed a re-arrangement of our foreign assets and liabilities, and I shall explain that. It did so in a manner that was undoubtedly beneficial to the domestic economy. In effect, South African residents bought back South African shares formerly held by non-residents, and they did so on favourable terms. In this way we reduced our foreign liabilities and also our future annual dividend payments to foreigners. Moreover, this “buying back” or repatriation of South African shares greatly helped the Reserve Bank to control the money supply. And since it occurred at a time of current account surplus and in a period of net inflow of foreign capital in other forms, the net official gold and foreign reserves showed relatively little change during 1983 as a whole. All in all, I suggest, a very gratifying result.

In any event, since November 1983, non-residents have again been net purchasers of South African shares.

I should like to say that South Africa’s abolition of non-resident exchange control represented a major step forward born out of economic strength and confidence in the future of our country—a step that has been extremely well received everywhere, at home and abroad, and it has undoubtedly redounded to the long-term benefit of South Africa. A country that believes in free enterprise and that welcomes foreign capital and technical “know-how” as a means of accelerating real economic growth, does not need to seek to continue “blocking” foreigners’ capital once it has been received.

Of course, our policy of relaxing exchange control stands in marked contrast to that of many other countries today, particularly a country like Zimbabwe, which have recently announced draconian new exchange control restrictions.

I can say something about the building societies and the De Kock Commission, but all I want to say at this stage is that very good progress has been made in drafting the new Building Societies Bill in relation to the decisions we announced some time ago on building societies to make them more competitive and to bring them within the ambit of overall financial policy. Very good progress has been made and I hope that the Bill will be laid before Parliament early in the next parliamentary session.

Finally I should like to emphasize, and I think this is very well appreciated in financial circles, that throughout its investigations the De Kock Commission has kept the Treasury and the reserve Bank informed of its findings and general approach. The result has been that many of the basic recommendations that are likely to be included in the commission’s final report have already been implemented. I refer, for example, to the various steps that have been taken to improve the markets for Treasury bills and Government stock; the dissolution of the National Finance Corporation and its replacement by the Corporation for Public Deposits; the reduction in the liquid asset requirements of banking institutions; the new techniques used in providing accommodation to the money market; and the increased use of open market operations and public debt management as important instruments of monetary policy.

The chairman has informed me that in its final report the commission will deal extensively with the issue of monetary targeting and money supply control, and how all of this is related to the determination of interest rates and spot and forward exchange rates in the South African economy. For all these reasons, I think the commission’s final report is awaited with considerable interest.

*I have spoken at some length, but I have done so on purpose because I considered it necessary to convey to this House the latest information concerning the South African economy, which is a great credit to the economy, and undoubtedly, if I may say so, a great credit to our economic and financial policy in this country as well. I also felt that it was necessary to refer to some of the criticism which has become fashionable in this country in recent weeks. I think I have been able to prove that a great deal of this criticism is really not well-founded, but very superficial. I also referred to certain policy decisions concerning, for example, the tax on fringe benefits and the whole question of the financing of local authorities under the new dispensation. I thank you for your patience, Sir.

Mr Speaker, I had intended to devote the major portion of the short time that is available to me to talking about the financial implications of the new constitution and the manner in which I hope the new budgetary procedures would be dealt with, particularly from the point of view of a consensus concept, which is the one which is being put forward by the Government. However, I am obviously now in the situation where there having been a somewhat unique attitude on the part of the hon the Minister of Finance during the Third Reading of a Budget debate in which he has after having had the opportunity to reply for as long as you liked to the Second Reading debate on the Budget, again had to come here today and spend virtually the major portion of his speech in endeavouring to reply to criticism. That, to me certainly indicated that the attitude the hon the Minister adopts in regard to how the budget will be conducted in the new dispensation will be in the same confrontational nature as it has been until now. In those circumstances and in view of what he has said, I have little choice but to actually come back to the real issues which he has raised in regard to the criticism which he has objected to and has spent most of his time debating today.

Whether the hon the Minister likes it or not, the reality is that there has seldom been a budget in South Africa which has received such a critical reception as the Budget he has presented this year. Across the board, whether it is businessmen, whether it is economists, whether it is consumers or whether it is trade unionists, they have expressed their disapproval with regard to one aspect or another of this particular Budget and the proposals contained in it and with regard to the fiscal and monetary policy of the Government.

It is remarkable that the hon the Minister came with only one person that he could quote in his defence. I suspected that because I have all the newspaper cuttings here and I brought the one I thought he would bring, namely the article in The Star which he said dealt so commendably with the President of the Afrikaanse Handelsinstituut. I hope that the hon the Minister has that clipping here. I am sure that he is keeping it to frame and to put it in his office. However, he should read that article carefully, because amongst other things the writer of that article, in talking about his policy, says: “The timing was awful”. If that is the best compliment he can get, I would imagine it is fine. The writer talks about the maize situation and the R100 million the hon the Minister used as the excuse for increasing GST and says: “That was an ill-considered decision over which Mr Horwood had no control. But there is such a thing as collective responsibility of Government. The hon the Minister is as much responsible for the hon the Minister of Agriculture’s decision as he is for his own. If he is not, he knows what the honourable thing is to do in those circumstances. That writer goes further. He criticizes the hon the Minister and the Government and says: “Compounding the problem, public servants’ salaries have been raised by 27%. What a disaster”. Does the hon the Minister agree with that? Does he agree, having brought this article as his sole commendation, that he disagrees with the Government on the increase in public servants’ salaries? The article states that the hon the Minister blew his credibility last year with a large Exchequer overrun. Some compliment that is! It then puts what I think is the most fundamental criticism of the hon the Minister. The writer says that last year when he was waiting for a copy of an official speech to be made the following day, there was an unexplained delay. He has only now found out from Government sources that there was going to be a major announcement particularly relating to GST in that speech. He found out that it was deleted and that it was because of politics, because the hon the Minister could not get the backing of his colleagues in the Cabinet. What are we doing? Are we playing politics here? The hon the Minister poses as the custodian of the fiscal and monetary policies of the country and as one who is safeguarding us in regard to the economy. The greatest indictment in this article—the hon the Minister must send for it quickly—is that the author says that he hopes that, when there is a new Minister of Finance, he will be able to keep more control over his colleagues than the present Minister is able to do.

Read the last part.

I shall read the last part:

And he does not have it today. The writer makes it very clear. Now I ask the hon the Minister…

You have misinterpreted what he said.

Right, Sir, I am going to give the hon the Minister a chance to respond by way of an interjection. I ask him: Is it true that he had his speech all pre pared and that the speech was then withheld and that he changed it under political pressure from his colleagues?

What speech was that? [Interjections.]

The one referred to in the article from which I have been quoting. The hon the Minister quoted this article to support him.

I did not write that.

He writes: “Last year, while waiting for a copy of the speech …”I ask the hon the Minister: Is that true or is it not true? The hon the Minister has brought up this article in his own defence and this gentleman says that one of the big problems the Minister has is that he cannot control his colleagues.

Read the heading to the article. [Interjections.]

You see, Sir, the hon the Minister wants me to read another little bit because he likes this article so much. The writer says:

Is that true or is it false? [Interjections.] No, Sir, I am giving the hon the Minister the chance by way of interjection to tell me whether this article is true of false. Is it true of false? [Interjections.] It is actually a very serious matter. If the hon the Minister—and this is to his credit—is advised by his advisers to take certain steps in regard to the economy and his colleagues then stop him for purely party-political reasons, that is a serious matter for this country. I therefore think the hon the Minister is obliged to say whether it is true or false. I may point out that I did not bring up this article, but the hon the Minister himself did as his defence. He could quote nothing else except this article and now he is not in a position to deal with it.

What about all the facts I gave you?

Sir, you will pardon me telling a story. During a war some Americans went to a Russian factory to look at aeroplanes being made. They found that there were no engines in the aeroplanes and one of the people who had come to look at them said: “These are lovely aeroplanes, but where are the engines?” The Russian replied to the American: “And what about your Black problem?” The hon the Minister is exactly the same. He cannot answer the question, so he comes with some obscurity. Let me ask the Leader of the House, who is sitting there smiling, whether it is true that he stopped the hon the Minister of Finance from in fact making his speech. [Interjections.] Let him get up and reply to that so that we can have it in Hansard that it is either true or not true. Either this article is false or it is not false. That is the article the hon the Minister brought up as his defence.

The hon the Minister said I must deal with the facts he dealt with in his speech. I shall deal with them. The hon the Minister was saying how good things are in South Africa at the moment. I do not think the rest of the public are on the same wavelength or living in the same country as the hon the Minister of Finance, because if things are so good, they cannot be bad. There must be some strange explanation. Let me state what I consider to be 13 economic problems, or economic plagues if one wants to call them that. Firstly, I say there is a problem in the current account and in the balance of payments. Nobody can convince me that an annual R3 billion deficit is what we are looking for.

There is no problem.

The hon the Minister says there is no problem. When the hon the Minister announced the increase in GST—I have his speech here and also the subsequent speech which he made later that week—he said that it had been done because of balance of payment problems. In other words, what he did was to take money out of the pockets of the consumers of South Africa because of the balance of payments problems which he now says he did not have. Where is the credibility?

The second point to which I want to refer is that there is no doubt—it has been shown by the banks—that there is a rising problem of short-term debt. The hon the Minister can refer to the value of the rand, but I say that the low external value of the rand is an indication of what people regard our currency as being worth when they have to exchange it. I can remember when the rand was worth 1,35 and 1,25 dollars. Its worth has decreased to 77 cents or 76 cents today. That is the present situation, and nobody can convince me that where one has a sound economy the value of one’s currency internationally will decrease.

What about sterling and the German mark?

Sir, what is it in terms of some South American currency? This is the same argument which is used every time. When we told the hon the Minister to compare our inflation rate with those of our trading partners, he compared us with some South American State. The hon the Minister should look at the basket of all the currencies. [Interjections.]

Mr Speaker, on a point of order: Can you please ask the hon the Minister of Finance to stop his continuous interjections?

Order!

I admire the hon the Minister. [Interjections.]

The hon the Deputy Minister quoted some short-term figures regarding the GDP, but the reality is that there has been a negative GDP per capita over a long period. One should measure the real increase of the GDP not by taking the overall GDP, but the GDP per capita because the population increases and one therefore has to take into account that it has to be spread over a bigger population.

If things are so good, why are business profits in real terms declining and why are the profits of companies declining? If things are so good, why is unemployment so bad? I want to refer to some very simple figures as regards unemployment. These figures are those of the chairman of the Scientific Committee of the President’s Council, Prof Marais. In the period 1981 to 1985 there will be 292 000 new workseekers every year. He states that even with an economic growth of 4,5% per year, the GNP—he uses it and not the GDP—will not create that number of jobs in real terms. In 1981 the GNP was 0,8%; in 1982, minus 3,6% and in 1983 it was minus 1,1%, and this is not even in per capita terms. We are therefore going backwards as regards job creation. In 1981 4,982 million people were employed; in 1982, 4,915 million and in 1983, 4,924 million. Over three years there has therefore been a work-force increase of 900 000 while the number of people employed in absolute terms have decreased by 58 000. By doing some simple calculations, one can demonstrate that the figure of registered unemployed is completely unrelated to reality when it comes to the Black unemployed in South Africa. If one looks at those figures, it is clear that 985 000 people have disappeared from the statistics into some vast pool of unemployed where they cannot be found. Yet the hon the Minister had the audacity to tell us today that there is nothing wrong with the economy. That is an audacity if there ever was one.

The hon the Minister also referred to savings.

Business suspended at 12h45 and resumed at 14hl5.

Afternoon Sitting

Mr Speaker, when we adjourned for lunch I was dealing with what I had described as the 13 economic plagues which beset South Africa at this moment. I have tried to indicate that the argument of the hon the Minister that everything in the garden is rosy is not one that is going to find favour with the public at large. It is not, to my mind, factually correct and certainly it does not demonstrate that kind of communication to the public where the public can accept that as being correct. Only yesterday they were being told to tighten their belts. Only yesterday they were being told by a spokesman on behalf of the Government that economic conditions were such that they had to tighten their belts and that things were going to be difficult. Yet today, some 24 hours later, miraculously, now everything in the garden is rosy.

I have dealt with some of these 13 points, and I should like to continue with them now. I will briefly deal with them.

Firstly, there is the question of savings, to which the hon the Minister also referred. He pointed out how attractive savings were, and yet—the proof of the pudding is in the eating—savings have never been at a lower level than they are at the present moment in our economy. In fact, there is completely inadequate incentive to saving in this economy. The reality is that because of the inflationary expectations that exist the consumer feels either that he cannot save or that it is not in his interest to save.

There is also the question of interest rates. Interest rates are at high levels from an historical point of view, and nobody who has to borrow money can argue that away.

Inflation is at a high level for this stage of a business cycle and no economist worthy of being called that will argue that inflation is not high for a stage of the economy where one is hoping for an upswing in that economy. Where one has these high levels now one will have even higher levels of inflation when the upswing comes.

GST has been increased as from 1 July to a record level in South Africa, where it was intended to be a low level tax. We were told that it was going to be at a low level. I will go into the reasons for that increase in just a moment.

Then, when we talk about things being good, disposable incomes are not only factually, from the point of view of individuals, at low levels, but statistically it is clear that they are under tremendous pressure.

Consumer debt is extremely high. There is no doubt that arrears on mortgage payments are mounting, insolvencies are increasing in numbers and liquidations are on the increase. All of that does not point to a happy economy.

These are factual matters which cannot be argued away by politicians. They are the reality that every man in the street and every businessman and every housewife in South Africa knows. It is no use arguing them away with statistics because in the end the people know what the truth is in this situation. What I find remarkable, and even more remarkable from the interjections of the hon the Minister, is his explanation as to why there had to be an increase in the GST. If his Budget is correct, even with the supplementary estimates now, he does not need all the money which he is budgeting for in regard to GST. On his own admission he does not need it. Therefore there must be some other reason. He previously gave us the other reason when he said that the primary objectives of this were:

I would have imagined that nobody wants to take action against something which is an evil unless that evil exists. However, according to the hon the Minister, this morning that evil does not exist. He has to make up his mind. Either he needs the GST for the Budget or he needs it for these economic measures which he stated. He cannot have it both ways because in reality he is trying to argue now that there is no such economic condition which warrants that increase in the GST.

Let us look at the situation in regard to GST. The first question that has to be asked is: Is this method of dealing with the problem the most effective one that this Government can take? Well-known economists were all pooh-poohed by the hon the Minister this morning. As far as he is concerned the economists and the best banks in the country, spokesmen from all universities, all of them amount to nothing in preference to the one person he quoted from a newspaper article. However, Prof Lombard who serves on the Prime Minister’s Economic Advisory Council and who I believe also is on the board of the Reserve Bank, says the following:

Is Prof Lombard also pooh-poohed? Is he also to be thrown aside in this rejection of the economists, the bankers and the businessmen of South Africa by the hon the Minister?

The hon the Minister gave us some figures this morning and I had a look to see how he comes to these figures, because there are some fascinating things. I took out the figures for private consumption expenditure and for consumption expenditure by the central Government. Let us just take the situation last year. In the first quarter of last year private consumption expenditure showed a minus 0,6% increase. The Government then had it cut back because it was the period just before the Budget when they ran out of money. The Government’s expenditure was minus 17,1%. Then we come to the period immediately after the Budget when the Government’s consumption expenditure increased to plus 56,4%—a dramatic change from before the Budget to after the Budget when the private consumption expenditure is plus 2,9%. In the third quarter to which the hon the Minister referred in regard to the increase in GDP expenditure—I am only referring to private consumption expenditure and Government expenditure—private consumption expenditure was plus 4% and consumption by Government 4,9%. In the fourth quarter it was 4,5% for private consumption expenditure and 11% for Government expenditure. When the hon the Minister therefore speaks about people tightening their belts, I must point out that the one belt that has not been tightened, where in fact there are no notches left so that it cannot be closed, is the Government’s belt because they do not restrict expenditure. When they talk about financial discipline it means that they want the public to be disciplined; they want the public to bear the burden while they do not discipline themselves in regard to their expenditure. They do not set the example that is required, and the statistics prove it. The statistics prove that there is no doubt that the Government does not exercise the restraint that is being asked for from the ordinary man in the street.

Let us, however, talk about private consumption expenditure. Who is going to be hit by the increase in GST? I can quote from articles that have appeared from economists and in some cases from the very spokesmen of the Government itself. Firstly, the rich are not going to be hit by the increase in GST because they have the money to spend in any event. Secondly, those who can get salary increases to compensate them are not going to be hit by the increase in the GST. However, those who cannot get salary increases, particularly those in the ranks of the unskilled where unemployment creates competition for jobs, those people are going to be hit by the increase in GST. Those who cannot get further credit, and those who have used up their savings are going to be hit by the increase in GST.

The exemption from GST of some of the essential foodstuffs does without doubt provide a relief for the lower income groups. There is no question about it, and we have asked for it. However, I tried to indicate to the hon the Minister this morning that in fact increases in food prices are already on the way and one fears that they will negate the whole concept of the exclusion of certain foodstuffs from GST.

Let us talk for a moment about the money supply. The latest figures that were published indicate that the increase in Ml for the 1984 year-on figure was 37,4% and for the M2 it was 20,4%. What is interesting is that the publication that the hon the Minister is so found of quoting normally, the Financial Mail, says that if one does not inflate these figures for last year, then in fact the M2 increased at 25,9% and the Ml at 48,8%. When we look at what the hon the Minister of Finance said about the money supply in his Budget Speech, we find that he said it was under control. Everything was going fine. However, the fact of the matter is that the money supply is one of the problems that has caused inflation in South Africa because it has been inadequately controlled. There is no question about that at all. There is also no question about the fact that while we have been told that although it has gone wrong in the past it will be better in the future, every time the future becomes the present we have the same old story over again. That is the mismanagement that we have as a result of the fact that this Government is unwilling to take the necessary steps.

The hon the Minister said this morning that we do not want him to take these measures now, and he asked us what we wanted him to do. What the hon the Minister forgets is that when one does not take timeous measures to deal with economic ills when they arise, stronger medicine has to be taken at a later stage. This Government has failed to take those timeous measures and so that stronger medicine will now have to be taken.

One can go on at length about the state of the economy in order to demonstrate how there has been mismanagement. There is one further remark I wish to make in this regard and that is that however much the hon the Minister of Finance may mismanage our economy, in the end the inherent strength of our South African economy will ensure that things will come right as long as we do have that efficient management. We are strong enough to deal with these problems and we do have the inherent wealth with which to do it. We also have the manpower to do it, and we should be able to do whatever is necessary to rectify the position.

In the few minutes that are still available to me I should like to refer briefly to the constitution. I wish to refer in this regard to two matters. In the first instance there is the question of the cost of the new structure. At this Third Reading stage of the Budget, we know that the new dispensation is coming into being in September but we still do not know what it is going to cost us. We do not know the direct costs although we can estimate them and we do not know the indirect costs. We are to some extent working in the dark in regard to the constitution. I think it is high time for an hon member of the Government to stand up and tell us what this new constitution is going to cost us. The reality of the position is that the success or failure of the constitution is going to be measured by the speed with which the expectations of people are going to be fulfilled. I do not think it is even being argued that these expectations have to be fulfilled in regard to the removal of discrimination in the services provided by the State. However, the speed at which this must be done, is an issue. If this cannot be done and done expeditiously, then no constitution under the sun is going to be able to create stability in South Africa. To start off with a new constitution from a base such as this one from an economic point of view, I do not think is giving any constitution a fair chance. I think the hon the Minister of Finance has let this Government down because, to use the words of the Bureau for Economic Research, we are in the worst recession for 50 years.

What absolute rubbish!

Absolute rubbish? I tell you, Sir, this hon Minister is unbelievable! The whole country sees a situation but the hon the Minister closes his eyes to it. He does not want to know about it. [Interjections.] It is not happening. It is the Bureau for Economic Research, it is the big banks, it is the economists and the professors at universities who know absolutely nothing about what is happening in South Africa. It is all rubbish in the eyes of the hon the Minister. [Interjections.] The hon the Minister of Finance is not giving this new constitution a fair chance because the hon the Prime Minister and the hon the Minister of Constitutional Development and Planning are going to need money to develop this new constitution. There are expectations to be met and the hon the Minister of Finance is not meeting them.

I want to touch on one final point. If the budgets are going to be dealt with in the new constitution in the manner in which this Budget is being dealt with, I say once again that the new constitution does not have a chance. The President’s Council has drawn up a budgeting plan which requires the attention of everyone because that plan contains the concept that before a budget is introduced one should get all the interested parties together and use all the brains that are available both in Parliament and outside to produce a consensus Budget. Let us do that because the type of confrontation situation that has been created by this hon Minister cannot bring about a consensus form of government. We cannot do it. I therefore want to make an appeal that somewhere a halt must be called to this situation. We must return to good management; we must return to efficiency and we must put the economic interests of the ordinary South African first and not have this game continued which is being conducted by the present administration.

Mr Speaker, it was interesting to listen to the hon member for Yeoville, particularly since he made a very unjust attack on the hon the Minister of Finance. Let us just go back and look at what the hon member for Yeoville did after the Second Reading. After the Second Reading of the Appropriation Bill, in which the hon member failed to make any impression on anyone, within or outside Parliament, he was obliged, according to The Argus of 12 April 1984, to hold a conference and make a new speech, which was not effective either.

Let us go further. Today the hon member for Yeoville made an effort to launch an unjust attack on the hon the Minister of Finance and obtain information from him about a Cabinet meeting, which he knows the hon the Minister of Finance may not give him. We are accustomed to his oblique and selective quotations, and time and again he ignored a request by the hon the Minister to quote the entire article, instead only quoting selected parts. However, the hon member knew that the hon the Minister was unable to answer him because he may not speak about a Cabinet discussion. At the start of his speech the hon member said that he wanted to discuss the new dispensation. Surely that is not true, and the hon member knows it. He know it, because when the opportunity presented itself to discuss the new dispensation last year, how many speeches did he make? How many speeches did he make or how many meetings did he attend to discuss the new dispensation?

Order! The hon member must withdraw the allegation “the hon member knows it”.

I withdraw it, Mr Speaker. The hon member is making a big mistake. The hon member had the opportunity last year, when we discussed the new constitutional dispensation, and when his party held meeting upon meeting to appeal to the people of South Africa to vote no. How many meetings did the hon member for Yeoville address? Where was he? If the hon member tells me that he was abroad, I ask him: What was he doing there when at home his party was engaged in an extremely complex struggle? How many meetings did the hon member address? I say that he did not address a single meeting. Will he deny that? The hon member cannot say “yes” or “no”. But let us go further. I now ask him: Is the report—which later became a rumour—that he voted yes, true? [Interjections ] What happened after that? With reference to the subtle way in which he sought to drive the hon the Minister into a corner—he did not succeed—I ask him whether he was the man who, in the caucus of his party, managed to arrange that the hon member for Walmer and his friend sitting there in front of him had to repudiate their own signatures. The rumour which did the rounds was that it was he who was not in favour of toll roads. Therefore he managed to arrange that they had to repudiate their own signatures to a unanimous document. [Interjections.] That may be so, but if it was not him, who was it? Was it you? If it was him, what did he have to sacrifice?

Mr Speaker, on a point of order: Who is “you” and who is “he”?

The hon member for Vasco may proceed.

Did he perhaps have to make a sacrifice by holding a meeting about GST together with the hon the member for Constantia … I am referring here to a report in The Cape Times dated 19 May 1984 concerning a large protest meeting in Cape Town addressed by the hon member for Yeoville and the hon member for Constantia in regard to sales tax. They raised a big fuss about it in advance. According to the article Mr Harry Schwarz stated why the Government had increased the sales tax to 10%, how unjust it was and why it ought not to have been done.

And there were 30 people. What about it? [Interjections.]

The hon member is prepared to admit that there were 30 people. But how many of those 30 were prepared to believe him, and how many were not? How many agreed with him in advance, and how many agreed with him afterwards? According to my information 29 agreed with him before the time and afterwards the figure was 13. Must I assume that my information was wrong?

Let us take the aspect of sales tax further. Let us ask one another whether the 10% that the hon the Minister introduced is really so unjust. Let us refer to the Financial Mail. I know that the hon member for Yeoville does not have much respect for them because they seldom agree with him or support him. After all, he is on record as having said: “I am not impressed by the hon the Minister quoting the Financial Mail. I can quite understand that. [Interjections.] Let us see what the newspaper has to say. I quote:

After all, it is true that in Luxembourg the figure is 12% and not 10%. In Ireland one pays 35%, not 10%. In Britain itself the figure is 15%. In West Germany the figure is 14%, and I could continue in this vein.

But surely you know it is not the same tax.

I shall come to the hon member in a moment. One could elaborate further on the percentage paid in countries with which South Africa can be compared. In fact, it is said that the sales tax ought to be higher, but it is not only the Financial Mail that says that, because the hon member for Yeoville is also on record as having said that. Only last week he said that he and his party preferred indirect tax. He will not deny having said that. He agrees with me. If he agrees and stands by that statement then surely he agrees that the hon the Minister must increase indirect tax and not direct tax. That is the very point that the hon the Minister must move towards, because if one looks at the average international percentage, one finds that our percentage is still one of the lowest.

Do you agree with the Financial Mail that supertax be increased to 25 %?

We can come back to the question of supertax, and we can also come back to 1980, when the hon member pleaded for its abolition. If the hon member prefers that, then we can start there.

One must review the entire situation and one must consider what South Africa’s position is in view of the international situation, which is one of recessions in every country. We must also bear in mind that South Africa has to contend not only with the international recession prevailing at present but also with exceptional circumstances. Surely we all know that we have had to contend with an exceptional drought which has contributed towards South Africa being in a far worse position than the average Western country, and after all, our economy is regarded as that of a Western Country.

Let us consider what South Africa’s position is in the international situation. According to the Institutional Investor South Africa is in 29th position as regards the best investment factor worldwide. One should not simply overlook such things. We can also take cognizance of the facts stated this morning by the hon the Minister of Finance. He said that last Friday he again had the opportunity to pick up his telephone and, within five minutes, renew a loan of R100 million for another six years. That is the important aspect—not merely the renewal or the amount, but the period of the loan. Let us think back to the early ’seventies. The longest factor applicable to us then was nine months to a year. Surely these loan facilities we enjoy attest to the utmost confidence.

Nor is that the only factor contributing towards South Africa being in a very favourable position in the international market. Let us consider what is being said in the insurance world, for example. I quote:

Surely that is the point at issue. The point is how the South African situation compares with that in other comparable countries.

We also read that there is a paean of praise for the handling of the situation by the hon the Minister of Finance and the hon the Minister of Industries, Commerce and Tourism. On 7 May 1984 we read:

We have the basis and the strength, as the hon member for Yeoville said. There are two alternative methods. The first is to reduce expenditure by way of increased deposits on hire-purchase transactions, restrictive credit ceilings, limitations on imports and on the exportation of capital, restrictive measures relating to free trade etc. Surely that is not what the hon member for Yeoville wants. Surely that is not what he and his party advocate, because after all, they share our view that as far as possible there should be free trade. Competitive growth must result from free trade so that the resultant productivity will contribute to more exports. Therefore an effort must be made to maintain one’s position in national trading in a competitive and productive way. Accordingly the other alternative is free trade. We have progressed a long way along the road to free trade and this is the declared policy of the Government which is being implemented by the hon the Minister of Finance and the hon the Minister of Industries, Commerce and Tourism. We have already achieved considerable successes in this regard. Greater productivity has also been achieved in the process. At present, however, this is still a problem. In Japan the growth rate was 7% and the growth in income was 13%. In West Germany the growth rate was 4,9% and the growth in income was 10,6%. In South Africa, however, the growth rate was only 2% whereas the growth in income was more than 13%. During the years 1981-82-83, hire-purchase transactions at commercial banks increased from R0,7 million to R1,8 million and R4,5 million. The amount in respect of loans to individuals increased during the same period from R2,7 million to R4,2 million and R6,9 million. Surely it is not the Government’s fault when one gets headlines such as “Spend, spend, spend. Inflation rampant as State goes on the binge” appear in newspapers. That is not the State’s fault. The increase in Government expenditure over the past four years has always been less than the rate of inflation. I can also furnish figures in connection with companies. The headline in this afternoon’s Argus is “Borrowing spree”. Surely it is the individual who is guilty of this. That is why I referred to the figures relating to productivity in contrast to the increase in revenue. South Africans will have to realize that they are spending our prosperity at the paypoints in shops. While demands for higher salaries are made every day, we must realize that in the process we are endangering the prosperity that could be awaiting us in future and that we could experience over the next few years.

In the few minutes still at my disposal I should like to refer to a few other matters. I believe that the time has come for us to apply selective protection in South Africa, in the same sense as it is done internationally at present. We know that countries like Japan do not use import tariffs, but apply health measures to admit imports on a selective basis. We know that the French, for example, have an office somewhere in the Pyrenees that decides on what is to be imported. Ways are found to make it difficult to import.

I want to refer to another two matters. Firstly, there is a tendency for the trade unions to become increasingly militant and to set increasing demands. I want to sound the warning today that there is a danger that this conduct on their part can begin to become irresponsible. Ultimately we may reach the stage at which it will be better to provide a machine, that will not say “no” and that will not demand an increase in salary every day, rather than to keep an unwilling worker that one can never rely on. I appeal to the trade unions to refrain from overstepping the mark as far as their objectives are concerned.

I want to make one final point. Whereas we in South Africa will have to consider the distribution of wealth between rich and poor, we shall not be able to do so on a financial and economic basis only. If we do not consider our rate of population increase we shall not be able to achieve this in any event. Therefore I want to ask the hon the Minister of Health and Welfare today, through the hon the Minister of Finance, to launch an active programme among all the population groups to bring about a turnabout in the rate of increase so that we are able to distribute wealth equally among all members of the population in such a way that everyone will derive the benefit.

Mr Speaker, I want to discuss a very serious matter here today, a matter, indeed, that we regard as so serious that we considered calling for a special debate in this regard as a matter of urgent public importance. Subsequently, after consultation with you, we deemed it appropriate to raise the matter in this debate.

I have before me a document entitled “Memo”. It is a State document, an official document, which comes from File A 7/8/2/K1 of the Department of Co-operation and development. This document consists of seven paragraphs, typed paragraphs, and at the bottom there is a handwritten paragraph consisting of eight lines, and it is signed “A P Treurnicht, 25/4/1979”. I also have before me a pamphlet entitled Die KP aan die kaak gestel. On page 30 of this pamphlet there is a photostat reproduction of what is professed to be a document. On closer examination it is evident that this document in Die KP aan die kaak gestel in fact constitutes a falsification of the original State document. On the one hand, the object is clearly to create the impression that the falsified document is the entire original State document. On the other hand, the object is clearly to suggest that Dr Treurnicht only wrote what appears in his handwriting. Thirdly, the very clear aim is to harm Dr Treurnicht and the CP by means of this falsified document.

I want to give an indication of the method adopted. Paragraphs 1,2,3,4,6,7(c) and 7(d) of the original document have been deleted. Paragraph 5 has been taken and placed under the title of the original document so that it starts there. Number 5 of that paragraph has been deleted. Then a part of paragraph 7 has been added to paragraph 5, so that the two together form a single paragraph. Subsequently, the words “recommendation agreed to” are taken out of the original sentence in which they appeared and shifted up to form a title. In addition they have been underlined. Subsequently the middle part of the paragraph in Dr Treurnicht’s handwriting, the very part in which his intention is clearly stated, is deleted, and the word “as”, which appeared at the end of the fifth line, has been skillfully deleted and placed at the beginning of the sixth line so that it reads as if there is only a sixth line.

All this appears in the document entitled KP aan die kaak gestel. If one examines this document further one sees that on the inside of the back page it is stated that it was written by C R E Rencken, MP, Information Officer of the National Party in Transvaal. It has been published by the Federal Council of the National Party of which the hon the Prime Minister is chairman. It was printed by Nasionale Handelsdrukkery in Parow. The booklet contains a foreword written by the hon F W de Klerk, leader of the National Party in Transvaal, and a postscript by Dr. Jan Grobler, MP, Chief Information Officer. These are the five people who were concerned with this document as such.

However, there is a sixth person who is also involved, viz the hon the Minister of Co-operation and Development, who controls all State documents in his department. Apparently it was he who, at a given stage, was the only person in the Information Service of the National Party who was aware that there was such a document in the safes or the archives of his department. It would not be permitted for this document to leave that file without his granting his permission. Indeed, it took Dr Treurnicht a considerable amount of time to get hold of that document, and he was only able to do so with the consent of the Minister. However, the federal Council of the National Party obtained the document. In passing, the hon the Minister is in fact chairman of the Information Service of the Federal Council of the National Party.

One has to ask what all this is about. The reason is evident from this booklet because in the foreward the hon F W de Klerk writes:

In this way the hon F W de Klerk intimates that he did in fact acquaint himself with the contents of this document, that he stands by it and that he associates himself with it.

In the postscript Dr Jan Grobler, MP, writes inter alia as follows:

In other words, Dr Jan Grobler does in fact certify the contents of this document. He commits himself to them and therefore stands by it. Or do they, too, now say that they signed it without reading it?

This is falsification in its most extreme and blatant form. Indeed, it may constitute fraud. In addition, it probably represents an infringement of certain statutory prescriptions. In other words, it is a statutory offence. This is the National Party’s “Watergate.” In England not only the Ministers concerned, but the entire Government would have resigned. In the United States of America the people in question would have been impeached. I have before me a document by the hon Dr P G J Koornhof, chairman of the Information Service of the Federal Council of the National Party, dated 22 June 1984, which is an admission of guilt in this matter. [Interjections.] It is a matter of falsification, fraud and deceit. In this instance we demand the resignation of the hon the Minister of Co-operation and Development who, as Minister, misused a State document. We also demand the resignation of Mr C R E Rencken, MP, who wrote the pamphlet containing this falsification. He writes inter alia as follows about another person on page 8 of this document:

This is what is written in this document about someone else. We also demand the resignation of Dr Jan Grobler and Mr F J de Klerk because by their signatures they associated themselves totally with and made themselves responsible for the contents of this document. We leave it to the hon the Prime Minister to decide for himself in this regard. On taking office he promised South Africa clean administration, and it will be known that in the final months of his regime as Prime Minister, the worst case of political falsification in the history of South Africa manifested itself. [Interjections.]

We also challenge the State-controlled SABC, TV and radio to give this matter the publicity and news coverage it is entitled to receive. They can jeer as much they like, but there are going to be songs sung about this matter. The first song which will probably be sung, with apologies to an author I do not know, will probably go as follows:

[Interjections.] Or a different song could be sung, one that goes like this:

I want to tell the hon the Prime Minister that in the Potgietersrus constituency and in the Rosettenville constituency the falsification under the signatures of the Ministers and information agents of the NP are already in possession of every voter. [Interjections.] They can laugh if they like. They can pass a law; they can detain us, but this falsification will be distributed from platform to platform among the voters of South Africa.

Mr Speaker, I had really hoped that in this final debate of this session, one which in many respects is an historic debate, I should have been able to bring a message of hope, something I should very much have liked to do. I should very much have liked to elaborate on the note that was struck overseas by the hon the Prime Minister on Republic Day, 31 May 1984, at the home of the late President Paul Kruger, when he said that we should find our strength in our diversity, and our unity in our diversity, and throught our unity would go on to make our country a regional power at the southern tip of Africa that, for its neighbours, would be a burning light of civilization. I should really have liked to concern myself with those matters and exchange a few strongly felt ideas I have about that.

It is true that I have for some time now been Minister of Co-operation and Development as well as chairman of the information service of the NP. Due to the situation which has now arisen I am compelled to enter that sphere. I do so with the greatest pleasure in order to render service and to be of service in doing so.

The hon member who has just resumed his seat made a big fuss about various matters. He used words here that one would not utter in the normal course. Moreover, I shall not use such words this afternoon because to the best of my knowledge I have never done so in all the years that I have served in this House. Coming from that hon member, however, I am by no means surprised to have heard those words. One of his characteristics, however, is that he can exaggerate so tremendously, and he did so again this afternoon in the superlative degree. If I had wanted to go onto the attack in the terms used by the hon member this afternoon, then I could refer back to what those hon members did with the signature of the hon the Prime Minister. [Interjections.] I should then have every right to use that same kind of language and could neatly turn the tables on them. The hon the Prime Minister said the following in a statement:

[Interjections.] If I were to carry on in that vein I could elaborate on this further, but it would get me nowhere. Therefore I now want to deal with the matter raised here.

I want to say here and now that I would have preferred it not to have happened. [Interjections.] I can protect my colleagues who drew up the document in all honesty, because I established to my satisfaction that there was no intention to harm anyone. [Interjections.] If and when the facts are carefully analysed it will be quite evident that this is absolutely correct, and this will also be proved in the light of this debate. What, then, are the full facts? Attacks have been made from many quarters, and specifically from the ranks of the CP, on members of the NP and on the hon the Prime Minister and, indeed, on virtually every member of the Cabinet, in which those concerned have resorted to the lowest tactics, and we have simply continued to take it. [Interjections.] I can refer to so many of these attacks. I have already referred to one, the hon the Prime Minister’s statement. I could refer to the Scheuer pamphlet concerning which the hon the leader of the CP gave an undertaking in this House that if it was found that there were incorrect statements in that pamphlet, he would dissociate himself from them. We are still waiting for him to do so. Those hon members helped to distribute that pamphlet. The Scheuer pamphlet caused considerable damage and disgrace and now that he has to pay R5 000 in damages, the leader of the CP is sitting there without saying a word to keep his promise. We are waiting, and we are interested to see what he is going to do about it. I could also refer to the blunders by the hon member for Waterberg at the national festival at Ellis Park on 10 October. On that occasion he presented himself as a holy man and told the country who would go to heaven and who would go the other place. [Interjections.]

Where are you going to?

I would not ask that of that hon member. I can also refer to the 666 story. I can also refer to the “bomb trick” of the hon leader of the CP, whereas in the meantime the accused has been given a 100 year term of imprisonment for an attempt to murder the Prime Minister. I can also refer to the speech of the hon the leader of the CP at Warmbad. While the hon the Prime Minister was trying to promote the cause of this country and all its population groups overseas, that hon member saw fit to try and tell South Africa and the world that the Prime Minister was selling out the sovereignty of the Whites in Europe. I could refer to the speech by Dr Mulder at Marble Hall, in which he called the hon the Prime Minister a traitor. I could have done all those things in reply to the hon member. [Interjections.] I have merely referred to them in passing because I do not have time to deal with them now. The only reason I did so was to state clearly that there is a history to this matter, viz that the NP then decided to issue a brochure entitled Die KP aan die kaak gestel, and I have the document before me.

It contains 22 untruths. [Interjections.]

Order! The hon member for Soutpansberg was given an exceptionally good hearing when he stated his case. I now expect hon members to give the hon the Minister of Co-operation and Development the same hearing. He must be accorded an opportunity to state his case.

Thank you, Sir. There are about 40 specific points in this brochure in regard to which the CP is in fact exposed. There is not the slightest doubt that this matter has hit the CP hard. This document, to which exception has been taken, and about which the hon member for Soutpansberg made such a fuss this afternoon, was published more than a year ago, in exactly the same form as it now appears in this brochure, in Die Nasionalis of May 1983. Here is the newspaper, and it is exactly the same. At that time the hon member for Soutpansberg was not yet a member of Parliament. I ask why it should be that after a year—this document was subsequently published in various publications; it appeared again in February or May in another NP document, and in other documents it was used and published word for word—mention is only made of it now? During this whole period of more than a year no one from the ranks of the CP said a word about this matter. Why do so now? Surely the answer is clear. This matter is hurting them now, and that is why we now have a transparent effort, just before the election in Rosettenville and, in particular, in Potgietersrus, to emasculate this brochure and attempt to discredit it. [Interjections.]

Let us consider the facts against this background. The facts in this pamphlet dispute are, in the first place—and in this regard everyone can judge for himself—whether Dr Treurnicht gave permission for mixed lodging in a hostel of the University of Cape Town. [Interjections.] The answer is a deafening “yes”. In the full documents that are now being made available, this is very clearly stated. What is more, the hon the leader of the CP indicated that the applicant would be accommodated in a single room in one of the hostels where he would share all other facilities with fellow students. Therefore the answer to that is yes.

The aim of Die KP aan die kaak gestel is to expose the inconsistency and lack of credibility of the CP and, specifically, of its own leader. That is why the title of the brochure is Die KP aan die kaak gestel, the introduction to which reads as follows:

Having done so on several occasions, the hon member for Waterberg is now advocating total separation at all levels as a matter of principle. All that this document, Die KP aan die kaak gestel, sought to do, was to tell the public at large that when Dr Treurnicht told them that he wanted to implement separation at all levels as a matter of principle, they should not believe him, because in the first place he was inconsistent, and in the second place, when he was in a position of authority and capable of taking decisions about the matter, he failed totally to implement what he is now professing and trying to make the country believe. I think that that is a very serious charge. That is why this matter is being dealt with in this way. What is more, Die KP aan die kaak gestel is only that one document …

Mr Speaker, may I ask the hon the Minister a question?

May I first just put my case. After that the hon member can ask a question with the greatest of pleasure. We also issued another document in this connection and in that document the question is asked: “Kon die betrokke student dieselfde kursus wat hy in Kaapstad wou gevolg het, by ’n ander universiteit gevolg het?” If one looks at the admission of this student to the University of Cape Town, one sees that the hon the Deputy Minister Dr Treurnicht, while occupying that position, was expressly told by the then department: “Daar dien gemeld te word dat hierdie graad deur beide die Universiteit van Umtata as Fort Hare aangebied word.” No recommendation was made to the then hon Deputy Minister. The department said: “Voorgelê vir u oorweging en beslissing.” Dr Treurnicht wrote in reply: “Paslike verblyfreëlings te tref. Reel met Plurale Betrekkinge en Onderwys, APT.” Under this appeared the words: “Goedgekeur onder die gebruiklike voorwaardes of afgekeur,” and this he signed on 27 February 1979. In other words, the reply to the question: “Kon die betrokke student dieselfde kursus by ’n Swart universiteit volg?” was yes. This student came from Umtata. Therefore it is only fair to point out that Dr Treurnicht, who is now being so sanctimonious, and telling the people in Potgietersrus that if he were in power he would implement total separation at all levels—even in regard to Coloureds and Indians—as a matter of principle, failed totally to do so while in a position of authority. That is all that Die KP aan die kaak gestel sought to convey, viz that we seriously question his consistency and credibility.

Read paragraphs 1, 3 and 4.

Then we go on to ask: Is Dr Treurnicht being consistent when he now advocates total separation? The answer is clearly “No, he is not being consistent”. Moreover we say in the advertisements, which are appearing this afternoon and tomorrow, that all the MP wanted to do was to expose Dr Treurnicht’s inconsistency. “Has the NP misled you?” we ask. We reply: “Judge for yourself”. What, then is the objection? I have now given hon members the facts. Let us now consider their objection. On 20 April 1979 Dr Treurnicht gave permission to a Black student to live in a White men’s hostel at the University of Cape Town, where he would share all other facilities with fellow students. In May 1983 Die Nasionalis published an abbreviated version of the permission. Subsequently, as I indicated, this was repeated on various occasions. Only in June 1984, more than a year later, the CP objected to another repetition of the abbreviated document Die KP aan die kaak gestel. The CP does not deny that Dr Treurnicht did give permission, but objects to the abbreviated version of the document. Nor does it deny that Dr Treurnicht granted admission to the university to the student in question. What are the facts? The fact is that the Information Service of the NP had no bad intentions. [Interjections.] Hon members can laugh about that if they wish.

Was the document stolen?

The document was not stolen. I am still coming to that. Just give me a chance so that I can state the facts. The Information Service of the NP had no malicious intentions in this regard. We wanted to bring a fact to light and we did so. As far as the abbreviated edition is concerned I acquainted myself with the facts in this regard by calling in my hon colleagues this morning and speaking to them seriously about this matter. As chairman of the Information Service of the NP I established that the abbreviation was effected a year ago for reasons of conciseness. [Interjections.] The hon members can laugh about that until they are blue in the face. Surely it is no novelty in the world of the Press that a montage is done. Surely everyone who has experience of this knows it. After all, it is often the custom that where this is done there is an indication of what has been left out and so on.

Where did that happen?

I am coming to that too. That is what happened in this case, and therefore the hon members need not laugh when I say that the abbreviation was done for reasons of conciseness because it will be proved by the information service of the NP that this was in fact the case. Therefore, we had no intention of misleading.

Will that be the finding of the court too?

The hon member can do what he likes with that, of course, but I am giving the facts now. I say it was done for reasons of conciseness. The hon member for Waterberg granted permission, and the fact at issue in Die KP aan die kaak gestel is by no means in dispute. The objection is to the omission of part of his handwritten commentary, which could create a wrong impression. This is the objection. [Interjections.] Now the hon members say that that is so. Why, then, did they laugh a moment ago? In order to prevent any misinterpretation of the facts, the relevant document is being published in full and, as the CP requests, it will appear in a Transvaal newspaper this afternoon. It will appear in full.

With the falsification?

With the “falsification”, as the hon member for Soutpansberg says. We say it is not a falsification; we deny it. We speak about the abbreviated version. That abbreviated version, as it stands, will appear together with the full document in Die Vaderland this afternoon. It was impossible to have it published in the Free State afternoon newspaper this afternoon, but it will appear in all the morning newspapers in each of the provinces tomorrow because we wish the facts of this situation to be clearly stated in the light of the vile allegations being made by the CP and in the light of the outrageous misrepresentations being put about.

If we have made a mistake we have the courage to admit it. When I have made a mistake I have never been afraid to admit forthrightly that a mistake has been made. As far as that aspect is concerned we say frankly—indeed, I wrote to the hon member to that effect—that it is regrettable that this happened.

Where did that happen?

But I am saying it now.

I said it a moment ago, too. In fact, I began by saying that I was sorry that this had happened. The point is that this does not derogate from the fact that the Information Service of the NP wanted to convey and put forward. For that reason we are making the full facts available to the whole country.

I did not become chairman of the Information Service of the NP yesterday. I have been chairman for so long that I honestly cannot say how long it has been. In my whole period of service it has been my personal endeavour that honesty should prevail under all circumstances, that rectitude should prevail under all circumstances, and it has been my personal contribution to ensure that mistakes are not made. In my period of office not thousands, but probably millions of words have been published by the Information Service of the NP. This is the first time that this kind of vile allegation has been made by the Opposition. Moreover, this does not upset me personally. If what the hon members charge us and me with were true, it would be a pleasure to admit it forthrightly and to submit to being dealt with in whatever way was appropriate by the bodies that would have to deal with the matter, because the facts that I have established are as I have stated them this afternoon.

I now wish to deal with the other part of it and dispose of the matter finally. Personally I have nothing to hide; nor has the information service of the NP, except to say that we are not perfect. We, too, can make mistakes, but when it happens we are prepared to admit it forthrightly. We shall admit our mistakes forthrightly, and that is what I am doing here. Hon members of the CP want to know from me how the document found its way into the hands of the information service in the first place.

Let us hear.

The hon member is making such a noise now. I am constantly trying to refrain from being personal, and I shall do so again at this point. Paragraph 46 of the Public Service Code, which deals with the publication of official information reads as follows:

Therefore there is no prohibition. The document that the hon member is making such a fuss about is not a secret document. It is merely a document of the Department of Co-operation and Development. More than a year ago the CP accused the NP, as it still does from time to time, of adopting a course of integration, and to support its allegations it has advanced inter alia the sharing of mixed facilities, mixed gatherings etc. However, we were aware that the hon member for Waterberg, who is accusing us of this morning, noon and night, repeatedly gave permission for mixed gatherings while he was Deputy Minister. After all, it was dishonest of the hon member for Waterberg to create such a fuss about that subsequently. Paragraph 46 goes on:

The Archives Act, No 6 of 1962, provides as follows in section 9(6):

For the purposes of this Act, documents of a department are regarded as the archives of the department. I repeat that this document was not marked secret, because then the situation would have been totally different. I quote further:

The head of the office is subordinate to the head of the department. In a department like Co-operation and Development, which is a large department with thousands of officials, there are several heads of offices. For example we have a post of Chief Director dealing with archival documents. I read on:

Against the background of the facts that applied at the time I say to this House this afternoon that when I was approached about this matter, in the light of what the CP was doing, I personally regarded it as being in the country’s interest, knowing full well that Dr Treurnicht signed various documents of this nature for mixed gatherings, to grant the necessary permission for that document to be made available to that person, viz Dr Jan Grobler. [Interjections.] What is the scandal in this connection? Surely I am entitled to do so.

Mr Speaker, may I ask the hon the Minister a question?

No. Let me state my case first. In any event my time is limited. What happened subsequently? This document was made available and produced. For a year nothing happened. Then, the other day, Dr. Treurnicht asked to speak to me. He told me that he had reason to believe that a document made available to the information service was being used to harm him. I said to him: Let me look at the document to which you refer.” I then did so and subsequently called him in and told him that I had looked at it and that I was prepared to make the document available to him. Hours later he received the document.

How long did it take you?

As long as it took me to obtain the document from Pretoria. When I had obtained it I called in Mr Van der Wall and on the same day I called Dr Treurnicht in and told him that I would give him the document before three o’clock that afternoon. What is wrong with that? Surely it is correct that I should first have acquainted myself with the request. I then gave formal approval for that document to be made available to Dr Treurnicht. If the hon members now say that it is a disgrace that I made the document available to Dr Grobler on good gounds, why do they not say that it is a disgrace that I made it available to Dr Treurnicht on equally good grounds? Whether they agree with that or not, I have nothing to hide. I am stating the facts as I know them and as …

Mr Speaker, may I now ask the hon the Minister a question?

No, Sir, my time is really very limited. I am therefore putting the facts to this House and thus to the country as well.

I want to conclude with a further remark about this matter. There is not the slightest doubt that the brochure Die KP aan die kaak gestel is in fact doing just that.

It is full of lies.

Then the hon member must state what the lies are. Just listen. Sir, to what the hon member does. After I had made the document available to Dr Treurnicht and they had made such a fuss about it, the hon member wrote a letter to me in which he again objected to our having charged Dr Treurnicht with having spoken about war.

Is he not “an hon member”?

Yes, the hon member. I am referring to where, as we understood it. Dr Treurnicht spoke not about politics but about war. Now Dr Treurnicht denies it. Surely, then, the burden of proof rests on hon members of the CP. They must prove that that was not correct. Our ears tell us that he was speaking about war. I can quote what Dr Treurnicht said there:

I am not speaking politics, I am speaking about war because that is what we heard. He said that he had said that he was not talking about war. I am now, however, referring to what he said:

Everyone heard on television what the hon leader of the CP had to say. If he was not speaking about war, then those hon members must convince the country of it. They must also mention what he was in fact speaking about. We have the tape recordings. [Time expired.]

Mr Speaker, we have witnessed this afternoon the latest battle in the “Broedertwis” between erstwhile colleagues. There is no doubt that we will hear more of this …

Mr Speaker, on a point of order: Did you prohibit interjections for the remainder of this debate?

No, only until the Minister of Co-operation and Development finished making his speech.

No doubt we are going to hear more of this as this debate continues. I do not particularly intend to get involved in this, other than to say that I do believe that there are certain issues at stake. One of those is the confidentiality of correspondence which hon members have with Ministers. This is something which needs to be considered, and whether there has been a case of a document being doctored in order to change the content. These questions will no doubt be answered as the debate continues.

I want to return to the state of the South African economy in general, and in particular to certain statements made by the hon the Minister of Finance earlier in this debate. I want to put it to the hon the Minister, who at one time was a professor of economics, that when I was at university I had a professor of economics who used to say that economics is not an exact science but an art. He also said that economic opinions are highly subjective depending on one’s perception of things. There are many clichés which one could mention, such as “beauty, like evil, lies in the eye of the beholder”. One must also remember that comparisons are after all odious.

We have become accustomed in this House to the hon the Minister of Finance telling us about all the compliments which are paid to him by international bankers. Speaking for myself, I would not trust the compliments of international bankers, and I will tell him why. These are the same bankers, who have been praising the hon the Minister about the creditworthiness of South Africa, who have lent billions of dollars to other countries around the world, to such an extent that those countries are today over-borrowed, almost bankrupt and on the verge of pushing the entire international banking scene into the sea. I would rather trust the opinions of my local bankers, because they deal with businessmen like myself who have their fingers on the pulse of the economy and who are far more aware of the true condition of the South African economy than any international banker.

Having said that, I am rather amazed by some of the comments made by the hon the Minister about certain authorities in the economic field in South Africa. The hon member for Yeoville said that the Bureau for Economic Research at the University of Stellenbosch had said that the present recession was the worst in 50 years. The hon the Minister in an interjection said that was nonsense. Is it nonsense?

Yes.

I want to read from page 7 of the Bureau’s report:

I want to ask the hon the Minister if this opinion is nonsense.

Read the Reserve Bank’s bulletin.

I asked whether the opinion published by the University of Stellenbosch’s Bureau for Economic Research was nonsense. Is the work of this institution, which is one of the most highly reputed economic research organizations in South Africa, a lot of nonsense? If it is, the hon the Minister of Finance should speak to the hon the Minister of National Education so that the funds allocated to the University of Stellenbosch can be cut because this country cannot afford to waste money on research institutions which publish nonsense.

We heard a great deal of gobbledygook from the hon the Minister in regard to the economy. Whether he likes it or not, I want to refer to some of the people who have passed comments on the state of the South African economy. I want to refer to an article in The Citizen of 24 May under the heading “Cutback in Government spending called for”. It refers to the man whom the hon the Minister ridiculed today, Mr Hennie Klerck who is the outgoing president of the Afrikaans Handelsinstituut. Might I say that if I were the Minister, I would give far greater cognizance to the opinions of Mr Hennie Klerck, who represents hundreds of Afrikaans businessmen around the country, because these gentlemen have their fingers on the economic pulse of South Africa. If the hon the Minister of Finance says that these people are talking nonsense then I fear for the Good Hope and Carlton Conference and any confidence which businessmen may have in the hon the Minister of Finance. Mr Klerck called for a reduction in the inflation rate, a cutback in Government spending and an increase in productivity. He said:

In the same paper, under the heading “Personal savings badly hit”, it is stated:

That is the view of Mr Pierre Steyn, the General Manager of Sanlam. I quote further:

There are many other reports. An article under the heading “Little hope seen for upswing” also appeared in Barclays Economic Review.

I want to put a final quotation to the hon the Minister from The Citizen of 19 June—only last week—under the heading “South Africa is in dire straits, says Volkskas”. I quote:

I believe the hon the Minister should heed the realities which are being expressed by these people. He should heed them because we are on the verge of entering a new constitutional dispensation which is going to put even greater pressure on the fiscus and on the economy of South Africa as a whole. I want to accuse this Government of providing no incentive to the people of South Africa to really get down to work and produce and to save. I say this because I firmly believe that our present economic system is carrying far too many freeloaders. There is far too much feather-bedding in the Public Service. There is feather-bedding in State corporations and also in many spheres of the private sector. In many cases people are receiving wage packets for very little effort or productivity. There is also too much credit in South Africa. Too many subsidies are also being given to people who do not really deserve them. The tax rate is far too high on real earnings. This Government’s policy has provided no incentive to the public to save, and there is too great an incentive on spending. This is the reason why inflation is running so high today, and this is also the reason why taxes are continually having to be increased. The net result of this is that savings are being eaten up. There has been a fall-off in investments and we seem to be sinking deeper into debt despite what the hon the Minister says about the debt service ratio only being 6%. The fact is that persistent inflation is eroding our currency at the rate of at least 10% per annum. There are more and more bankruptcies occurring in South Africa today, which leads to increased unemployment.

One may ask; Who is to blame? The hon the Minister may say it was the drought. He may advance many other arguments such as the gold price, but he is the one who is largely to blame. It is he who controls the fiscus and the money supply. It is he who talks about financial discipline and yet at the same time does not practice it with his own colleagues, as the hon member for Yeoville has clearly illustrated today. In fact, it appears that he cannot enforce it with his colleagues.

Having said all this, and trying to end on a constructive note, I believe that there are certain remedies which could be put into use to try to solve the country’s problems. The first one is that I believe that the annual rate of growth in the money supply must be kept to the limit which the hon the Minister’s own advisers say it should be. If my memory serves me correctly, it is around 17% per annum.

Secondly, both the public and private sectors must cut their own spending on non-essentials and especially on luxury goods.

Thirdly, there must be a reduction in the public sector work force. I believe the Government must follow the example of the SATS who last year reduced its labour force by something like 30 000 people and in the process avoided an estimated loss of nearly R700 million and ended up with a net loss of about R11 million. That is what can be done in South Africa.

Fourthly, there has to be, I believe, a greater incentive to produce more, to save more and to invest. There have to be more disincentives on the part of our people to borrow money, especially for non-essential goods. There is a need to have a higher deposit on hire-purchases and a shorter payback period. I also believe that taxation has to be reduced as Government spending is curbed.

Fifthly, I believe that the administered price structure in South Africa must be reviewed, especially the cost-plus aspects of administered prices. I believe these cost-plus aspects must be removed. This may require the complete restructuring of the costing of many of our industries but I believe it needs to be done urgently.

Sixthly, there must be far greater competition in business. I believe the Government must use the powers and the legislation which it has to destroy price rings and cartels.

Seventhly, the importation of non-essential luxury items should be curbed. Eighthly, I believe that every single Government departmental budget should be scrutinized and trimmed by at least 10% in real terms. If the hon the Minister of Finance is unable to do it, it is the hon the Prime Minister’s duty to ensure that the Ministers in his Cabinet will either rise or fall on their ability and their performance to run a tight ship in this particular regard.

Ninthly, I believe that the State should dispose of whatever activities it can to the private sector and allow the private sector to take over these activities wherever possible. Finally, I believe that there should be a massive publicity campaign to educate our people in the basic economic facts of life. For example, we must teach our people that if South Africa is to enjoy prosperity, it is going to have to earn it. One cannot buy prosperity; it has to be earned. I believe that our people should be taught that the only real financial security in life is through productivity while one is working and through savings in the way of one’s pension scheme for when one is retired. I believe that jobs in South Africa and the remuneration therefor should be so structured as to provide for ample reward for effort and productivity. I believe there should be heavy taxation on extravagant expenditure.

I say these things at this late stage of this session because next year we are going to have a new constitutional dispensation. We are going to have an Indian and a Coloured House that are going to put political pressure on the Government to spend more. If this Government does not curb its spending, if it does not set the correct priorities for South Africa, then I fear for the economy of South Africa as a whole. I firmly believe that we are now in a battle for survival as we go into a period of change. We need strong leadership in South Africa. I believe we had it from the hon the Prime Minister last year in regard to constitutional and political matters. Today we have to get the same strong leadership from the Prime Minister and the Cabinet when it comes to economic matters. If we do not get this leadership and we do not overcome the very, very serious and basic economic problems in South Africa, I fear for the future of this country and the future of our children.

I sincerely hope that the hon the Minister of Finance, instead of getting up here and telling us what a good boy he is as a result of all the pats he got on his back when he was overseas, will spend more time in South Africa with the local bankers and with the local businessmen to find out just exactly how well off or how badly off they are. Perhaps if he spoke more to those people he would have a different attitude in this House than he displayed this morning when he introduced this debate.

Mr Speaker, the speech by the hon member for Amanzimtoti really disappointed me. We have heard various financial debates during this session and the hunting season is open for the hon the Minister of Finance and his deputy. Everyone is launching personal attacks on them, and now the hon member for Amanzimtoti, at the beginning of his speech, has allowed himself to be misled into also making a personal attack on the hon the Minister, instead of looking at our economy and making a constructive contribution in an effort to overcome our present difficult economic situation. Later in his speech he did improve and mention a number of matters to which I shall come back later.

The hon member also said: “I would rather trust my local banks.” Let us see what our local banks have to say. Since the hon member for Amanzimtoti accused the hon the Minister of Finance of being the sole cause of our present economic problems, does he not believe that other factors in our economy have played an extremely important role? Here I refer to matters such as the gold price, world economic conditions, the severe drought we are experiencing here, etc. Surely the hon member will concede that these are factors beyond the control of either the hon the Minister of Finance or this country, and that they have had a significant effect on our economic situation. As a reasonable man he will certainly concede that. If he does, why then does he not make a balanced speech when discussing financial affairs? The hon member asked what our local bankers have to say. I have before me the first quarterly edition of Leadership. I do not know what the hon member for Amanzimtoti calls Mr Louis Geldenhuys, the Chief Economist of Senbank, but he is probably a local banker. Let us look at the balanced approach adopted by this economist of one of our local banks when he reviews the South African economy. I just want to quote these two paragraphs. Mr Geldenhuys says:

Why did the hon member for Amanzimtoti not mention that? What about the drought, too? Why did the hon member not refer to the effect of the drought on the economic planning of the Minister of Finance and his department? I wish to quote the following paragraph as well. The writer says:

Then follow these important words:

May I please ask a question?

No, unfortunately I have very little time. As in the case of other Opposition spokesmen, the hon member for Amanzimtoti did not adopt this balanced view of the situation. However they are, firstly, waging a personal campaign against the hon the Minister and, secondly, only concentrating on what is negative.

In considering the general approach of the Opposition to finance in our country, I want to begin with the PFP. What has happened to that party? Particularly since 2 November 1983 that party has moved away from its ideology. They said to themselves: We failed miserably at the polls in the referendum on 2 November 1983 as far as our policy and the no vote are concerned, but let us change our tactics and attack the Minister of Finance and the Government on bread-and-butter issues. It has been as clear as daylight since the beginning of this session of Parliament that this has been the tactic, and the chief exponent has been the hon member for Yeoville. And then they drag in all kinds of other matters just to draw attention away from themselves, such as the oil stories, the Salem matter and the issues relating to the oil fund.

Let us consider what the basic arguments have been of the chief spokesman on finance of the PFP, the hon member for Yeoville, in all our financial debates since we convened here. In general he has taxed the hon the Minister of Finance and the Government with having overspent, with the result that the Budget does not balance. Therefore we are obliged to increase taxes and will be obliged to increase taxes again in future. To that they link a heartrending lament in an effort to canvass support among the voters for the idea that this Government, through its financial and economic policy, is trampling upon and impoverishing the consumers and the lesser privileged in this country. That is the argument that that hon member has advanced in the past.

The second argument is that the Government’s administration of the country is poor. The Government has lost control of its administration, according to him. Then they tell one that this is why there are not enough teachers; this is why there are not enough policemen in the country; this is why there are not enough customs officials, and this is why there are not enough income tax inspectors. Then that hon member asks: When is the Government going to wake up and increase salaries so that there will be enough of these people? They go on to tell us that due to the lack of sufficient staff in the offices of the Commissioner of Inland Revenue and in the customs and excise offices, this country is losing millions in income tax, in customs and excise duty and matters of that nature. Surely these two arguments advanced by the hon member for Yeoville and his party’s spokesmen cancel one another out. One cannot have the best of both worlds. Now I want to put a question to the hon member for Yeoville. When he appeals for stringent curbing of Government expenditure, why does he ask at the same time for more expenditure in other fields? Because he is asking for more for pensions. At the same time he is asking for more for hospitalization. At the same time he is asking for better remuneration for university staff. At the same time his party complains that not enough is being spent on roads in this country. At the same time they complain that not enough is being spent on housing. One cannot complain about all these things and then, in the same breath, say that the Government’s tax rate is too high and that they are doing this and that wrong in the economy.

A short time ago the hon member for Amanzimtoti advanced the same argument. What did he say? He asked the hon the Minister of Finance to cut the budgets of all State departments by 10%. Now I want to ask him and his party members: Do they want to cut pensions in the year ahead by 10%? I ask the hon member for Durban Point: Do they want to cut pensions?

Of course not!

Do they want to cut the allocation for education?

We want better administration.

Does that hon member also want the defence budget cut by 10%, together with that of the teachers? This is the kind of argument that those hon members advance across the floor of the House. Surely it does not hold water.

Let us consider what is the standpoint of the CP on finance. They have moved towards their ideology, while the PFP have moved away from their ideology. They then apply their ideology, their specific approach to politics, to the finances of the country and make this kind of speech and tell the voters this kind of thing. They say that the new dispensation will cost this country billions of rands. Those were the words of the hon member Mr Theunissen on Friday. He simply makes such a wild statement without further ado. In an earlier debate on finance the hon member for Sunnyside told us here that this Government was impoverishing the citizens of South Africa. He is probably going to repeat that in this debate. Then too, we also hear the story that we are hearing in Potgietersrus and everywhere else in the country viz that the Government is doing everything for the Blacks, but nothing for the Whites. According to the newspapers the hon leader of that party, the hon member for Waterberg, said certain things in Rosettenville last week. He said:

That is the kind of statement made.

Let us take it further. The criticism of the Nkomati Accord that was concluded with Mozambique is well known, but those hon members do not tell the citrus farmers of the Lowveld or the rest of the country that those farmers can export their products at considerably cheaper rates through the harbour of Maputo and are therefore able to be more competitive on the foreign markets. No, that is not mentioned. [Interjections.]

If criticism of the Cahora Bassa power-line is expressed, as hon members do, the rest of the country is not told about the cheaper power we can obtain thereby. Incidentally, this is the cheapest power that South Africa can get hold of at present. Every consumer of power in this country will benefit—the home-owner, the industrialist in his factory, the farmer on his farm—but there is more to it than that: It will mean that we shall save a considerable amount of capital. For example, a body like Escom will not need to begin at once with the construction of new power stations. In that way we also save on other resources. We save water and coal. However, that agreement is regarded by hon members as pernicious. There is no point in us emphasizing what is negative in this country; let us look at what is positive in our economy. In considering this, I want to single out the following in the few minutes left to me: In the first place, as the hon the Minister again made clear to us this afternoon, our economy is fundamentally sound. In the second place we enjoy considerable prestige in international banking circles. We do not owe a great deal, and what we do owe we are capable of repaying. Our financial policy, our monetary and other fiscal measures that we have applied over the past number of years, have attracted praise, both overseas and locally. We do not have an excessively high unemployment rate, if all the circumstances are taken into account. Finally, by utilizing funds for defence we have brought about stability in the country and our businessmen and other bodies have been able to proceed quietly on the economic front to do business and benefit themselves and, thereby, the country as well.

This country has a fantastic economic future with incomparable opportunities for our young generation in particular, opportunities for those who want to adopt a positive view of South Africa and who are prepared to roll up their sleeves and work hard.

Mr Speaker, the hon member for Ermelo will forgive me if I do not react to his speech, but there have been five speakers between the last PFP speaker and myself and I feel that I have to react to what I can only term the shabby speech of the hon the Minister of Co-operation and Development.

It was, I believe, a very, very poor answer to the attack which has been made on the NP. All he succeeded in doing, I think, was to prove to us in the official Opposition that the CP and NP are to a large extent birds of the same feather. I have looked at this document which gives the original version of the memo and the memo which was issued in the by-election. There can be no doubt that this was blatant falsification, absolutely blatant falsification. They cut bits out and used them elsewhere. One can only say that falsification is of course dishonesty, plain and simple, and that is what this boils down to. It goes further than that, however, because to misuse State documents for party political purposes I believe shows a callous disregard for the good name of South Africa. It is more fitting in a banana republic than in what the NP believes South Africa is and what it certainly should be. I think it also points clearly to the ludicrous situations that arise in the practice of this evil of apartheid. The ludicrous arguments about whether a Black student can use the facilities at a White university, the same toilets or whatever they may be, make one think that one is living in Cloud Cuckoo-land. I believe this misuse of State documents is a very serious charge to be laid against the NP. I must admit that I would like the official Opposition to have access to the hon the Minister of Finance’s files after he retires, which should not be too long distant.

The hon the Minister of Finance said in his introductory speech to the Third Reading debate in relation to the recommendations for taxation for local authorities namely the employment tax and turnover tax that no decisions had been reached in regard to the implementation of these taxes. Is that correct?

In regard to the actual rates of tax.

That was not made very clear because it was quite clear from a recent speech by Mr Croeser that in fact the Government had approved those basic taxation methods.

Only the three forms in principle.

Right. You have accepted them in principle and I am glad we have clarified that. The other thing I want to ask the hon the Minister about concerns his warnings to private enterprise about housing subsidies. He said, if I heard him correctly, that existing schemes would be allowed to continue but that if anybody came with new schemes they would have to be very carefully as they might get themselves into trouble. Is that correct?

I will answer that specifically.

If a private enterprise company that has never had a housing subsidy scheme before suddenly starts subsidizing its employees’ housing to the tune of 8%, bringing it down to a real 8%, would they then be liable to be jumped on by the Receiver of Revenue? The hon the Minister says nothing. What if they go below 8%?

The MINISTER OF FINANCE. They will be judged by the Receiver of Revenue.

So they will be judged if they go below 8%, but down to 8% will be all right?

I did not say that.

In that case I want to say that the hon the Minister is being extremely unfair. To allow something like 60% of bondholders to have subsidized fringe benefits and to continue to have subsidized fringe benefits, and to deny this to other people in the private sector who want to introduce it, would be extremely unfair. [Interjections.] Well, it sounded remarkably like it. I think the hon the Minister should clarify what he says.

I will deal with that in my reply.

Fine. I look forward to hearing it.

I want to quote what the hon the Minister said on Wednesday, 28 March 1984 (Hansard, col 3878) as follows:

I want to quote him again on Friday, 11 May, only 43 days later when he said the following:

Here we have two totally contradictory statements made within 43 days of each other. I believe this typifies the confusion with which the State’s finances are being handled.

One of the things he blamed for the sudden imposition of an extra 3% sales tax was the gold price, and yet in rand terms the gold price was higher when he made the announcement about the increase to 10% than at the date when he made his original Budget speech. Therefore that does not hold any water whatsoever.

Financial discipline has been this hon Minister’s password, and this apparently applies to everybody except the hon the Minister himself and to the departments of State. Let me give an example. I was first elected to this House in 1977 and the first Budget debate I took part in was that on the Budget for 1978-79. The estimate was for R9 621 million. This year the Budget is for R24 863 million, or R15 000 million more than six years ago. I do not believe that this is financial discipline. That is an increase of 158% or the equivalent of 26% per year over the period. That is the record of this Government and this Minister who apparently believe in financial discipline. It becomes even more ludicrous when one realizes that in 1978 we had a new Prime Minister, elected by the NP, who promised us two things, namely a clean administration and a rationalization of the Public Service. Neither of these promises has as yet been demonstrated as having been fulfilled, and I will deal with them in due course.

To return to budgeting, I want to say that the Budgets have proved to be as valid as the promises of the hon the Minister of Cooperation and Development—and we heard something about those today. Let us compare two sets of figures over this period of time, namely the original estimate and the revised estimate in the following year’s Budget. In the six years I have mentioned there was an increase in the revised estimate of 3,9% in the first year, 4% in the second year, 6% in the third year, 6,4% in the fifth year and no less than 8,2% last year. This is a classic example of exceptionally poor budgeting.

Are those real figures?

Those are the figures as presented in the printed estimates as supplied by the hon the Minister to the House. As I said, there was an increase in the revised estimate of 8,2% last year. We are now budgeting for R24 863 million for this year and, on the hon the Minister’s past record, we will probably overrun this Budget by at least 5% or another R1 243 million.

The burden of taxation the average South African is having to pay has become intolerable. Only a Government which owes its place to a small minority of the population could behave in so dictatorial and selfish a manner. The gravy train keeps rolling on. As the hon the Leader of the Opposition has said, the new Constitution has added 10 coaches to the gravy train. What is worse is that, instead of trying to devise how to save money, the energies of this Minister and this Government seem totally devoted to finding new means of taxation. GST was the first milkcow. It moved from 4% to 10%. Next comes fringe benefits. We were warned of a new capital gains tax. At the same time we were warned of a turn-over tax and an employment tax. This Government is driving South Africa into the poor-house. We are increasingly becoming a poor nation and the value of the rand regularly reaches new lows against the dollar.

That brings me to the next economic failure of this Government, which is the failure to deal with inflation. I remember well that on many occasions in the House the Minister blamed imported inflation, but now that European countries and the USA have succeeded in getting their inflation problems under control, who can we blame but this Government, which is of course trying to shift the blame to the private sector? The central blame for inflation lies with the failure of the Government adequately to control its own expenditure. The hon member for Yeoville has mentioned it as has the hon member for Amanzimtoti. The lack of control of Government expenditure is what is causing the problem and the result is extra taxes and the consequent price increases.

The next point I want to tax the hon the Minister with is the list of foodstuffs to be exempted and the manner of doing it. At the end of March this confused hon Minister announced that he had asked the Standing Commission to advise him on the exclusion from general sales tax of some or alternatively of all foodstuffs. Forty-three days later, before they had even had a meeting, I understand, he took matters into his own hands and confusion reigned supreme. The problem is that he and his party look at these matters through the eyes of the privileged few in South Africa, through the eyes of the “fat cats”. They have their fridges and their deep freezes …

You asked for the exemptions.

We did not. Let me just finish what I wanted to say. They have their fridges, deep freezes, eyelevel ovens and electric grillers. They forget that millions have grave difficulty in keeping fresh food fresh and unspoilt and in cooking it. These millions have no fridges, stoves, and no electricity in many instances. If they do, they have to consider costs very carefully before they use it. However, the hon the Minister exempted frozen foods, which need to be stored in a deep freeze, but did not exempt canned goods which can be stored on the shelf. That is as callous an action as the hon the Minister of Posts and Telecommunications telling pensioners that they can live on R20 a month. Why cannot more of these basic foods be exempted? Why cannot the Government exist without taking food out of the mouths of the poor and the needy?

Hon members have no doubt heard of Ku-pagani. This organization has existed for years and their prime purpose has been to supply nourishing food to the poor at the lowest possible cost. Their chairman is quoted as saying that only three out of the 84 lines of food they supply are exempted from tax. If ever there was a governmental blunder, I believe this pathetically small list of exempted foods is it.

I believe that sales tax should be removed from all foodstuffs. One would lose a little on the luxury items but the figure would be very small by comparison to the overall benefits.

I think the House would be disappointed if I did not refer to the question of oil, and I would like to deal with this issue in the time remaining to me. I specifically want to mention the premiums we have paid for oil. The hon the Minister of Mineral and Energy Affairs told us on 4 May this year that in 1981 we paid a premium of $5 plus. In 1982 we paid $3,5 and at the moment we are paying a premium of up to $1,9 per barrel. However, I have evidence that we were offered oil at far lower prices and that this oil was of an acceptable quality. I have not investigated in any depth the background of the people who made these offers right back to their grandfathers, as the hon the Minister of Constitutional Development and Planning himself said. However, I have here a copy of an offer made in July 1983, when we were apparently paying a premium of up to $1,9 per barrel, which was for Iranian light crude at a premium of 50 American cents, and yet the offer was refused. I have a copy of another offer dated 1982 for Saudi light crude at a discount on Opec price. I also have photocopies of letters which were sent to Mostert of the Strategic Fuel Fund on that occasion. I have not investigated the companies concerned, but that the offers were made to Mostert seems well established. However, they were turned down flat when we were paying large premiums.

In the past month I have been offered sufficient oil of acceptable quality to supply South Africa’s needs three times over. Almost all of this is at Opec price or better. Some is for spot shipments but most is on regular contract.

The hon the Minister will not answer my questions as to what we are currently paying for 34 API light crude, and I must assume that he has something to hide. One thing is certain. If we are still paying a premium for our oil, it should only be for the remaining duration of an old contract. The Government has paid through its nose for oil, and I very much fear that a great deal of it was unnecessary.

In South Africa we pay, pay and pay. I believe it is high time that South Africa showed its displeasure with the Government.

Mr Speaker, it is a pleasure to follow the hon member for Port Elizabeth Central and to reply to him.

Recently there have been quite a number of campaigns and protest meetings against the economic policy of the Government. I personally am of the opinion that it is quite clear from these protest movements, particularly those of the PFP, that the PFP has run out of ideas, particularly after the signing of the Nkomati Accord and the Prime Minister’s overseas tour. That is why they have just appointed another committee to reconsider their policy from scratch.

They are probably going to reinvent the wheel.

Yes.

I should like to refer to the hon member for Port Elizabeth Central. He attacked the Government on high Government expenditure, large deficits, etc. I assume that he was once a businessman himself. He must surely have worked with budgets and received reports from his management every month pointing out to him that certain deviations were occurring, for example that farmers were purchasing more windmills owing to the drought in the Northern Cape, for example. His firm would therefore have to concentrate on increased sales of waterpipes. [Interjections.] When one assesses a financial position, one looks at the final result. One looks at the profitability, at the profit as a percentage of the turnover and as a percentage of the investment. Surely this is what one looks at. The hon member for Port Elizabeth Central will agree with me on this point. If one looks at the State’s Budget, there are, after all, certain indicators according to which that Budget must be assessed. One of these is State expenditure as a percentage of the gross domestic product. In our case it is approximately 25%.

That is too high.

It is among the lowest in the world. The figure has risen a little, but one always has a moderate rise in a time of recession. The figure of 25%, however, is low compared with that of most Western countries.

One must also consider the real expenditure per capita. In this connection the hon the Minister of Finance has a fantastic record. The figure was R267 in 1975-76, R263 in 1978-79, R269 in 1980-81 and the figure for the 1984-85 Budget, prior to adjustment, is R264. What more does one want? If one analyses these figures, there is almost a downward trend in the real expenditure per capita.

Our budget deficit is minimal compared with the position in other countries. The hon the Minister of Finance rightly said that in foreign countries our situation is considered ideal. President Reagan is being attacked because his deficits are too large, but it seems to me as if we are being attacked because our deficits are too small.

The hon member for Yeoville and the hon member for Edenvale tried to indicate how individual tax has increased compared with that of companies. According to them, the individual most now bear the full burden by means of personal tax, sales tax, etc, while companies are getting off more lightly. If one looks at the situation among the members of the Organization for European Cooperation and Development, one finds that direct personal tax amounts to 10,9% of the gross domestic product, compared with the 2,6% of company tax. In Britain it is even said that company tax should not be too high. Our figure is far better, but now we are being attacked, while we are in the midst of a recession. Then one experiences a decline in profits, and that is why company tax is lower. The hon member for Yeoville had a great deal to say about this. Sir, I am sorry to say this, but the hon member for Yeoville badly distorted the position.

I want to go further. Another story commonly told by the Opposition is that we are becoming poorer. When they say that, they are also associating themselves with my good friend Mr Klerck, the former president of the Suid-Afrikaanse Handelsinstituut. He pointed out that during the past two years our income per capita had dropped by 13%, that the utilization of our production capacity had dropped to 84% and that unemployment had increased. It seems to me the hon member for Yeoville merely used Mr Klerck’s speech, and now he is peddling it in places like Sea Point, and he is trying to stir people up with his speeches.

Mr Klerck and the hon member for Yeoville went further and said that total private consumer spending was still declining in real terms. However, one must look at the statistics before one. I can give my sources because I do not quote statistics that I have conjured up out of nowhere. I am now referring to the Quarterly Bulletin of the Reserve Bank and I can even give the hon member for Yeoville the page number.

Between 1981 and 1983 we had an annual decline of 3,7% per capita in real income. On the other hand we had had an increase of 4,1% per annum during the previous three years. One cannot merely refer to statistics in general and allege that we are becoming poorer. We are still experiencing a serious drought. This was merely referred to in passing. If we had had a normal agricultural harvest, the increase in our gross domestic product would have been 3,9%. Last year the negative effect of the drought on our balance of payments was R593 million, and the hon the Minister has said that it is going to be far greater this year. If one takes into consideration, however, that 3,9% growth was lost as a result of the drought, we have not fared badly at all and we cannot talk about becoming poorer. To this we must still add the effect of the decline in the gold price, but the hon member ignored that. We know what effect a decline in the gold price has on the balance of payments. The newspapers would do well to expose this stating of generalizations by the Opposition parties.

Let us consider the real domestic product. In the third quarter of 1983 there was an increase of 6%; in the fourth quarter the increase was 11%, and in the first quarter of 1984 it was 4%. The volume of production of our industries rose by 5% for the year ending in January. Does that suggest that we are becoming poorer? The real wages per capita of our workers increased by 3,5% in 1982 and by 0,2% last year. These are our workers; the people who are supposed to be having such a terribly hard time. We know they are having a hard time owing to circumstances, but hon members must not deliberately misinterpret figures.

Let us consider the real private consumer spending because the Opposition is constantly referring to this, and let us again use the Reserve Bank statistics. Consumer spending has never declined. In 1976 it was R15,7 billion. In 1981 it was R18 billion; in 1982 R19,4 billion; in 1983 R19,6 billion and in the first quarter of 1984, on an annual basis, it was R20,1 billion. Does that suggest that we are becoming poorer? Such cheap politics, distorting the facts if one does not have a policy, is really transparent.

Let us now consider capacity utilization which was considered to be so low by the president of the SA Handelsinstituut. At the moment our capacity utilization is 86,5%. On 15 June of this year the utilization in the USA was 81,9%. Now I ask you, is this a sign of extreme poverty and hardship? I agree that certain of our industries have been affected by the drought, inter alia the producers of fertilizer and certain sprays. There is no getting away from that. Mr Klerck said inter alia that unemployment was increasing. The total number of Whites, Coloureds and Asians unemployed at the moment is 30 217. In my opinion this is abnormally low because there is after all the movement of young people and also normal movement that affects this figure. As far as Black people are concerned, 8% of them are unemployed. The total unemployment figure in the USA only dropped to below 8% only a month or so ago.

Quite a number of attacks were launched on inflation, but people do not realize that during the eight months preceding May 1984 the rand depreciated by 11% against other currencies. Owing to the drought we also had a fairly large increase in the prices of our agricultural products.

As far as our balance of payments is concerned, we find that we had a decline in our export prices in spite of the fact that everyone expected a rise. This had a negative effect on our balance of payments.

In view of all these circumstances we are faring well. We really cannot complain. If we consider the final result the condition of our State finances is good. Our growth in quite a number of industries is also good. I am not saying it is perfect, because we are not in a “boom” situation. We are still in a recession.

There is another point the hon member for Yeoville and other hon members are so fond of talking about, namely that there is too much credit. They say the consumer is being forced into poverty and that he is no longer saving anything. One should really do one’s homework and not talk so glibly. The drought alone has caused a decline of at least 1% in private savings. It is also interesting to note that not long ago when the Americans were still in a recession private savings stood at 3% of the GNP. At the moment the banks are granting too much credit. Our prime interest rate is 21% at the moment and the problem of the Reserve Bank is whether that interest rate should be increased further. Henry Kaufmann, managing director of Solomon Bros who is considered to be one of the leading advisers on finance in the United States, said that one should not exceed 21% in ones primary rates because this would damage the economy. He pointed out that consumers were no longer sensitive to high interest rates because of the easy availability of credit. Last year two of our commercial banks did not make an exceptional profit on their normal banking activities, but did do so on their hire purchase financing. What the Americans call “deregulation” is now entering all facets of financing. Because it is profitable for them the banks have begun to compete in advancing funds to the consumer. Now we also have a floating interest rate pattern. The consumer says it is 25% now but by the end of the year it may be 18% and that is why he is taking the chance of borrowing. We also have a problem with our policy of greater market-orientation in that our companies have borrowed money abroad on a large scale. Owing to computerization our banks also have far better control over their funds and they therefore have more money available to assist the consumer, which encourages his spending. It is very easy to say that the Reserve Bank should have allowed interest rates to become more market-orientated. But what would the effect have been on our farmers? What would the effect have been on our homeowners if interest rates had gotten completely out of control? Of course the question arises whether we should start with hire purchase to see if we cannot shorten the repayment period and increase the deposit. I think this is a commercial aspect the Department of Industries, Commerce and Tourism would do well to devote attention to. We must however be careful not to blame the Government for all the consequences of these structural changes.

What does Standard Bank Review say? They say:

I have to agree with this. When we consider the achievements of the hon the Minister of Finance over the past 10 years we know that they constitute a fantastic success story.

Mr Speaker, inter alia, the hon member for Waterkloof said in his speech that the Opposition parties are distorting the facts of the economy because they have no policy. I think that that hon member and his party should be the last people to speak about the distortion of facts. I think one can rightly say today that the Government function in South Africa has reached a low point since 1910. [Interjections.] The pamphlet which the Government distributed, amongst other things, bases one statement on a State document, and it is a very important matter. In this document which they distributed there is a photostat copy which creates the impression that it is authentic, that it is the complete document and that that is what the document looks like. That is the first impression that is created. Why does one publish such a photostat? No indication is given in this photostat copy that paragraphs were omitted. No normal reader would reach the conclusion that four paragraphs preceding paragraph 5 had been omitted. No reader could reach the conclusion that paragraphs 6 and 7 had been partially omitted; that certain signatures of officials had been omitted, and what is even more important, that an important part of the extremely important and relevant footnote of the then Deputy Minister had been omitted. Furthermore, it is by no means possible to infer and realize from this photostat that this file had been montaged, that certain words had been moved and that they are not where they were. I say that it is deliberate falsification which took place here. Furthermore, I want to say that a completely wrong impression is being created here. A completely wrong impression is being created, since if one reads the footnote as it appears now, after it has been doctored and after it has been transformed and distorted, it creates the impression that the then Deputy Minister said that if there was decent lodging with the University of Cape Town, that particular student could live there, whilst he said that decent lodging should be found for him in the Black urban residential area. Surely what we have here, therefore, is a deliberate distortion of the facts.

Why did you not object a year ago?

Now the hon the Minister is asking an important question. He is asking why we did not object a year ago. He got out a copy of The Nationalist, but he only made his case weaker by doing so, since by that he intimated that he has already been aware of this falsification for a year.

That is not true.

The hon the Minister has that in his possession. The hon the Minister is the chairman of the information committee of the NP. He said that a moment ago. Was that edition of The Nationalist published without him knowing what appears in it?

The first time I realized that there was an error was the other day when it was brought to my attention.

Now I ask: What kind of chairman is that? The department’s things are used, and they could not have been used without the hon the Minister’s permission. The hon the Minister did not go and see how his department’s documents and information documents were being used. The hon the Minister simply blazoned it abroad. That is what the hon the Minister is saying now. The hon the Minister said that he gave the document to certain MPs. He told them that they could jumble it up as they pleased; that he was not interested and that they should just do as much damage as they could. That is what the hon the Minister is saying now. The hon the Minister gave it to them and he did not keep an eye on what they were doing with it.

The hon the Minister said something else when he spoke. He admitted that he had gone and delved into the files of his department to build up a case against the hon the leader of the CP. After all, the hon the Minister knew that the hon the leader of the CP had approved certain things, and he went and looked for them. He deliberately went and looked in the files to see what he could find against him. Does the hon the Minister give the Opposition parties permission today to go and rummage in the files of his department and every other department to build up cases against him, viz cases with regard to oil, cases with regard to the admission of Chiavelli to South Africa, cases with regard to the Government’s participation in Mozambique, the role the Government played at first with regard to the Renamo the role the Government is playing in that regard now, secondly, what is the Government’s role with regard to Frelimo? We want to go and look at the files to see what is happening. Does the hon the Minister give us permission to do so, or does he not? Furthermore, I want to say that this matter is much worse then Watergate. Here is a State document, distorted, transformed and falsified. It was then blazoned abroad, whilst in the case of Watergate they simply went and eavesdropped. This case is therefore much worse than Watergate, and the hon the Minister therefore has no choice, since if the hon the Minister has clean administration at heart, he and his colleague who wrote the foreword to this document, confirming that it was authentic and correct, should resign, then those two henchmen (“trawante”) of the hon the Minister, viz the hon member for Brits and the hon member for Be-noni …

Order! The hon member must withdraw the word “trawante”.

Mr Speaker, I withdraw it. The hon the Minister’s two fellow-travellers, then …

Fellow-criminals.

… should go and resign because they drew up documents which …

Mr Speaker, on a point of order: May I ask whether the hon member is entitled to refer to me and other hon members on this side of the House as criminals?

Order! Which hon member did that?

I said it, Sir.

The hon member for Brakpan is aware that that is a word which may not be used in this House in respect of other hon members.

Mr Speaker, I withdraw it.

You are a disgrace to this Place.

Order! The hon the Chief Whip must withdraw that, too.

Mr Speaker, I withdraw it.

The hon member for Lichtenburg may proceed.

That hon Minister admitted that an incorrect version was blazoned abroad, and that is why he undertook to remove pages 29 and 30 from the pamphlet. I find that striking. It is a tried and tested little method of the hon the Minister to remove pages. Eventually, he also left an abridged version of his complete thesis on the shelf. He is used to removing pages and thinking that it will work, but it is not going to work this time. We are not going to leave him simply to tear out pages and implement that method of his. It is not working this time.

This pamphlet which was distributed is not the only untruth. This is a State document. If the hon the Minister wants to be a man and prove that he advocates clean administration, let us have a one-man judicial commission to investigate this matter, since a State file is at stake here and we must see what the judge’s finding is. Every citizen of the Republic of South Africa now has a sword hanging over his head, since if an ordinary voter wants to write a letter to the State about his pension or about any other matter, he is subject to this kind of treatment meted out to my hon leader, viz that his letter with his signature could be seized and distorted. It could be used against such a person. If this is done to a citizen of the Republic of South Africa, a man who is a leader of a party and who has Parliament in which he can defend himself, what does the ordinary citizen have with which to defend himself? I consequently want to say that this is an extremely serious matter and under no circumstances can it be left at that.

If the Government does not appoint a judicial commission it would mean a further cover-up and that they are afraid of arriving at the facts. In any case, we demand the resignation of those two hon members.

I say that the Government function is at its lowest point since 1910. If one listens to the hon the Minister of Finance and to the hon member for Waterkloof, one would say that the economy is on the crest of the wave—that things are going fantastically well! That is what one thinks when one listens to them, but what are the facts? What do the economists tell one? What do the business leaders tell one? They are all dissatisfied and they say there are problems. The gross domestic product of South Africa has declined over the past two years, but the hon the Minister says that things are going well; we are becoming increasingly wealthier! And that whilst the GDP is declining. Unemployment is increasing, but the hon the Minister says that things are going well in South Africa. The inflation rate is still into double figures. The current account of the balance of payments shows a negative figure—there is a deficit. The value of the rand is still depreciating—it is becoming increasingly weaker. Foreign loans over the short term are on the increase. Personal savings have reached a low point. How can people be expected to save if they have nothing to save? Interest rates have reached a record high—never before in the history of South Africa have interest rates reached this height. Yesterday we read in the newspaper that a building society says that 4 000 of the people who have loans from it are in arrears with their instalments on their houses. Nevertheless the hon the Minister says that things are going well in South Africa. Are things going well if people cannot pay their instalments due to the high interest rates? Company profits are declining.

Government expenditure is getting completely out of hand. The hon member for Yeoville also referred to that. Obviously someone was silenced at one stage. Not even six months of this year have passed, and the hon the Minister has already increased GST twice, after having promised at a congress of his party last year that he was not considering increasing GST within the next few years. This year GST has been increased by 66% altogether, but he has not yet given an indication of one cent with which he is going to finance the new dispensation. I want to ask the hon the Minister whether he expects GST to be increased even further, since there is speculation that it is going to be increased even further and that other taxes are going to be levied to defray expenditure.

For the first time since the war the current revenue of South Africa is lower than the current expenditure, and the hon the Minister has to finance current expenditure from loans. Nevertheless the hon the Minister says that things are going well for South Africa. The Government will gain a little credibility if it were to begin giving attention to productivity and if, with all these campaigns they are launching, they were to begin to launch a “Buy South African campaign” to decrease imports and increase exports. They should begin implementing more stringent control over hire-purchases. This Parliament would be setting an example if members of Parliament would say that they are not going to accept an increase in salary again next year. In the economic position in which South Africa finds itself at present, we could set an example of how to set the economy right again. The Prime Minister, every Minister and every member of Parliament should take that decision in the interests of South Africa, at least as regards this year and the next financial year. The Government function is at a low point, since why are these things I am asking for not being done? If the Government has the courage of a mouse, it should do these things. Hon members opposite are just sitting and shouting now, however.

The Government function is at a low point for another reason as well. This is the last Budget debate we are going to have under the present dispensation. It is sad that we have to bid farewell to this dispensation under these circumstances. The new dispensation has not yet even come into operation, but the Government tells us that it is going to conduct consensus politics in contrast with confrontation politics. If one does not have consensus in the new dispensation, what does one have? If one does not have consensus, one has confrontation, or a compromise has to be reached to avoid confrontation. This new dispensation has not yet even come into operation and we have already seen twice how the Government has had to reach compromises and make concessions with regard to two cardinal matters of vital importance in order to avoid confrontation and to keep the envisaged new system going. Before the referendum it was said that the Brown people and the Indians who were living in Mayfair illegally had to get out. However, Rev Hendrickse said that if that were done he would not participate in the new dispensation. The Government then capitulated and said that the people could remain there. The provisions of the Prohibition of Political Interference Act were violated by the left wing of the NP. Dr Willem de Klerk was the first person to violate the provisions of that Act, and the Labour Party is doing the same thing. They say they know that they are violating the provisions of that Act, but that the present Government will not take the future Government to court. The Government has already intimated that it is going to amend that Act. It has therefore already capitulated. However, it has not yet capitulated far enough since Rev Hendrickse is still provoking it. Now we will see whether or not the Government can deal with this situation. It has already capitulated twice, and we are waiting in suspense to see whether or not it can stand its ground.

I have already said that the Government function is at a low point. The overseas tour of the hon the Prime Minister is now being presented as a triumphal tour. A large team of journalists, photographers and other people went along on the tour to create a certain image for South Africa, but what is being said about the tour in overseas newspapers and magazines, however? A completely different image is created in those newspapers and magazines. For example, one reads the following in an overseas magazine:

That is all the Government was trying to do. The report goes on to say:

In other words, the Prime Minister was pressurized into relinquishing certain things by those overseas leaders. After all, we have read in the newspapers that those leaders told him: “Well done, you have made a good start, but now you must get a move on and go faster.” I read the following interesting words in The Guardian:

That is the impression people in Europe have of this tour. It was anything but a triumphal tour. It is absolutely clear to any observer that the reception the hon the Prime Minister had was a cool one. [Interjections.] Pravda is smiling. It was a cool reception. Only in Portugal, which is making a little money out of the Cahora Bassa Scheme, was he given a State banquet, but nowhere else in Europe. That is not a good sign. These people refused the hon the Prime Minister everything he asked for.

Mr Speaker, may I put a question to the hon member?

Sir, the hon member must resume his seat. The hon the Prime Minister was refused everything he asked for and the worst happened: The Prime Minister of Britain rebuked the Prime Minister about the removal of a group of people at kwaNgema where a dam had to be built. [Interjections.] On Wednesday, 13 June, the hon the Minister of Foreign Affairs said in this House in reply to a question that they are going to report to Mrs Thatcher on the removal. Sir, imagine the hon the Prime Minister arguing with Mrs Thatcher about a development project in her country where a dam has to be built and a few people have to be removed and asking her to report on that. She would have told him: “Go home; keep your nose out of my affairs”. She is an iron lady, but the Prime Minister of South Africa is not an iron man. He is not an iron man, and that is why he did not stand his ground and tell her: “You have nothing to do with that”. He should have told her: “Those are my internal affairs and I know how we should govern South Africa”. [Interjections.] The Prime Minister humiliated South Africa in that regard. He went further and asked Mrs Thatcher to ban the ANC from London. [Interjections.] Sir, those hon members do not have the facts. The Prime Minister asked her to do that, and Mrs Thatcher said that as long as they were not breaking the law, they could remain where they are. One by one the people overseas—Mr Kohl and Mrs Thatcher—told the Prime Minister that he should go ahead and break down separate development once and for all.

The worst of all is that the Prime Minister offered the administration of South West Africa to those people. I say that that is the height of the low point which the Government function has reached in South Africa. It has always been the policy of South Africa that the people of South West Africa would decide for themselves about their future. [Interjections.] It does not matter whether or not it is important to Potgietersrus, since it remains a fact. South Africa’s policy was that the people of South West Africa would decide for themselves and, in addition, that the decision of the people would be on an ethnic basis, that the population groups would be recognized. Now the Prime Minister is offering the administration of South West Africa to those powers. Now I ask: Who was consulted? Not one of the domestic population groups or parties was consulted, or, if the Government did consult, let them tell us who was consulted. The NP of South West Africa says that they were not consulted and they are not in favour of that either. Mr Andreas Shipanga says that he does not want to be moved from one colony to another colony. He says that he is not in the market.

South Africa has a record for dealing with the administration of South West Africa since 1919. The hon the Minister of Foreign Affairs said the following in this House on 6 June 1979 (Hansard, col 7891):

Now the Government is offering South West Africa to those countries which, as the hon the Minister of Foreign Affairs said, cheated him. On the same occasion the hon the Minister of Foreign Affairs said the following (col 7893):

Now I ask: What has become of the Government’s promise to the fellow State South West Africa—the hon the Minister was speaking about South West Africa—that it will suffer the consequences? The Government no longer consults people internally. For at least the past 18 months they have only been speaking to the frontline states and all kinds of other people, but not with the internal parties. In particular, they do not speak to the majority parties among the Whites. I maintain that the Government has forsaken its promises of the past. With the tour of the Prime Minister South Africa has built up the image of a country which leaves its friends in the lurch. [Interjections.] The Government has left them in the lurch. Moreover; the Government has also left Rename in the lurch and is taking the side of Russia’s friend, Frelimo, nowadays. [Interjections.] That is the image of the Government.

It is a disgrace.

That does not matter. Disgrace or no disgrace; the deeds of the Government speak for themselves and it will have to give an account of what it has been up to in South Africa.

That is not the only lie which appears in this little pamphlet. Another lie is told in it regarding the Conservative Party’s policy of a separate state for the Coloureds. Hon members can go and read Hansard in which the hon member for Umlazi said precisely what our policy looks like. What is said in this pamphlet is an absolute untruth. [Interjections.] We stated unequivocally that the homeland, the state for Coloureds with which we want to commence, will consist of 23 rural areas plus the four large group areas, which gives a total of 27 different areas. We expressly stated that. [Interjections.] We also said that 50% of all Coloureds are already in that area.

Who said that?

I said that, and the hon member for Umlazi quoted me. We shall begin with 27 different areas. That will be the point of departure. Those people will be permitted to purchase and extend adjoining land. Hon members are claiming that it is not possible, when more than 50% of these people are already in these areas and are much better off than kwaZulu or other Black states in many respects, [interjections.]

I want to show hon members on that side of the House how they have lost their idealism and how powerless they have become. Eight ethnic groups were mentioned 14 years ago. The Ndebele were not even recognized, they had no territory, nor were they recognized as a people. The development of that people began in approximately 1974. This state exists today and thousands of people live in towns and tremendous development is taking place there. Those people, having not even been recognized as a people 14 years ago, asked for independence and it has been approved in principle. That is what can be done.

The Conservative Party knows that there are many people in the ranks of the Coloureds who advocate a homeland. If hon members were to read the report of the Erika Theron Commission they would see precisely how many people are in favour of a homeland, ie those who would prefer that, as long as they are not removed to the Richtersveld. For example, they want to remain in Mitchell’s Plain, and that fits in with our policy precisely. In that report it can be seen precisely how many people are interested in such a state.

That is why we say that the new dispensation is not going to work. The Government has already published two blue booklets and they are like manna from heaven to us. When the Government implements the new Constitution, the Conservative Party will be bursting at the seams, and when the system collapses there will be an alternative awaiting South Africa which will continue to develop South Africa.

Mr Speaker, at a later stage I shall be referring in more detail to the speech of the hon member for Lichtenburg, but at the very outset let me tell him that I think that Eugène Terre’Blanche has cause to regret the fact that the hon member for Lichtenburg did not rather speak at the inaugural meeting of the Afrikaner-volkswag.

Rather tell us about the blue booklet.

I am coming to that.

Tell us of the consequences. [Interjections.]

Yes, and how many you still have with you.

Sir, rather than have to sit in the House under conditions that are dishonourable, when the people who elected me no longer wanted me, I would choose to leave. The hon member is an underhanded groveller. [Interjections.]

Mr Speaker, on a point of order …

Sir, I withdraw it. [Interjections.]

Coming, as we are now, to the end of this Parliamentary session, which is basically the end of an epoch, one tends to look back over the years that one has been sitting here. One then tends to look back and to ask oneself how much progress has been made and what we have achieved. Then one thinks of the various parties sitting here, those who began at the same time as one began oneself, and others who came along subsequently, and one summarizes for oneself what one thinks has been achieved under these circumstances.

There are two speeches, in particular, which have interested me in the course of this session. I am referring to the two speeches of the hon the Leader of the Opposition. I listened appreciatively to them. I also read them afterwards. As a starting point, as it were a text, I should like to refer to what the hon the Leader of the Opposition said when he introduced a motion on 2 March 1984. He was referring to a speech he had made the previous week and said:

The hon the Minister of Constitutional Development and Planning replied to that speech, acknowledging that the hon the Leader of the Opposition was right in saying that that was the central problem in South Africa.

If one thinks back over the years, one thinks of the suggested methods for solving this problem. The Government has come to the conclusion that there is only one way of solving this problem, ie on a group basis. That is why the Government has drawn up a new Constitution to make provision for that group basis. Thus all the parties represented in the House began to participate in the development of that Constitution. And the hon the Leader of the Opposition also conceded to the hon the Minister of Constitutional Development and Planning that this was the basis from which this problem had to be regarded.

The hon the Leader of the Opposition went on to spell certain things out. At one stage he told the hon the Minister of Constitutional Development and Planning that he did not want to steal a march on him, but that what the PFP had identified as far back as 1979, the NP was now doing. The CP, of course, is constantly saying this. The hon the Leader of the Opposition thereupon quoted from a PFP document of 1979. I quote:

In the 18 years I have been sitting in this House has been, as far as I am concerned, the dominant question. I must add that the hon the Leader of the Opposition elaborated on this theme. At a later stage, without coming right out and saying it, he came round to the fact that we would have to adapt to world opinion. I acknowledge that he did not say that we would have to adapt to world opinion, but he listed one law after another that the world wanted us to get rid of. The hon the Leader of the Opposition went on in this vein, but never in any of the speeches I listened to did he at any stage come round to this central question that he himself posed. In those speeches he never got round to it, and I found it quite interesting, because the whole discussion—the hon the Leader of the Opposition spoke of a discussion—was about how we should solve the problems of South Africa. He said we should identify the things we agreed about and the things we disagreed about and then proceed from there.

This point, he said, was one of the things—as I understand it—about which we disagreed with each other. I accept the fact that the hon the Leader of the Opposition has a view of the situation different to that of hon members on the Government side. People sitting on the Government side are, of course, responsible for ensuring that there is stability in the country. They must ensure that things in South Africa do not get out of hand. We have a very good reason for saying that. We are, after all, part of Africa. We make no secret of that. In fact, previous Prime Ministers have said that we are part of Africa and that we would have to reach to the world at large through Africa. Our present Prime Minister, however, is the first one who has really adopted that course, ie of being of Africa and of getting through to the west via Africa. That is the fact of the matter.

Let me reiterate that the Government has throughout the years, had a different view of this because it has been responsible for maintaining stability. On the other hand, the hon the Leader of the Opposition is, of course, in a position to suggest an academic solution. He says get rid of things, but he does not have a word to say about how he wants to maintain stability. According to him, the problem must simply work itself out.

For the past 181 years now, the period I have been sitting here, we have gone on in this vein. In that time I have not heard a single word from the Opposition side about how we should maintain stability in South Africa. In fact, at times the hon the Leader of the Opposition sings a different tune. We know of his propaganda document, which he presented in the form of a question-and-answer session. There he expressly said that the facts of Africa and South Africa made Black majority government in South Africa unavoidable.

He did not say that.

Oh yes, Sir. [Interjections.] Well then, why does he not say that that is not his policy?

I am not going to argue about that. The hon the Leader of the Opposition has another turn to speak before Parliament rises. He must therefore definitely say that he does not believe in Black majority government in this country. [Interjections.] The hon the Leader of the Opposition must not use sign language. He must stand up and say it.

But I am saying it.

I accept it as such, but then the hon the Leader of the Opposition must spell out for me what his policy in this connection is. [Interjections.] At this stage, in the eyes of the public, members of the PFP are people who believe in Black majority government, and quite a few of those hon members opposite are in agreement with that. [Interjections.] Those hon members must not come along with fancy comments such as “That is not correct”. The hon the Leader of the Opposition must spell out for us how he wants to maintain stability in our country. [Interjections.] A moment ago the hon member for Yeoville had a long enough time to speak. He surely cannot just go on speaking.

In my view that is the reason why we cannot make any progress with this debate. It is because the hon the Leader of the Opposition has not yet answered this question that he himself broached, ie what guarantee the present White voters have that they will not be dominated too. That is the situation, and that is the problem that stands between us and that we have to resolve.

In looking at the other Opposition parties, the question that arose in connection with the CP, when those hon members broke away from the NP and left, was whether there was any room for a party between the radical HNP and the NP. That is the question that arose. I think we have now reached the stage of being able to say in Parliament, with the utmost certainty, that there is no room there. [Interjections.] It is so obvious that it goes without saying that Mr Jaap Marais is losing his supporters whilst, in fact, retaining his policy. That is the gist of the matter. [Interjections.] I shall spell it out for hon members, and nowhere is it more clearly evident than in the conduct of those hon members and their hon leader in relation to the so-called Nkomati Accord.

Yes, call it the so-called accord.

Mr Speaker, I did not interrupt those hon members when they were speaking. Let me quote to hon members from their policy document. Amongst other things, it reads as follows:

It is not a question of the ideological situation or conditions within that country; that is not at issue. Their policy document states that they will enter into relations with anyone, as long as it is in South Africa’s interest. Let me quote further from their policy document:

I am quoting from the CP’s constitution. [Interjections.] They want to give those things away on a plate. I quote further:

Let me go further:

[Interjections.] Also the Frelimo’s, and Samora Machel too. I quote further:

That is, with them. “Pooling their resources!” [Interjections.] Let me quote further:

[Interjections.] I quote further:

Of course it is their policy, and that is the reason why they accept invitations to Nkomati, until such time as Jaap Marais starts creating problems for them. Then Jaap Marais spoke for them. I shall now quote the following extract about the Nkomati Accord from an editorial of Die Patriot:

Jaap Marais branded them “traitors”. In a moment I shall be reminding hon members where the question of treason and traitors now stands.

Then problems started cropping up in regard to the negotiations—the pot and the kettle began to experience problems. The hon the leader of the CP then stood up here; he had to start saying why he did not quite support Nkomati. First the hon member for Brakpan stood up and objected to the hon the Prime Minister speaking English at Nkomati to someone who could not understand Afrikaans. [Interjections.] Thereafter the hon the leader stood up and had to record his objections to Nkomati and the Nkomati Accord. We have seen what his policy states. He also referred to the English that the hon the Prime Minister spoke there:

Now one must look at what the “pooling” of the “resources” has become, and I quote again from Die Patriot:

It concerns the “pooling of resources”:

Hon members must listen carefully now, because it is a leader of a party who is writing this sort of thing about an international accord:

It is probably correct that one cannot pool the military facilities of one’s country without endangering its security, but is there really a member in the House who believes this sort of thing?

Jan believes anything.

Surely Jan is not that stupid. Does he believe it? [Interjections.] Mr Speaker, have you now heard who it is who is telling me to act with dignity? It is the former Minister, the hon member for Lichtenburg.

That was not the end of the story. Die Afrikaner then reported that no agreement would be concluded between the HNP and the CP. There was, however, a breakthrough in right-wing politics. After that breakthrough there was the scandalous phenomenon of the leader of the CP, with the shabby aim of winning a single provincial by-election, saying that the Prime Minister of his country was carrying South Africa’s sovereignty to Europe on a platter. Then they still use the word “scandalous”! Today the hon member for Lichtenburg quoted from the most left-wing of newspapers in Britain. He spoke of quite a number things of—I challenge him to mention one of them, let alone offer proof—which the hon the Prime Minister went to ask for in Europe.

I did mention them, did I not? Were you not listening?

The hon member did not say anything, did not mention anything. He said that the hon the Prime Minister received a “no” to all the questions he put, without mentioning a single question he had asked. The things the hon member tried to enumerate were things he had fabricated and were therefore nothing but lies.

Could I put a question to the hon the Minister?

No, I do not have any more time left.

It did not end there. We remember that before Jaap Marais got started with them, they were labelled traitors. Someone who is officially known as a liar, Dr Connie Mulder, now comes along with the villainous assertion that the Prime Minister is a traitor who sent overseas to betray South Africa. Can you now see, Mr Speaker, why I asked you initially whether there is room for a party between the NP and the far right-wing HNP? In the short space of a few weeks the leader of the CP, after they gave him the right to go and negotiate, violated his own policy. That is, of course, nothing new; it is normal practice for him. Not only that. He went along and bartered away his own party and its leadership to Carel Boshoff. I do not blame him, because one only has to look at who the persons are who are backing him up. [Time expired.]

Mr Speaker, the hon the Minister of Health and Welfare is usually regarded as a man who spends a great deal of his time telling jokes, and the bulk of his speech today was again really not worthy of comment. Right at the very beginning he attempted to make a serious charge against the hon the Leader of the Opposition and this party by suggesting that we have never, either in our publicity or in speeches in Parliament, denied that we stand for Black majority rule. We do not have to wait for the hon the Leader of the Opposition to reply to that tomorrow. It stands in our documents and in Hansard that over and over again we have stressed that. I cannot understand how the hon the Minister, who says he has been in the House for 18 years, can have sat here for the 10 years we have been here and misunderstood that.

Will you answer my other question as well?

Certainly. The other question the hon the Minister raised was the whole question of domination. It is quite right that this is a key problem in South Africa for Black and White alike, but let it also be said right at the beginning that a further question that has to be asked and must be answered by that hon Minister and his colleagues in the Cabinet is the following: Can there ever be peace in South Africa so long as the bulk of the people who live in this country are denied meaningful political rights? That is also a question we must deal with. Once again we have had a session of Parliament in which we have hardly even paid lip service to that major problem. What has characterized that hon Minister’s speech and the speeches of so many of his colleagues has been this kind of family row between them and the CP. Meanwhile, the Government fiddles while Rome burns. Outside people are desperately worried, they are concerned, they are hungry, they are struggling with enormous tasks, but the hon the Minister of Health and Welfare spends all his time having a joke with the CP. [Interjections.] It is no joke for the people outside who are waiting for some lead.

Was what I said a joke?

That is right; the hon the Minister comes here with his snarling insinuations and sarcasm. It ill befits him. This is supposed to be a financial debate, but we spend all our time worrying about a pamphlet. If only the hon the Minister of Co-operation and Development had had the courage to stand up and say “Listen, we have made a terrible mistake and we are sorry about it; there are no excuses” and had then sat down, he would have served his country and his party very well. However, he missed that opportunity and that hon Minister has done nothing else but compound the problems he has started.

I want to turn to the hon the Minister of Finance and deal with pressing problems which fact this country with specific reference to manpower and the labour field. It goes without saying that stability in the labour field is essential for growth and development in South Africa. This is self-evident. It is indisputable. We are all agreed on it on every side of the House. It is further generally accepted that politics and labour should not mix and should not exacerbate a potentially sensitive and even volatile situation. However, if one is to judge by statements made by many Black leaders and by labour leaders of all races, politics on the factory floor is inevitable as long as Black workers are excluded from the Constitution of South Africa. That is the kind of problem with which we should be wrestling rather than having this mud-slinging from one side to the other. There exists a vacuum in South Africa and, more than that, a yawning chasm which will be filled by voteless Black workers in their work-place and in their communities for as long as they are denied a meaningful part in the new dispensation. Now that is the kind of problem we face in South Africa. It is an urgent problem that is becoming more urgent every day. Against the background of an economy which is desperately trying to rise from a stubborn recession, political solutions are absolutely vital and urgent. They are just as urgent as any economic policy. In fact, one cannot separate the two and if we do not give attention to the one, no matter how splendid an economist one has as Minister of Finance today, tomorrow or in the years to come, one will not be able to resolve those problems. It is in our own self-interest to give immediate attention to this problem. One of the saddest things about this Parliamentary session is that we have spent all these months debating but we have given scant attention to the major problem facing South Africa, and we have witnessed this again this afternoon. As long as the downturn continues so long will the dreaded spectre of unemployment continue to haunt more and more workers. This in itself can cause instability but, as the economy improves, as we all hope it will, so many workers will have greater potential to pursue their own political ends. Therefore the only conclusion I can draw is that whether we are in a time of recession or whether we are in an upturn, political rights for Black workers and Blacks in south Africa remains a fundamental problem crying out loud for a solution.

When one looks at the whole labour scene, South Africa is particularly dependant on the mining industry, and we simply cannot afford disruption in this key industry. The House should take note, however, that the first major dispute between the Chamber of Mines and organized Black mine workers in South Africa was declared last week by the National Union of Mine Workers. In rejecting the Chamber’s pay offer, the National Union of Mine Workers has set itself on a course which could bring about the first ever legal strike by Black mine workers in South Africa. The hon the Minister knows far better than I how much this country depends on the mining industry. This should be a matter of concern to all of us, not merely to the Chamber and the union concerned.

The Chamber has announced that it will unilaterally impose wage increases on 1 July this year, despite the warnings of the National Union of Mine Workers. The Chamber feels that they are not truly representative. Unless this impasse can be resolved, widespread industrial unrest in South Africa’s key economic sector cannot be ruled out, and I hope that the hon the Minister and his colleagues who are responsible for this industry will have a very careful look at what is happening here because there are trends developing here which are extremely worrying.

Against this background the Government must no longer drag its feet on the blatant discrimination which exists in the Mines and Works Act. This institutionalized job reservation is contrary to the whole spirit of the Wiehahn Commission and the developments which have taken place so successfully in other sectors, for example the manufacturing sector, and can only encourage the further growth of Black workers unions and unrest among Black workers rather than industrial peace.

During this session I asked a number of questions relating to manpower, and there is one in particular that I want to bring to the attention of the House which relates to costs incurred as a result of industrial accidents. This has very much to do with the whole question of budgeting, saving and investment. I asked how many industrial accidents had occurred in the Republic in 1983. The answer was a stunning 311 648 accidents in one single year. What has that cost the country? The amount paid out by the Workmen’s Compensation Fund in 1983 was a massive R52 298 451, which is not an amount which we can afford. As a further indication of enormous wastage, 3 688 711 man-days were lost as a result of absenteeism flowing from industrial accidents. This in itself is worrying. There must be something seriously wrong that so many industrial accidents occur in a single year at such high cost.

What was even more shocking was the reply given to the following question:

Sir, bear in mind that I am talking about a single year, 1983. I have asked a lot of people what they thought the figures would be. I wonder if there is anybody in this House who could venture a guess as to how many workmen suffered permanent disablement in a single year in this country. I have gone out of my way to talk to some top business people and they have said that tragically, since it was one of the facts of life, the figure would probably be several hundred. The highest figure given to me by anyone whom I have asked was about 1 000. The actual figure given by the Department of Manpower, however, was 27 074. That is the number of workmen permanently disabled in one year. There is something very sadly and badly wrong about that. The breakdown was given to me by the hon the Minister of Manpower: Whites 1 949, Asians 218, Coloureds 1 602 and “members of the Black population groups”—that is how it was worded in the answer—23 305. This is unbelievable, both in terms of the cost and human suffering involved.

Let me also give the figures in respect of those who died in that year in industrial accidents in this country. Altogether 2 186 died, of whom 191 were Whites, 19 Asians, 160 Coloureds and 1 816 Blacks. I believe that this is totally unacceptable. Not only is it sheer economic wastage but this deplorable loss of human resources must have a desperate impact on family life, both in respect of those who are permanently disabled and indeed also in respect of those who have lost a son, a father, a brother, a wife or a daughter, whoever may be involved.

I want to say to the hon the Minister that if he shares my concern, which I think he does—I think every hon member of the House should be concerned about these figures—I hope he and his colleagues will support me when I call for the Government to appoint without any delay a commission of inquiry to go into this state of affairs. We cannot allow this to continue. This is only one area of discussion when we talk about the Budget or the economy of this country. We are a highly industrialized country. We are very proud of our reputation, but no one can take pride in those figures. No one can tell me that it is necessary in today’s world for 27 000 people to be permanently disabled and for more than 2 000 people to die in industrial accidents in a single year. I hope the hon the Minister will give attention to this matter. I repeat: We call for a commission of inquiry to investigate and to report on this state of affairs.

Mr Speaker, the hon member who has just resumed his seat mentioned certain figures in connection with people who, after industrial accidents, become unfit to work. I agree with the hon member that those are shocking figures and that in all spheres accidents of that kind are damaging to South Africa, including that of the human beings, to which he specifically referred. Whether it is necessary, in this regard, to appoint a commission of inquiry, particularly in the light of the fact that there are quite a few programmes specifically aimed at ensuring safety in industry, I am not convinced of that at this stage, and I therefore do not want to express any further opinions about that. If the hon member would excuse me, I would like to come to a few matters raised earlier in the debate.

I want to refer to the contentious pamphlet that was distributed, and say immediately that the Government’s reaction, when its attention was focused on the error and on the misrepresentation in the pamphlet, is extremely important. [Interjections.] In this connection the hon member for Lichtenburg made a very big mistake when he said that this incident was worse than Watergate. In the case of Watergate there was certain unacceptable steps taken by some of the supporters of President Nixon. Watergate can, however, be ascribed, not to the wrong action itself, but to President Nixon’s reaction in trying to conceal it. In this case, however, the Government acted with integrity. It immediately put matters right. The NP’s information service took steps, of its own accord, to put matters right, and there was consequently no concealment of any kind. This is the difference between this and any other scandal. We agree that a mistake was made, but the Government’s actions after this was brought to its attention cannot, in my opinion, be criticized. In contrast, the conduct of the CP, after this mistake came to light, can be strongly critized, and in this connection I shall specifically be referring to the conduct of that party.

From what I have gathered, the CP today published a pamphlet in the Potgietersrus constituency. In that pamphlet it is stated, in bold print: “Exposé on National Party”, together with all the things said here today. Although it is written in inflammatory language, it complies with the requirements of the Electoral Act. What is important, however, is that in conjunction with that pamphlet another document was distributed. One of our organizers in Warmbaths gave me certain particulars. In that pamphlet, distributed in Warmbaths, there is an insert. This insert, which consists of a single page, does not comply with the requirements of the Electoral Act, because there is no indication of who published it. It can, however, certainly be regarded as part of the pamphlet and is therefore all right. That is not, however, the point. The point is: What is the content of that insert in the official CP pamphlet distributed by them? It contains the following statement:

Suddenly the CP wants to latch onto this affair—and the Government has already expressed its regret in that regard—by saying that there are deeper religious divisions in politics. In this insert there are certain Biblical quotations, and I want to refer to them. The first is from II Corinthians 6:15:

That is the CP’s reaction to the pamphlet and related events. Then Luke 12:51 is quoted, as follows:

Suddenly, in an act of despair, the religious element is dragged into the political arena in Potgietersrus. I want to accuse the CP of having tried to go beyond the bounds of the political disunity that exists today. The CP wants to try to give this political disunity an ecclesiastically emotional or Biblical foundation. The CP does not only want the disunity amongst the people, which we have, but also wants to absolutize that disunity. They want to ensure that that disunity continues to exist, because that is how they can build up a kind of power base. I want to warn hon members of the CP that their actions are heading only one way, and that is towards a split in the church in South Africa. How, when such political accusations are being flung hither and thither, can people with differing political views sit together in the same church, presbytery or synod? today we want to give the CP a serious warning, and that is that the time has come for the CP to relinquish this kind of politicking.

On 10 October 1983, prior to the referendum, the hon member for Waterberg made a speech at Ellis Park in which he tried very subtly to link up Christianity with the yes or no votes. What is happening here, is not a subtle effort, but rather a blatant one, to achieve the same ends. We want to tell the CP that with this pamphlet they have simply taken their luck too far. Their actions in this regard have been deliberate and are, in our view, an abuse of the feelings of piety of our fellow Afrikaners. We as Christians must not try to pass judgment on the Christianity of others, not even by implication. We therefore reject this conduct on the part of the CP and say that they have gone too far.

The hon member for Lichtenburg referred to the hon the Prime Minister’s overseas trip. This reference must be seen against the backdrop of Dr Connie Mulder’s reference to the same trip. By implication Dr Connie Mulder said that the hon the Prime Minister had gone to commit treason, whilst the hon member for Lichtenburg said the hon the Prime Minister was given a chilly reception. There is, after all, a big difference in approach in this connection, and those two hon gentlemen will have to decide amongst themselves which of their standpoints is, in fact, the CP standpoint.

The hon member also stated that everything the hon the Prime Minister asked for had been refused him. Let me tell the hon member, in the most positive of terms, that the hon the Prime Minister did not travel overseas to beg for alms on South Africa’s behalf. Let us understand each other very clearly in this connection. In one respect the hon the Prime Minister made a very important breakthrough. In other respects he also brought about greater perspective, and I want to refer to that.

In this connection let us refer to certain extracts from the British Parliamentary Hansard. On occasion Mrs Thatcher said:

That has been South Africa’s policy from the time the hon member for Lichtenburg was a member of the Cabinet. Mrs Thatcher also said:

I want to say today, in the most positive terms possible, that to date that had not been England’s official standpoint. The benefit of the negotiations lay in the fact that they brought about greater understanding of the fact that the Cubans should not be allowed to remain in Southern Africa. That understanding developed as a result of the hon the Prime Minister’s visit.

I also want the hon member to listen to what was said by Mr Kinnock, the leader of the Liberal Party in England. He said:

The leader of the Labour Party in England sees it as a “diplomatic coup”, but in this Parliament it is discredited, and I wonder whether the hon member would tell us on whose side he is. The Prime Minister of Great Britain, Mrs Thatcher, replied:

It is therefore a question of the place South Africa occupies in Southern Africa, and thereby in the world at large.

The hon the Prime Minister’s visit brought about greater perspective in many other respects that are very important, too. Firstly, it brought about greater understanding of South Africa as a regional power. It brought greater understanding of the fact that South Africa could play an important role in generating peace in Southern Africa. It brought about greater understanding of the fact that South Africa is a strong and worthy partner which could play a key role in the struggle against poverty in this part of the world and in the struggle against communism. It brought about a greater understanding of the complexity of the internal situation in South Africa. I want to make it very clear that the hon the Prime Minister did not go there to place South Africa’s policy on an altar in his discussions about it, because that is an internal matter concerning South Africa and will not be discussed on that basis.

I want to deny, in the strongest possible terms, that Mrs Thatcher and the British Government gave the hon the Prime Minister a chilly reception. That is untrue. I also want to deny, in the strongest possible terms, the claim that the reaction in Europe was that the hon the Prime Minister’s tour had been a failure. That is not true. The overwhelming reaction of newspapermen and of other writers there was that it had indeed been a successful tour.

In this connection it is important to have a look at the hon member’s statements about Nkomati and Renamo. I should like the hon member to listen to us and see whether he perhaps has the courage to answer one or two of our little questions about this. Dr Connie Mulder, in a direct attack on Nkomati, said that the Nkomati Accord had been put together in Moscow and Washington. Firstly, that is the biggest lot of nonsense under the sun. The Nkomati Accord came into being as a result of bilateral negotiations between South Africa and Mozambique. As far as Moscow is concerned, I specifically want to refer to a report in the New York Times of 8 April 1984, in which that newspaper’s correspondent in Moscow said the following:

From the reports we obtained, and from the actual situation, let me state that the Nkomati Accord and its relevant aspects were a setback for Soviet expansionism in Southern Africa. The Nkomati Accord and its relevant aspects do not meet with the approval of the communist countries. The Nkomati accord and the hon the Prime Minister’s trip overseas have had one very important effect, that of being a setback to efforts made to isolate South Africa. In this connection we must note that the United Nations has adopted numerous resolutions to the effect that the Republic of South Africa should be isolated. That party must now tell us where it stands in regard to the official isolation of South Africa, as propagated by the UN. Does it take sides with the UN’s resolutions to isolate South Africa, or does it think that this Government should oppose that with strength, force and power? They must tell us where they stand on the question of isolation. The parties on that side of the House owe us an answer to that question.

There is another more important aspect relating to this, and that is what the hon member said about Renamo. The hon member blamed the Government for having left Renamo in the lurch. On this issue we are not going to allow the hon member to get off that easily. The Nkomati Accord makes it very clear indeed that no single person, or any of the parties, will interfere in any way in the security situation of the other parties. That is very clear. We want to know the following from the hon member: Is it his standpoint that the Government must renounce the Nkomati Accord and support the Renamo rebels? We want an answer to this from that hon member. [Interjections.]

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

Sir, I shall give the hon member for Brakpan an opportunity to put a question to me as soon as the hon member for Lichtenburg has replied to my question.

I challenge the hon member for Lichtenburg to tell us, across the floor of the House, whether it is the CP’s standpoint that the Government should support Renamo and break the Nkomati Accord.

Make your own little speech.

I challenge the hon member. He levelled a wild accusation at the Government here, an accusation to the effect that the Government has left its friends in the lurch.

Tell us the true story.

He said the Government has left its friends in the lurch, thereby creating the impression that he stood by Renamo. I specifically want to know from him—and we are entitled to an answer to this, and that answer I want: Is it the standpoint of the hon acting leader or the parliamentary leader or the incumbent leader—or in whatever terms we should refer to him—that the Government should renounce the Nkomati Accord and help the Renamo rebels? I am asking the hon member to reply to this because, as has happened so many times, a wild accusation has been levelled here. Let us now be specific. I am challenging the hon member to be honest. I am challenging him to be frank. I am challenging him to have the manly courage to tell us what the CP’s standpoint in this regard is. We want to know what the CP’s standpoint on this is.

We will not allow ourselves to be hounded.

There is a very important question to which we want a reply, and that is whether it is the CP’s standpoint that the Government should renounce the Nkomati Accord and support the Renamo rebels.

We do not allow ourselves to be hounded by hobgoblins.

The hon member says he does not allow himself to be hounded by hobgoblins, but I am asking him what the CP’s standpoint is. [Interjections.] Perhaps the CP could answer another question. In this connection I want to broach a matter that I have previously broached in this House.

In a policy document published in Potgietersrus the CP said that it believed in the independent survival of the Afrikaner people and its own culture, its own history and its own Calvinistic view of life. Let me tell the hon member at once that I agree with the CP. In this regard I also believe in the independent survival of the Afrikaner people. In this regard we are in complete agreement with each other. I do not think that there is any disagreement between us in this regard. In its policy document, however, the CP also states:

After discussing White self-determination, it is stated:

In the manifesto published in Potgietersrus there is the following:

There is just one thing we are wondering about now: Is the CP’s programme of principles applicable to the Afrikaner people? That is all I want to know. I challenge the hon member to answer this question. He is sitting there smiling at me. He has a grin on his face, and seems to be embarrassed or ashamed. I challenge him to tell us whether the CP’s programme of principles is applicable to the Afrikaner people.

We simply ignore you.

Surely this is a reasonable question: Is the CP’s programme of principles applicable to the Afrikaner people?

To whom is your programme applicable?

The NP’s programme of principles is applicable to the Afrikaner people. Is the CP’s programme of principles applicable to the Afrikaner people—that is what we want to know?

Make your speech.

Our programme of principles is also applicable to you.

Is the hon member for Brakpan saying “yes” or “no”? Did I hear the hon member for Brakpan correctly? The hon member’s programme of principles is applicable to the Afrikaner people. Did I understand him correctly? If it is correct that this programme of principles is applicable to the Afrikaner people, the inevitable implication is that the hon member is saying that the Afrikaner people should have their own separate country, their own separate Parliament and their own separate sovereignty. Is that their standpoint?

You are being ridiculous.

If I am being ridiculous, the CP’s programme of principles is not applicable to the Afrikaner people. I should like to tell my CP friends …

You do not have any friends.

I have many friends, and I also regard the hon member as a friend. I should like to ask my CP friends whether their programme of principles is applicable to the Afrikaner people, yes or no.

May I put a question to the hon the Deputy Minister? He asked whether the CP would help Renamo, but I want to know from him whether, prior to Nkomati, the Government gave Renamo assistance in the form of arms and the training of troops.

The hon member surely knows that the Government’s standpoint is that it did not do so. I can assure the hon member that as far as I know, nothing like that happened.

I now want to refer to another matter. I want to quote what Dr Connie Mulder said about the hon the Prime Minister’s visit overseas, and that was: “Mense wat by hul volk staan, soos Verwoerd, Strijdom en Mal-an, was nooit welkom in die buiteland nie.” I wonder whether it is also the CP’s standpoint that individuals who stood by their people, like Verwoerd, Strijdom and Malan, were never welcome abroad. It is strange for someone like Dr Connie Mulder to adopt such a standpoint, because he has been overseas quite a few times. In 1971 he visited the USA, Portugal, Spain, Switzerland, England, France, West Germany, Italy, the Netherlands, Canada, South America and again the USA. In 1972 he was in Mozambique, and in 1973 he visited Israel, Iran, Switzerland and Rhodesia. In 1974 he was in the USA and in 1975 in the USA, Israel, Taiwan, Japan and Thailand. In 1976 he was in Britain and in West Germany, and in 1978 he visited several countries in Europe, Britain and the USA. He also made an attempt to visit Egypt, but without success. So this allegation comes from a man who is a real globe-trotter, a real jet-setter. What is important to us, however, in regard to this attack on the hon the Prime Minister, is that mention is made of Verwoerd, Strijdom and Malan, but that nothing is said about Mr Vorster. The question that we now ask ourselves—also in the light of the fine speech made by the hon leader of the NP in Natal, the Minister of Health and Welfare, is whether in this regard the CP has not moved much closer to the HNP. When the CP broke away, the HNP was implacably opposed to the previous Prime Minister, Mr John Vorster, but the CP still tried to turn to Mr John Vorster. Since then, however, we have found the CP turning its back increasingly on Mr John Vorster. Here we again have the same kind of thing, reference being made to three former Prime Ministers, but not to Mr John Vorster. The question that arises is whether that is not a slap in the face for Mr John Vorster. Mr Vorster himself went abroad quite a few times. In 1970 he was in Malawi and also made numerous secret visits to African states. In the early ’seventies he visited Portugal, Spain, France and West Germany. He also visited the Ivory Coast and was in Liberia in 1975. In 1976 he visited Israel and Switzerland, and in 1977 he was in Vienna in Austria. The question is why this accusation is being levelled at the hon the Prime Minister. We want to tell the hon leader and members of that Opposition party today that their actions are not in the best interests of the inhabitants of South Africa. If the propaganda that they are levelling at the Nkomati Accord were to become a reality, that would be playing directly into the hands of South Africa’s foremost enemies. If their standpoint in this regard were to become a reality, it would only benefit communism. If their attitude towards the outside world—not their attitude as set out in their programme of principles, but their attitude in practice—were to be reflected in Government action, it would meet with a feeling of repugnance abroad and would really contribute to the isolation of this country. It would possibly lead to official sanctions against this country, which could debilitate this country’s economy, and if this country’s economy were debilitated, so would be its ability to pay for its military viability. If one investigates all the facts, one sees that the hon members of the CP are undoubtedly engaged in a policy which, if it were implemented, would be contrary to the interests of all the people of South Africa, and in particular contrary to the best interests of the White people in this country too. For those reasons the voters of South Africa will totally reject them in the long run.

Mr Speaker, I trust that the hon the Deputy Minister will excuse me if I do not follow his particular line of argument. I have no particular quarrel with the CP, except that I do not agree with their policies; but I do not want to get involved in a personal fight.

To achieve my objective in putting my point across to the hon the Minister of Finance, it is necessary for me to establish a bench-mark for purposes of comparison. I will therefore start off by saying that in 1948—that is going back a long way—South Africa was one of the most popular countries in the world. Food was about the cheapest one could possibly get anywhere in the world. Accommodation was cheap. One could get a flat for £10 per month in one of the better parts of town. One could buy a house for £3 500. Above and beyond that, South Africa had one of the lowest taxation rates anywhere in the civilized world. I just mention this as a bench-mark for purposes of comparison.

At that time a lot of immigrants came to South Africa. They came here because of the circumstances I have outlined and particularly the taxation rate, because it meant that a person could go into business and, if he worked hard and was industrious, he could make money and eventually retire, knowing full well that he would not have to worry about his future. However, in 1948, apart from a lot of immigrants coming to South Africa, something else also happened and from that time on South Africa’s international reputation deteriorated to the stage we have reached now where I would say we are amongst the most detested of nations. We now have a considerable unemployment problem and a taxation level and system which is a terrific burden on all and sundry and which is probably amongst the highest anywhere in the world. Certainly, as regards home-ownership, we have a system which very much restricts the possibility for newly married people or young people to obtain homes of their own. Furthermore, as a result of our taxation system it does not pay to save money.

It is this aspect that I wish to speak about. Today, if I am to believe what one reads in the Press, South Africa’s savings have dropped to the lowest level in this country’s history, as was also mentioned by the hon member for Yeoville. They have dropped to approximately 2,5% of our disposable income. This appears to me to be somewhat catastrophic in that the money people save in excess of their income is used for capital growth in the country. If we do not make up the shortfall from our own people, we have to make up our capital needs from overseas. At a time when we have a poor gold price and drought-induced troubles, I am afraid that this money becomes very expensive.

Capital generation for new work opportunities will be vital in South Africa if unemployment is not to become rampant. I believe that in this country one cannot afford to have rampant unemployment. One only has to look at what is happening with unemployment in a civilized country like Britain at present, and the fear of unemployment there, to see what could happen in this country. One must also remember that in Britain life and the law in general are rather more respected than in this country. We must remember that we live in Africa which has a pretty rough history when it comes to respect for life and the law.

Why do we not have the amount of savings which we should have? Apart from the fact that people are so heavily taxed that they do not have very much left over anyway, even those who do have money are not prepared to save that money and invest it in financial institutions. I would like to refer to the point made by the hon the Minister of Finance this morning, namely that hundreds of thousands have had well deserved profits on investments. That was the expression he used. This is absolute nonsense because people who are investing in financial institutions today are in a terrible position, and I would like to illustrate this. If one takes a person with a reasonable income level who has an investment of R100 000 and a 50% tax level with 15% interest on his money, allowing for inflation which is approximately 15%—I think these are relatively realistic figures—the money which he has invested will earn R15 000 in one year. This R15 000 profit is promptly taxed by the taxman to the tune of R7 500, leaving a gross capital sum of R107 500. If one applies the 15% inflation rate to that, one funds that in terms of purchasing power—not money because money per se does not matter—one now only has R91 000. One has therefore not had any real earnings on one’s money. However, the taxman has collected a very nice R7 500. No wonder people do not want to invest in financial institutions!

I want now to refer to the position of a businessman. A small to medium business—of which I know something—may have a turnover of R2 million. The net profit at 10% before tax would show a return of R200 000. Company tax comes to R100 000, leaving R100 000 after-tax profit. If this profit is paid out in dividends to the partners and the businessman is on a higher level, they would only receive R50 000. In other words, the net return on a R2 million turnover will show the partners in that business R50 000 profit but the taxman will get R350 000. Therefore, who on earth has the effrontery to call this country a free enterprise society? It is socialist. The businessman is working purely and simply to provide massive funds for the Receiver of Revenue. In addition to all this, the hon the Minister has said that as far as local government is concerned, he has a few more taxes lined up in terms of levies of one sort or another. When this little lot comes the situation will become utterly impossible.

The financial policies of the hon the Minister of overspending, over-taxing and of promoting inflation are not only destroying the small man and his security but will also totally destroy the faith of the public in our free enterprise system. Also, if it goes on long enough and badly enough—this is of some importance for the Government to remember—it will destroy this Government too. The Government must remember that it does not have the massive unity of Afrikanerdom today backing it. Afrikanerdom has split into two groups.

But you have nothing left.

Never mind what we have. The Government does not have much either.

You’ve got nothing.

Never mind what we have. I am looking to the future of this country and I happen to have an interest in it. [Interjections.] The point is that this can destroy this Government. This possibly is why hon members on that side are so nervous of the CP.

We have made dramatic changes in this country in respect of labour relations. We have made great strides in improving race relations. For goodness sake, let us also have a serious look at the financial situation. With the new Constitution coming into effect we are going to need money and we will not be able to afford to waste it now, as it is being wasted in every department of State. It is wasted in every department, not just one or two. Do not ask me: “Where would you take it off?” Let me get at it and I will tell the Government where to take it off. I have had some experience of this. [Interjections.] We need reform in finance if we are going to have any future at all.

Finally, I should just like to suggest to the hon the Prime Minister that when he does replace the hon the Minister of Finance he does not get one of the financial theorists or one of the greedy bankers to take over the portfolio. He should rather get a genuine businessman who has an understanding of the production of wealth, and not merely the making of money on the backs of other people.

Mr Speaker, it is quite evident that the hon member for Umlazi has been stung …

Umlazi?

I mean the hon member for Umbilo. [Interjections.]

Well spoken, old chap!

It is quite evident that the hon member for Umbilo has been stung into an ant-Nat stance by Mr Lubbe, the chairman of the Western Province region of the NRP in his letter to the Sunday Times yesterday. I do not want to deal with the substance of the hon member’s speech. [Interjections.]

Why not?

I will later come to Mr Lubbe and what he had to say in the Sunday Times yesterday.

The end of the last major debate in the Westminster style Parliament of South Africa is an appropriate time for the established political parties to take stock of their position. In just a few months’ time the members of two new Houses of Parliament will be taking their seats here. In the interests of effective Government and in order to facilitate the consensus-seeking process, it is of the utmost importance that all established White political parties should leave no doubt in the minds of the public about where they stand on matters of policy and of principle. I think there can be very little doubt where we on this side of the House stand. Our record for the past 36 years stand there for all to see, and this Government has after all been the architect of this new dispensation.

Similarly, in the months ahead we have little reason to doubt the position of the official Opposition and the CP about their respective approaches to South Africa in the years ahead. The same, unfortunately, cannot be said of the party of the hon member for Umbilo, who spoke before me. That party may already have been written off in the Cape and the Free State but they still have pretensions to relevance in the Transvaal and they will be putting up a candidate in Wednesday’s by-election. In Natal, of course, they control the provincial council and they hold one third of the parliamentary seats in that province. [Interjections.] The hon member for Umbilo is very vociferous now.

I always have been vociferous.

However, whether his supporters are as certain about the direction of his party is a very doubtful question.

In this afternoon’s Daily News published in Durban there is a report headed “Open revolt over leadership in the NRP” from which I shall quote only one sentence, namely:

[Interjections.] Very few supporters of the NRP know exactly what their party’s direction is. Certainly very few can give one any explanation of what their party’s policy is and what their party stands for. [Interjections.] I should know because I asked them in Rosettenville and they simply shrugged their shoulders, that is if they do not blame the politicians for stirring up old rifts after the referendum.

One can hardly blame supporters of the NRP if they do not know what their party stands for. One need only look at the NRP’s record over the past eight months. One finds that in Pinetown in February they insisted on putting up the only candidate against the PFP. They refused to seek an open pact with the Nationalists. They even spurned individual offers of assistance from Nationalists. It is common knowledge that they did not lift a finger to seek votes from known Nationalists or to register any special or postal votes for absent Nationalists. In fact, their whole campaign was so ineffectual that it reflects poorly on their organizational and election knowhow.

The result at Pinetown was an unmitigated disaster resulting in an insult to one of their best men in Natal and in the unnecessary reelection of a PFP member of Parliament. [Interjections.]

Their lack of cohesion, the absence of internal discipline in their party and their failure to project their own party’s policy was again evident in one of their supposed strongholds in the constituency of Durban Point where they were conspicuous by their absence in a municipal by-election a month ago. A Nationalist from outside Durban Point won that election, ably assisted, fortunately, by some voluntary NRP helpers. [Interjections.] However, the failure of the NRP to keep the voters of Durban Point informed of their party’s policies resulted in a nakedly racist Civic Action League candidate fronting for the CP polling 40% of the votes. [Interjections.] Moreover, we have come across evidence in Durban Point and elsewhere of Civic Action League infiltration of NRP committees, which can only be attributed to lack of clarity on NRP policy. [Interjections.]

Perhaps the worst example of NRP vacillation has been found in the past month in Rosettenville. It is common knowledge that the NRP leadership was opposed to participation in Wednesday’s by-election, yet they stood by helplessly when the local organization insisted on putting up a candidate. When that candidate distributed a pamphlet which probed new depths of political gutter-sniping, …

You are not doing too badly yourself. [Interjections.]

When that candidate distributed that pamphlet, the leader of the NRP publicly dissociated the party from its contents.

we would like your leader to do the same with that pamphlet you distributed. [Interjections.]

However, that hon leader did absolutely nothing to prevent the distribution of that pamphlet. [Interjections.] Now that leadership again stands as a helpless onlooker when the NRP candidate in Rosettenville openly pleads the CP cause as the second option in Rosettenville [Interjections.] Just imagine, Sir, that a party which in November last year called for a yes vote in the referendum alongside the NP now, within eight months, has to see one of its official candidates pleading the cause of the party which was most violently opposed to a yes vote in the referendum.

Just how far the rot in the NRP has set in through the refusal of the NRP leadership to discipline its members is evident from a letter which appeared yesterday in the Sunday Times. Mr Lubbe, the regional chairman of the NRP in the Western Province, openly supports Mr Jayes, the NRP candidate, against the national leader of the NRP. What is more, he said that letters of congratulation had been sent by the Groote Schuur Division, the False Bay Division, the Western Province Women’s Council, the Western Province Regional Council and the Cape Head Committee of the NRP associating themselves with these actions by their candidate in Rosettenville. What is more, according to The Daily News of this afternoon, the hon member for King William’s Town who has been so vociferous here, was referred to as follows:

[Interjections.] Here we have open rebellion by his own province and he will not comment. [Interjections.]

Mr Speaker, we are facing a general municipal election in Durban in September. It is common cause that the NRP is as anxious as we are to break the stranglehold of the PFP in the Durban City Council. Will they deny it? Now they are quiet, Sir. Yet they again allow themselves to be stampeded into sabotaging any attempt at a fair distribution of wards among anti-PFP parties. [Interjections.] This time they say that the NRP members standing in the municipal election are standing as independents and so they cannot do anything about it!

It is past time that the NRP in Natal and elsewhere stand up and be counted on the side of those they say they are on, and that they discipline the rebellious elements within their ranks.

May I please ask a question?

No, Sir. I am sorry, I have nothing to do with the PFP this afternoon.

If the NRP leadership lacks either the resolve or the ability to discipline its members, I think they owe it to the people of South Africa and especially the people of Natal to stand aside and to allow those of their bewildered supporters who know nothing about their policies to seek their political future with us or the PFP or, if that is Mr Jayes’s fancy, with the CP.

Mr Speaker, in the remaining minute or two of today’s debate I just want to make a few remarks. Quite a few questions were put to the hon the Minister of Finance today, and this goes to show that there is quite a bit of criticism being expressed about the country’s economy. Tomorrow I shall hopefully set out in detail how each and every businessman in the country is of the same opinion. I shall furnish the necessary proof in regard to what they have said about the position of South Africa’s finances. I do not want to say things that are untrue. [Interjections.] I shall also give details of the fact that South Africa’s economy and its finances have never been in as sad or parlous a state as they are at present.