Mr Speaker, when the debate was adjourned last evening, I mentioned that I would like to refer to a point raised by the hon the Leader of the Opposition in talking about the national states and the development policy, if you like, of the Government. He was very critical in this regard and had, inter alia, the following to say (Hansard, 26 June):

I asked the hon the Leader of the Opposition whether that was real income and he eventually said yes. The hon the Leader of the Opposition was also good enough to give me the reference that he had used and I have now had an opportunity of studying it.

The position is of course, Sir, that one cannot use GDP in this respect. The gross domestic product is purely what is generated within the boundaries of a state, and it is a well-known fact that a very large part of the earnings of these national states comes from the South African economy as such; that is to say, from outside the boundaries of those states.

That was exactly the point he made.

When one considers this situation, one then finds that the gross national product—that is the index one would have to use … [Interjections.]

That was not the argument.

The gross national product is a very different thing. In 1980 the gross national product was 488 on average as against 100 in 1970. When one looks at this in real terms, one finds that it increased from 100 to 176. At a compounded interest rate, not a simple interest rate, which is much higher, it is nearly 6% per annum.

But that is made up of mineworkers’ earnings from outside. [Interjections.]

Mr Speaker, these are wages that are paid into these states. They are used in the states directly.

But they don’t fall out of the air; they come from South Africa.

This money is not the total amount earned by mineworkers on the mines. It is the part that is remitted back to the states and used by them. [Interjections.] Why did the hon the Leader of the Opposition take the figure of R46 based on a 1970 deflation? Why did he not give the actual figure for 1980 and work it back and then see what it was in 1970? When one takes the actual figure, which is not a correct indication, one finds that it is closer to R200. However, the figure that has to be looked at is the one that represents the actual earnings used in those States and which, on a ten year real average increase at compound rates, increased by nearly 6% per annum. It is not one of the lowest in Africa but one of the very highest.

That is why they leave Transkei. [Interjections.]

Mr Speaker, we can argue but we have to argue our statistics correctly.

I should like now to sum up certain aspects of the debate very briefly because, as I said earlier, I personally have never before heard such remarkable criticisms as I have heard during this debate in regard to our economy. I want to say emphatically—and I base this on absolutely official facts—that the South African economy today is in far better shape than hon members of the Opposition tried to make out. The economy is on course in a very difficult world. If we had only had a drought, that would have been calamity enough. If we had only had a drop in the gold price, that would have been calamity enough. However, we have had the two simultaneously, and we have never had anything like this before. [Interjections.]

Order! Hon members have had sufficient time to debate the Third Reading of this legislation. The hon the Minister must now be given an opportunity to reply.

Thank you, Sir. I may say, Mr Speaker, that these cheap personalities do not affect me in the least. I say that our economy has put up a performance which has been commented on in a most positive way by the best judges one can find.

Last night I had a long chat with the Governor of the Reserve Bank, Dr De Kock. He has just been overseas and has talked to many central bankers. He has spoken to many of the leading economists and bankers in the world, people who know what is going on. They come to this country and study these matters in depth. He told me that they were amazed—this was my experience a few weeks before—and astonished at the strength of the South African economy under these conditions. Mr Speaker, what would you think of an economy which, under the strain of the past year and these two calamities that have hit us, has experienced a growth rate over the past year in real terms of more than 5%? In fact, in the third and fourth quarters of last year and the first quarter of this year, a period of nine months, there was an average of real growth increase of 7%. Although it has subsided somewhat since then, I think it is absolutely safe to say that it is probably somewhere around 6% today. It is one of the best growth rates in the whole world. Unfortunately, we only received these statistics very recently, although I did say in my Budget Speech that there had been an improvement since the middle of last year and that I hoped it would continue. We are living in a world that is riddled with debt. There has never been such a debt crisis in the world as we have today. That is generally accepted. In South Africa nobody can say that we have a debt problem. We do not have a debt problem in this country. That takes some doing, does it not? The gold price has fallen a good bit more than the oil price and countries that are substantially dependent on oil as we are on gold, where are they? They are absolutely on the ground. They have no credit worthiness left. Our credit rating today—and I can personally attest this; they tell me everywhere—has never been higher. Now, how can that happen? These people look at the facts.

Talking about the balance of payments, I cannot stress it enough that there is not at this moment, over a period of 12 months a deficit of R3 billion. If one takes the first quarter of this year and one works the figure out over a period of four quarters, then it comes to R3 billion, but I myself have no doubt that things are improving and we are going to find that it is not going to be R3 billion at the end of the year. It is going to be less. I can rely there on the best opinion I can give. There is no practical problem involved in our balance of payments. Imagine that in one year the drought alone is causing us a deficit in the balance of payments of something between R1 500 million and R2 000 million. Imagine also that the gold price had been not $100 more an ounce over a year but $50, that would only mean $420 an ounce, we would have another R1 300 million to the credit of the balance of payments. These are the figures we are going to see as the gold price picks up. The gold price is not going to be down there forever. Despite those calamities, however, we have not got a balance of payments problem. The matter is completely under control.

Hon members opposite talk about inflation being high. Inflation in the middle of 1982 was 15,5%. Today, measured by the cost of living or the consumer price index, it is 11%. It was 10% recently. We must remember that that index includes indirect taxes. Many countries in the world do not include indirect taxes and personally, taking that from a statistical measurement point of view, I believe that that is correct. I do not believe that one should include indirect taxes. Then our cost of living index, or the consumer price index, would certainly be well under 10%. Therefore one must be careful how one compares these things. Even if one takes the inflation rate at 11% today, for a developing country that has to provide all the infrastructure that we have to provide for development, knowing that we cannot get the return quickly and that productivity only comes much later, we are classified by the IMF as an advanced developing country. Look at all the rest of the advanced developing countries in the reports of the IMF. These figures are available. We stand right out when it comes to inflation. A country like Brazil has an inflation rate of well over 100%, not to mention those countries where the inflation rate is 300%. Here we are running at an inflated figure—because we put indirect taxes in—of 11%. Hon members opposite say that because it is 11%, this is something to be held against the Government. There is no Government in the world that can fight inflation alone, especially in a country like ours where the private sector predominates. The private sector is more than three times bigger than the public sector. Therefore one must have the right policies in the private sector as well. And what have we witnessed of late? We have witnessed a spending spree in this country that we have not seen in years. I am talking about private consumption expenditure now. It has risen nearly four-and-a-half times in the last ten years, ie 33% in real terms. In fact it is even more. It is probably 36%. This has been commented on, and I give credit to the Sunday Times for pointing out in their last Business Times under the heading “Spend, spend, spend” the very serious position that has occurred as a result of this spending spree on the part of the public. The Argus also deserves credit as it has been publishing a couple of excellent articles on this subject for some time. I think this is something that the private sector must look at too. How can the Government simply be expected to contain that huge wave of private consumption spending unless it intervenes in the economy to an extent that would probably be quite unacceptable to hon members opposite and indeed to us?

I want to say that as Minister of Finance I can in fact—of this I can assure the House— halve this inflation rate in a matter of months. We can halve this inflation rate, I say at the outside, within nine months. How? By raising taxes. If I were to put up personal income tax from the present maximum rate of 50% as the top marginal figure for married persons to where it was when I became Minister of Finance—it was 72% including a loan levy which after all was a compulsory levy ranging over seven years and had to be paid by taxpayers—we could absolutely strangle this inflation.

Why do you not fix GST at what it was when you became Minister of Finance?

If I were to put personal income tax up by say 10% and GST by another 3%, we could do it as well. What, however, would be the effect? We would cause a measure of unemployment and we would give a knock to the economy which would be quite unreasonable under the conditions I have been trying to explain to the House ever since this session started: The most difficult world conditions over which one has no control. We can do it, but I say it is to the credit of the Government, in the face of all this superficial criticism, that it has kept an absolute balance here.

The inflation rate is 10%, 11% and the growth rate is something which is of great credit to this country, something which we could never have dreamt of a year ago. I say this economy is in infinitely better shape than it has been for a long time. If I compare the situation today with what it was in 1975-76, I find that one is dealing with two completely different things; there is no comparison. The facts are there, and those facts will be written up one of these days so that everybody will be able to see them quite clearly.

I say that we ought to keep these things in perspective. Why denigrate every positive achievement that this economy makes in a very difficult world? Why not give credit where credit is due? I say that we are falling into stereotypes with some of these criticisms.

It is simply said quite dogmatically that Government spending is excessive. I refute that statement with all the emphasis I can find. I say that a country such as South Africa, a developing country where Government spending comprises 25% of aggregate spending, cannot be accused of excessive Government spending. A country where the average increase of Government spending in real terms per annum over 10 years is 3%, cannot be accused of excessive Government spending. I say particularly a country where per capita real income has remained virtually constant for 10 years is a country which can under no circumstances be accused of excessive Government spending.

There is another stereotype which is stated completely dogmatically and that is that South Africa is now suddenly one of the most heavily taxed countries in the world. It simply does not bear examination. The figures are there; the International Monetary Fund publishes a mass of statistics. I was talking to a man the other day who was very critical about this point. He said: Yes, but we are all very heavily taxed, look at America . I replied: Yes, let us look at America. He said that this was their figure and that was ours. I asked him what figure he was dealing with. His figure was the federal income tax in America, but the states in America impose substantial personal taxes while the local authorities too impose substantial personal taxes, and if one puts them together, one finds that there is no comparison with us at all; they are much heavier.

I am warning today that we must be careful. Let us criticize where criticism is valid, but do not let us fall into these stereotypes; this country and this economy deserve better than that type of criticism. I say that with all the sincerity I can say it. I would say that these destructive critics today are very seriously underestimating the basic strength of this economy. It is not the first time critics have done that. They are also very seriously underestimating the versatility of our economy and its resilience, its ability to pick itself up under the most difficult circumstances and to show a growth rate of 7% over nine months in real terms. These are the things which real authorities like the IMF see and comment on, comments which are very much to our credit.

Despite all these difficult circumstances, it is said that our financial administration is all wrong. They give no facts or figures, but tell us that bankers are criticizing us. I gave the considered opinions of two of our biggest banks which have just been published yesterday. The one says our policies are appropriate and the other one says that we are correct in putting up GST. In fact, they both said it. Let us therefore show some perception and balance in our criticism. I have never said that there are no problems in our economy. In my speech on Monday I said four times that we are facing problems. I said that there is need for belt-tightening, for discipline. I said this four times, I checked it. Yet I am told that I said that everything in the economy is rosy. I never said it and I never implied it.

Finally on this point, we are told that the rand has been depreciating, the currency has been depreciating, and that it is the fault of the Government. The rand has depreciated in terms of the US dollar, which is by far the strongest currency in the world. Today the dollar is stronger than it has ever been, because of quite exceptional appreciation. When you compare other currencies to the dollar of course they will be at a lower value. Did my hon friends opposite see what they said about the pound sterling yesterday and how it has fallen in terms of the dollar? A few years ago the Deutsche mark was as strong as the dollar, but in terms of the dollar it is now right down. It is not just the rand that has depreciated in terms of the dollar. What does our hon friends want us to do? Must we intervene or use all the foreign exchange we have in order to bolster the rand and have a completely artificial rate of exchange? Surely not. When exports pick up, when the gold price is better, when the drought is behind us and we are exporting foodstuffs instead of importing them, the rand will immediately pick up. In the meantime we have to help it and we have done this by putting up GST by 3% minus the basic foodstuffs exemptions. The same goes for interest rates. They are very high, but they are assisting us to keep inflation in check. They are determined by market forces and not by arbitrary decisions, which is to the credit of any country. As I said the other day, I believe that those interest rates have virtually peaked and that we are going to see an easing over the next few months. This is a view which is strongly shared by Dr De Kock of the Reserve Bank and by other prominent judges of these matters.

Finally, in respect of gold, I think all of us would have hoped that the price of gold would look much better than it does, because it would make a big difference to our economy. A $100 increase in the gold price over a full year would give the Exchequer at least another R1 300 million. For that we only need a gold price of 470 dollars. However, this is not so and we cannot expect or hope for that to happen. We have to live with it, and we have to adjust and have to consolidate. I suggest that that is exactly what we have been doing. We have to have a little patience in these matters, because these things do come right. Not to take precautionary measures under these conditions, would be to throw this economy to the wolves. It would be to throw it away, and this Government is not prepared to do it.

Having said all this, I ask for a little more reasonableness in some of these criticisms. I hope that rather more attention will be given to the facts which are available.

Mr Speaker, I want to come now to a more personal matter. With your permission I would like to read to the House a letter which I have written to the Prime Minister and which I handed to him this morning. It reads as follows:

In fact, it is exactly six months ago—

Naturally, I should have liked to go when the gold price looked better and the severe drought was behind us, but those things will come about in good time. It has been an immense honour for me to be a member of Parliament, first the Senate and then the House of Assembly, and of the Cabinet. Your own inspiring leadership, courage, imagination and high administrative standards will go down in our history. The whole country owes you a lasting debt of gratitude. The success of your unceasing efforts to improve the relations between Afrikaans-speaking and English-speaking people in our land is but one, albeit perhaps the greatest, of your many accomplishments. Among these I feel I ought also to mention your sustained striving for peace and prosperity in South Africa and in Southern Africa, the fruits of which are already apparent. It is comforting and reassuring to know that in the great and challenging times ahead a man of your calibre is at the helm of our affairs.

I could well have said “wonderful Mrs Botha”—

My signature follows. The Prime Minister was gracious enough to write me a letter which I shall always treasure. The Prime Minister has authorized me to say that he is issuing these two letters to the Press this morning. It but remains for me to say that, when I talk of the Prime Minister, I am talking of a very great statesman in our land, and I can but reiterate that I wish him the greatest possible success and happiness and the richest blessings in the tremendous task he has taken upon himself for the good of this great country.

Then—Sir, I shall be as brief as I can—I cannot neglect to mention my colleagues in the Cabinet. It has been a time of wonderful friendships for me and I can only say that I am sorry that I caused some of my colleagues so much trouble with their worthwhile projects which they wanted to finance on a better scale than I could often agree to meet. However, despite that, they have always remained friendly and constructive. I leave the Cabinet with the greatest possible respect for all my colleagues of today and of yesteryear when I first started in this very fine body. Sir, I pay tribute to my colleagues.

I started in the Senate, which now no longer exists, and I ended in this distinguished House and it has been an enormous experience. The camaraderie of this Parliament is something I certainly would not have wished to miss. We sometimes fight and become rather worked up and perhaps we sometimes call one another names, but when all is said and done it remains a great club and the dignity and morale of this Assembly and this Parliament is something which, I think, is the envy of many other countries. I wish you, Mr Speaker, and the Secretary of Parliament and all his staff everything of the best for the future and I thank you for the most dignified and effective way in which you preside over our sometimes rumbustious affairs.

Then I come to my department. Here I can only speak with a feeling of being rather moved, because here I have friends and staff members who I think are second to none, magnificent men and women. It is a very large department consisting of thousands of people. Inland Revenue alone consists of several thousand and so does Customs and Excise. I cannot possibly mention by name all the people I should like to mention—I would have to mention hundreds and hundreds if not thousands. From the most senior to the most junior member of staff I can never forget what they have meant to me in this rather demanding portfolio where work never ceases. What they have meant to this country cannot be expressed in words. One so often finds people who do not know the full facts and who are so easily inclined to criticize the Public Service. We have all heard this, and we have been told that the Public Service is far too big and that it has all kinds of defects. I wish I could see these. I run a very close working association with large sections of the Civil Service day by day and I have the most unqualified admiration and respect for these magnificent men and women. This is the only way in which I can describe them. Many of them are in the office at 07h00 or 07h30 in the morning week after week and many do not go home before seven or eight o’clock at night, and when the House sits at night many of them are here until 22h30 at night, and yet they get through the most fantastic work programme. I want to draw the attention of the country to this splendid body of people. The morale and the esprit de corps in this very large department of mine has never ceased to be a source of admiration to me. They have a very fine morale and spirit indeed.

I also want to refer to my ministry, my private secretaries and other members. I have been singularly fortunate in the calibre of my private secretaries and other members of the ministry. I would like to pay tribute to them. They are young, but of the finest calibre.

My relations with the private sector as a whole, such as commerce, industry, mining and agriculture and many other sections, have been excellent. My contact has been absolutely unceasing. Only tomorrow I will see the Association of Building Societies again. On Monday I will see another group, and so it goes on every week. I found my close working relationship with the private sector as a whole a very gratifying and constructive part of the whole scene.

I believe that the hon the Prime Minister and the Government are absolutely correct to go out of their way constantly to improve relations with the private sector. The private sector is much bigger than the public sector, but both are absolutely essential to this country, and the more closely they work together, the better for all of us. I have personally—I say this in a considered manner— not known the relations between the public sector and the private sector to be better than what they are at this moment. I believe that the very important conferences which the hon the Prime Minister arranged from time to time in recent years have had a good deal to do with this as well.

In passing I want to mention—I have all but finished—the various parts of my department. I would like to mention by name the Finance Department, which covers the lot, or if one talks of the Treasury in the generic sense, it also covers the lot. It depends how one uses the words. There is also the Finance Department and the Treasury in the narrower sense, the Directorate of Inland Revenue, the Directorate of Customs and Excise, the Office of the Registrar of Financial Institutions, which is burgeoning. There are also the Standing Commissions on Taxation Policy and on Building Societies and Banks. There is also the Reserve Bank and the Land Bank—both enormous institutions which play a very important part in this country. There is also the Auditor-General and the State Tender Board. Having mentioned all these, I have most probably left out some, but if I have I will try to make it good. This is a very wide-ranging and comprehensive department, and it has an enormous honour for me to be the political and administrative head of it as the Minister of Finance.

I want to end by again expressing my very warm appreciation to the hon the Prime Minister, to my colleagues in the Cabinet, to Parliament, to my party’s caucus and to the Whips all round.

Finally, as leader of my party in Natal I must say that that role has been one of the most challenging, one of the most pleasant and constructive things I have been engaged in since I have been active in politics. To my hon colleagues here from Natal, those outside and those in the provincial council I can only say that I will never forget them. They are worth pure gold. I am not going to talk about party political matters now. All I am saying is that 12 years ago we had three members in Parliament and we had a very small party. Today we have far more and we are by far the biggest party in Natal in terms of votes. I am not saying this in a critical sense of any other party at all. What I am saying is that we are in fighting trim. We do intend—this is an absolute confession of faith—at the very next opportunity we get to also become the majority party in the provincial council of Natal. I say that in a very nice way to my hon friends in the NRP. They, as we do, also know a good fight. We are going to fight this.

When I went to live in Natal in 1957 people said that I had gone over the border. One cannot say that today. Natal is an integral part of the Republic of South Africa. Let me tell my hon friends that Natal has no intention of doing anything else but making its imprint on all aspects of life in this great country. Sir, at the time of the Republic issue in 1960/1961 Mr Douglas Mitchell, a person for whom I have much respect—he was then the leader of the UP in Natal—said at a big meeting that they were going to march. Somebody called out: “Where are you going to march?” Mr Mitchell replied: “We are going to march to Pretoria.” I want to say to my hon friends and to Natal: Sure, we are going to march. Natal has actually never stopped marching to Pretoria and Cape Town and it is going to put on the pressure at every opportunity.

Sir, I thank you very much for this opportunity. May I wish all the parties of this House and Parliament as a whole great happiness and success. [Interjections.]

Question agreed to.

Bill read a Third Time.

Mr Speaker, before I proceed to move the Second Reading of this Bill, please allow me to say a few words with reference to the very important announcement which the hon the Minister of Finance has just made.

Minister Horwood held this important portfolio of Finance for 10 years. On the one hand this is a difficult task in a country like South Africa, a growing and developing country, and on the other hand even sometimes an unpopular task. In the short while I have been involved in this department it has become clear to me that in the apportioning of the wealth of South Africa, in the appropriations, there is only one common factor, namely that all allocations or appropriations are insufficient. It is quite a difficult task to do one’s best under such circumstances. For me it was an exceptional privilege to have been able to collaborate with the hon the Minister during these two years. At all times I got the feeling that he allowed me to convey my opinion on matters to him as well, and then generously accepted it.

Wherever the hon the Minister went, he conveyed South Africa’s image with honour, with distinction and with dignity.

Hear, hear!

I should like to add that I, as well as the private sector, can testify that he always, untiringly, made it his task to keep the economy of this country going. If there is any person who did not perceive this, he is definitely a stranger in Jerusalem.

†While I noted that Mrs Horwood is present in the gallery, I want to express the same sentiments towards her that I have expressed towards the hon the Minister. Mrs Horwood is one of the most charming ladies whom I know and I will always think of her with the deepest respect and affection.

*I believe that I am doing so on behalf of everyone in this hon House when I wish the two of them everything of the very best for the new period in their lives which has now begun.

†Mr Speaker, I now move:

Besides proposing that the rate of sales tax be increased from 7% to 10% with effect from 1 July 1984, the Bill proposes that sales of certain foodstuffs be exempt as from that date. A number of other changes in the provisions of the Sales Tax are also proposed. A full explanatory memorandum has been provided for the information of hon members and I therefore do not propose to go into a detailed explanation of all the various amendments proposed in the Bill.

As far as the proposal to increase the rate of tax is concerned, hon members will recollect that the hon the Minister, when announcing the proposal in the Standing Committee on the Finance and Audit Votes on 11 May 1984, mentioned various economic factors and the necessity for additional revenue that had led him to the conclusion that remedial fiscal action in the form of the proposed tax increase was called for. He went on to mention various objectives that he had in mind, such as the maintenance of a sound balance of payments, halting the depreciation of the rand and countering inflation. I do not propose elaborating on what the hon the Minister said. In fact, these matters have already been fully discussed during the debates on the Appropriation Bill.

The exemptions in respect of various food items have evoked considerable discussion in the media. This must be seen as a method of granting relief from tax on the everyday purchases that the great majority of our population have to make. The purpose was not to exempt all basic foodstuffs from tax as such. It is in fact impossible to define what is meant by basic foodstuffs. If one looks at the list of exemptions objectively, I think it can be said without fear of contradiction that everybody benefits because the list is long enough to allow most people to make a choice. With a tax like sales tax it is impossible to provide relief of this kind except on a general basis. In proposing this concession the government has not been ungenerous. The list of exemptions is quite long—much longer in fact than the list which was generally pleaded for in the past and which usually included only bread, milk, meat and mealie meal—and it is designed to benefit as many people as possible. Many requests have been received from persons and organizations for the inclusion of items not on the list. Although one would possibly like to include certain other items, regard must be had to the effect on tax collections. The proposed exemptions entail a sacrifice of upwards of R600 million during this financial year which, I am sure hon members will agree, represents a substantial concession.

I may add that a considerable amount of effort has gone into the defining of the various exempt items. The purpose of these definitions was, of course, to make it as clear as humanly possible what the items are. Inland Revenue consulted a number of organizations in both the public and private sectors in order to arrive at generally acceptable definitions. While the exemptions may, perhaps, be criticized as including certain expensive items, it must be pointed out that the identification of the items on a logical basis was regarded as of the first importance. The Act has to be applied by the business community, and it is equally important that the general public should know what these items are. When one looks at “meat”, for instance, I do not think that anybody could be under the impression that cooked meats are included in the exemptions. Of course, some raw cuts are more expensive than others, but it should be obvious that price variations do occur, and to exclude specific cuts merely because they are more choice portions or are more expensive, would result in more exceptions and, of course, complications and misunderstandings in butcheries.

I may mention that Inland Revenue is sending a printed document to all registered vendors containing particulars of the exempt and non-exempt items in a very similar format to that already given by the Commissioner in his Press statement and widely published in the Press. In addition a pamphlet will be available next week at offices of receivers of revenue giving the same details, and will be supplied to members of the public on request.

*I am also very pleased to say that Inland Revenue had the whole-hearted co-operation of the AHI, Assocom and the FCI, and I am convinced that everything possible has been done to ensure that dealers and the public are fully informed. I thank these organizations for what they have done in this connection. Although it is realized that the application of the exemptions could cause a measure of administrative inconvenience, I am pleased that businessmen are co-operating to pass on the benefits of the exemptions to the general public. The possibility of an exploitation of the public has been mentioned in sections of the Press, and allegations have even been made that the exemptions could make this easier. In this connection I just want to say that allegations of this nature are a reflection on the business community, particularly the small businessman, which cannot be accepted without further ado, particularly if it is borne in mind that the small businessman and his clients have frequently come to know one another very well over the years.

Allegations have also been made that the fines for contraventions are not heavy enough. The penal provisions of the Act have been considered, and only in one case was it necessary to increase the maximum fine. In this connection see clause 6(l)(i). The best method of curtailing malpractices, however, is to hold regular inspections. The strengthening of the inspection staff of Inland Revenue is a matter that is receiving attention. Since occupational differentiation was introduced towards the end of 1982 the staff position has improved, and certain further arrangements for expanding the staff through the employment of qualified persons are also receiving urgent attention.

Apart from the important amendments to which I have already referred, the Bill also contains amendments which are primarily intended to effect improvements and eliminate anomalies. I shall mention only a few of them. Full explanations of the more technical amendments will be found in the explanatory memorandum.

Charitable institutions providing aged persons, children or physically or mentally handicapped persons with food, meals, board, lodging, clothing or other necessaries, comforts or amenities may in terms of the Act be registered in order to enable them to purchase items required for carrying on their charitable activities free of tax. An indigent person does not necessarily fall into any of these categories of the aged, children or handicapped persons. This creates certain practical problems when, for example, meals are provided for lesser privileged persons and some of them fall into the specified categories and others do not. In both cases the activities of the institution concerned can only be described as charitable. The amendments inserted by clause 1(1)(a) and (b) were drawn up to enable the institutions concerned to utilize the exemptions to the full.

When a difference of opinion arises in regard to liability for sales tax, it may under certain circumstances be referred to an advisory committee or a special court. This applies when the taxes has not been paid and the commissioner has notified the person liable to pay such tax of his intention to issue an assessment. This does not apply when the tax has already been paid and the taxpayer demands a refund. In clauses 10, 11, 12 and 13 amendments are being inserted to make the present machinery for the hearing of appeals in respect of proposed assessments applicable when a refund is refused.

When an entrepreneur refunds a deposit on a container, he may deduct the deposit from the values on which tax is payable, provided tax was originally paid on the deposit when the container, together with its contents, was sold. When the deposit is refunded, the entrepreneur is not required to refund the tax on it as well. If the tax is not refunded, the entrepreneur makes an extra profit equal to the tax. This is an unhealthy situation, and in terms of the amendment proposed in clause 7(a) the deducting allowed in respect of a deposit may only be claimed if the tax has in fact been refunded.

I feel that it is unnecessary to elaborate any further on the various amendments proposed in the Bill since these have been fully explained in the explanatory memorandum.

Mr speaker, I hope you will permit me to say a few words with regard to the announcement that the hon the Minister of Finance has made. May I say at the outset that the way in which he expressed himself in the letter to the hon the Prime Minister, namely that he would have preferred to have resigned at a time when the economic position in South Africa was better, is shared by me. I think that he perhaps deserved to have been given the opportunity to have resigned at a better time. It is perhaps unfortunate that we are in this situation at the moment.

I have spoken on finance ever since the hon the Minister becomes Minister of Finance; so perhaps I can be regarded as one of his major critics, if not his major critic, in that I have had the opportunity in every single Budget debate of having had to deal with it. It is correct that I have opposed him and that I have had differences with him both in regard to aspects of policy and management, but I think there are other things that also need to be said and that is that I think that when it comes to the hon the Minister outside of this House in his co-operation with people, I should like to thank him and pay tribute to him for that. The one thing I really feel it is necessary to say is that despite the disputes and feuds that have existed in this House, we have preserved a personal relationship. What is remarkable—and I want to quote the example because I think it goes to the hon the Minister’s credit and should be said—is that at a time when we were having the gravest of difficulties he found it necessary to inquire after my health in the same way that I was concerned about his. That I think is what relationships between Parliamentarians are about. I want to thank him for the fact that despite the times when we were battling across the floor in terms which sometimes caused the hon the Prime Minister to look at me as if to say: “Cut it out, Harry; that is not the way to do it”, when he walked outside the House he proved that he was a Minister of Finance who was prepared to be pleasant to one and to take to one about what the world was all about, despite the fact that the hon the Prime Minister felt so strongly. I think that redounds without doubt to the credit of any man.

There is something else in the actual financial field which I think cannot go unsaid. Whatever differences there are in policy and whatever differences in financial management, I want to say to the hon the Minister that eventually he will come to understand economic democracy and to support it. I am quite sure of it because he has inside him a large something which threatens to come out, and once he ceases to be Minister of Finance, he is, I think, going to be one of my champions.

I want to tell the House what he has done and which I think nobody can take away from him, and that is that he has established beyond question the creditworthiness of South Africa outside. He has done that, and I want to say it publicly that that is something for which we are grateful to him. I think the hon the Prime Minister has been fortunate to have him to do that for us, and it has very lasting benefit. It is important that a country is known to pay its debts, that it meets its obligations particularly in these times. I think that when the hon the Minister of Finance has gone overseas and has seen the bankers of the world, he has been treated with respect and that, in fact, has gone to the credit of our country.

I say to the hon the Minister of Finance and to the hon the Prime Minister that I think those services which the hon the Minister of Finance has been able to render to us, we should not lose because that is something which is of vital importance, not of a political nature. If I understand correctly what he may be doing in the future, he may well be able to assist us in that regard when the time has gone ahead. I say that because I think it is extremely important. I hope that he will play some future role in the finances of this country. I actually anticipate that I may be able to quote some of his chairman’s statements in some of the institutions to which he may go, but then against the future Minister of Finance. I look forward to that day when I may be able to do that, because I think that is likely to come. We shall see how these things develop and how this goes on. [Interjections.]

I should also like to pay tribute to the wife of the hon the Minister. I think she has filled that office with grace. I think that when she has accompanied him overseas, she has been a credit to the womanhood of South Africa. I should like to associate myself with what has been said about her, but rather to associate her also with what has been said about the hon the Minister, because the hon the Minister has learned over the last few years that women are a fairly powerful lobby in South Africa. [Interjections.] Actually, they are a very powerful lobby [Interjections.] I actually feel reasonably comfortable with the hon member for Houghton behind my back. [Interjections.] I think that in that lobby the hon the Minister’s spouse has also been of considerable value to him.

I wish him good health. I hope that he will continue to make a contribution in the finances of this country, and we look forward to him having a real role to play because if his health will hold—I am sure it will and we wish him well in that regard—I should not like to see him disappear from the financial scene in South Africa.

Sir, my problem is that I am going to miss him. I do not know with whom I am going to fight in the future. That is one of the problems which I have, and it is one of the problems which I have about my speech today, that I was going to launch a great, big attack on him, but how do I do that in the circumstances? [Interjections.] Even in this last moment he has a frustrating debating ability in this context. In that spirit I wish to say that I wish him well. I wish him and his wife good health. I repeat that I hope they will continue to make a contribution to, the finances of South Africa.

I want to turn to the hon the Deputy Minister of Finance and deal with what he has said. I want to start slowly and carefully when I speak about this Bill. It contains a number of technical details most of which we will deal with in the Committee Stage. We do not have serious trouble with the majority of these details. When it comes to the question of handicapped persons we agree with the provisions in the Bill and actually believe that they should go a little further. One of my colleagues will deal with this aspect in due course. Then there is the question of charitable organizations and what they can now do. This is something we welcome and which we will support. We are a little concerned about the problems which may arise from the add-in add-on situation, because we like to see certainty. Whereas we realize that in some circumstances it may be necessary to have an exemption provision, we believe that those exemptions should be kept to an absolute minimum. We also think it is important, as has been indicated in the Bill, that it should be quite clear what sort of shop you are going into so that there can be no misunderstanding as to what is going to happen in regard to sales tax.

There are other matters of a technical nature which we will debate when we get the chance in the Committee Stage and some of my colleagues will do so, but the debate has been made much easier due to the very thorough explanatory memorandum which we received and for which I want to express my thanks to the commissioner for Inland Revenue for the care he has taken in respect of that.

I now want to come to the two major issues in the Bill. The first of these I want to deal with is the exemption provision, namely the exemption of certain foodstuffs from GST. Obviously we must welcome this provision, because we have battled for it over very many years. We have considered that it is necessary to have such a provision and that is why we welcome the exemptions contained in the clause concerned. However, I have to say to the hon the Deputy Minister that the tragedy of this is that the ham-handed way in which this exercise was initiated has brought the whole system of exemptions into question and under pressure from institutions. I do not think that what has been done to the office of the Commissioner for Inland Revenue has been fair, namely that these exemptions have been sprung on them. It is also not fair what has been done in respect of this Bill, namely that we only deal with it today, while its provisions will come into force within a couple of days from now. This is not the way to run a country. I fear that one of the important aspects of having an exemption system, is that you cannot bring it under a cloud when you introduce it by introducing it too quickly. The original idea of having the whole thing investigated by the Standing Commission on Taxation, not only in respect of whether it should be done, but in respect of its method of implementation as well, was an extremely sound one and it should have been followed through. Then we would have had time. However, what has actually happened, is that the Commissioner for Inland Revenue has had to work under tremendous pressure to work out a system in the relatively short time available to him. I think we can be grateful that commerce and industry which have complained about inadequate consultation, have yet been prepared to co-operate in full in respect of this matter. A lot of the teething trouble which will come about, may well have been avoided as a result of the combined efforts of the Commissioner’s office and organized trade and industry. I think one has to thank them for that, but I do not think it is the way to do it. I say with great restraint that I do not believe that we should embark on something like this ever again within such a short space of time and with such inadequate planning where people are put under this kind of pressure. I am concerned that the cloud which could hang over this due purely to this rush could well influence whether people see it as a good or a bad thing that this is being introduced. I believe it is a good thing which as such must be pursued. We must, however, learn a lesson from this and not approach matters in this way again.

There are a series of matters arising from this which need to be dealt with. The hon the Deputy Minister has referred to some of them. Firstly, we have the problem of confusion. The public must know exactly what is exempt and what is not exempt. I believe— and I have directed such an appeal to the hon the Deputy Minister before—that it should be written into the law and made compulsory that at every single outlet where exempt goods are sold a notice should be displayed informing the public on what goods they do not have to pay tax. The hon the Deputy Minister is somewhat concerned about so-called reflections on the business community—I shall come to that—but the reality is that, whereas the business community as a whole can be honest, there are always people who will take advantage of a situation. It is no use our pretending that there are not such people, because that it the reality of business life in South Africa and we must bear that in mind. I think that the hon the Deputy Minister must take every possible step to ensure that there is no confusion about what is exempt.

*Then the hon the Deputy Minister said in his introductory speech:

They do in fact make it easier. This is a fact. I think the hon the Deputy Minister must realize that this is the case. He went on to say:

†With great respect, Sir, no one is saying that all businessmen, including all small businessmen, are dishonest, but the hon the Deputy Minister cannot get up here and say that they are all honest either.

That is right.

Of course. How can he then say what he said in his introductory speech? All we are saying is that one must have legislation in order to make exploitation and abuse as difficult as possible. It must be prevented because one knows it takes place. One can quote example after example of how this has taken place. Even the statistics furnished by the hon the Deputy Minister relating to the number of prosecutions and the amount of money recovered prove that, whereas in the past it was not so easy to exploit and to avoid paying tax, it is now in fact easier. Those statistics provide absolute proof that exploitation takes place.

It can take place in two ways. Under the new system tax can be levied on goods on which it should not be levied or—and both can apply—the tax is not passed on to the Exchequer and, on top of it, the Exchequer not only does not get the tax paid by the consumer but does not get the income tax either. All the businessman has to do is take the cash out and not show it as part of his turn-over. Then he has in fact defrauded the Exchequer twice. That that happens is a reality and our job is to see that it is kept to an absolute minimum.

Therefore, firstly, I appeal to the hon the Deputy Minister that the authorities should take all possible steps to ensure that there will be no abuse or exploitation. Secondly, the public should be alerted as to their rights and they should know exactly what they are doing in the circumstances. Another appeal we have made to the hon the Deputy Minister and which so far has fallen on deaf ears is that, particularly now with the exemption system, it should be compulsory to provide either a cash register slip or some other written document indicating what goods were purchased and how much the sales tax was, except when the transaction is for a minimal amount. It has been demonstrated that that can be done by means of a cash register or an invoice and that will in fact provide the consumer with the necessary proof so that, if he feels aggrieved, he can do something about it. With substantial cash purchases a person sometimes writes down the total and details illegibly and then throws it away. One then leaves without knowing what exactly you have paid, what the tax was, what items were exempted from tax, and this is not good enough. I believe there should be a proper system with proper invoices. There should be a notice in all shops stating what items are exempted from tax and when the consumer has made his purchases, he should receive a cash register slip or an invoice. In this way he can check his purchases and safeguard himself. Inspectors should be alert and more clever than the people who try to pull a fast one. In this way one can have the backing to enforce the system.

We have posed questions about certain taxes. Once the tax is imposed by the Government, the GST has to be collected, because if it is not, then one day the Government may come along and put the tax up further because all the necessary tax is not collected. That is why we stress this as being of importance.

I now come to the question of exemptions. Everybody have their own ideas as to what should be added to an exemption list. I have my own ideas; the hon the Deputy Minister has his own and so other people have their own ideas. However, there are certain things which have to be looked at squarely. Firstly, has there been any—I want the hon the Deputy Minister to reply to this—adequate consultation as regards the actual needs and problems of the lower income group? If so, what has that shown? As I see it, there are two problems which have been overlooked, namely the questions of storage and refrigeration combined with the actual eating habits of lower income groups in South Africa. To leave out tinned foods, dried foods and dehydrated foods, is something which does not make sense because the poorer section of the community do not have refrigerators and therefore do not preserve fresh meat, fish and vegetables. In these circumstances they buy tinned and dried food.

You have very little knowledge of the poor.

I may have one advantage in that I have actually been poor myself. I know what it is not to know where the next meal is coming from, which maybe the Deputy Minister has not experienced. I know what the problems of the poor are and what it is like to live without a refrigerator. The hon the Deputy Minister might be living in a different world. Dried beans, peas and other legumes are eaten by people in the lower income group. They eat tinned foods and meat. Where does one store fish and meat which you do not eat that day?

I now want to refer to another example, namely medicines. One thing which should surely be exempted in medicines. It may be argued that there are medical aid societies, but the reality is that medicines are an essential of life. One realizes this when you can least afford it. To my mind there is a wide gap in this sense and that is why we have an amendment to this on the Order Paper I now move as an amendment:

I now come to the actual increase in sales tax. In this regard we are really in a strange situation. One has certain questions in this regard and the hon the Deputy Minister must justify some stipulations. Firstly, is this increased tax needed to cover the budgeted expenditure? From the figures which have been given to us until now it is quite clear that if this tax is imposed and if the amount of revenue is collected as is being forecast, there will be a substantial surplus at the end of the financial year. The only question is that if the estimates are not accurate, if the view on the credibility of the estimates which has been expressed by us in the Budget is a correct one, and if we take into account the provisions for the new constitution which are not there, we will get a very substantial additional estimate later this year. We are being told none of this. What we are actually being asked to do is to agree to an increase in taxation which, from a natural tax point of view, is in respect of more than half of what is forecast to be recovered unnecessarily in the circumstances. The only alternative then is to say that instead of borrowing money the increased tax will be used, and so borrow less money. I venture to make a forecast that what is going to happen during the current financial year is that the Government will borrow the money that it has budgeted for, and that the tax will come on top of that. The hon the Deputy Minister has to deal with this. That is one of the fundamental grounds on which one goes to the legislature to get approval for tax legislation.

There is also another matter with which the hon the Deputy Minister, or the hon the Minister of Finance, has never dealt with. He has R441 million of Sasol profits, which has not all been allocated yet—some has been given to Escom, etc—in the Reserve Bank, or invested in the new commissioners which have been created. What is going to happen to that R441 million? That is a lot of money in anybody’s terms. It is more than half of what is intended to be raised during this year alone from this form of taxation after deduction of the amount that will be lost as a result of exemptions.

If the purpose is not to raise money for tax purposes and there are economic objectives then we have a very strange situation. Then we have a kind of dichotomy that develops here. Sometimes we have a situation that we are told that everything is marvellous in regard to the balance of payments and that they are really running very well. Then one gets told that they are running very badly and that one needs this in order to deal with the balance of payments. Is this a measure which is being introduced in order to deal with the balance of payments, and in particular the current account? If it is, then there are other better methods. It is not necessary to tax all consumption if one wants to only deal with a reduction of consumption in respect of imported goods. There are other methods of taxation which one could then apply and which would only apply to imported goods. It has been done before in a form, such as for example the import levy. By imposing it on all goods what one is actually doing is to try to reduce consumer demand as a whole. I have said before, and I want to repeat it now, that by seeking to reduce consumer demand for locally produced goods one is reducing capacity in manufacturing concerns in South Africa even further. The lower the capacity utilization the higher the unit cost and the greater the danger of unemployment. Those are facts. One cannot get away from them.

As far as we are concerned, we do not believe that one should discourage consumption of local products, which are not purchased by means of credit which has been created but in the ordinary course, because that is in the interests of South Africa. We believe that industries which have been set up at great cost to the economy and to the taxpayer should not be harmed in a way that they may be bearing a harm which will last for a long time and in some cases may not be capable of being dealt with. When one has a real squeeze and companies go into liquidation one can never get those jobs back. They are lost for ever. At the cost of job creation in South Africa we cannot afford that. The statistics show that both sequestration and liquidation have been on the increase, and therefore we should not take that chance.

There are other methods of dealing with credit and I find it amazing that we have not looked at the position in regard to credit other than to deal with interest rates. The hon the Minister of Finance this morning again referred to the amount of credit that is being incurred. However, despite the fact that there has been this tremendous escalation of credit, we do not appear to be doing anything about it. There are methods of restricting credit, if that is what one wants to do, to ensure that people live within their means and not on borrowed money. But no such method is being employed. If, in fact, one wants to use these mechanisms in order to deal with the economic situation, I am suggesting that there are alternative methods. The challenge that I therefore put to the hon the Deputy Minister is that he must in the first place prove today that he needs this money. I think we can prove that he does not need it if his estimates are correct. Secondly, he must tell us that this is the most effective method in order to deal with the economic problems of the country. Contrary to what has been said by the hon the Minister yesterday and again this morning, people of the status of Prof Lombard and others indicate that this is not the best method to adopt, and one cannot just ignore the opinions of people such as these. It is perfectly true that if one wants to squeeze the economy—as the hon the Minister said this morning—one can put up GST to 15% or to 20% but one has to look at the consequences of what one is doing. One has to look at what one is doing to the economy and to the South African industry that is so vital to us.

There are people who contend the indirect taxation is much better than direct taxation. I am not against indirect taxation but a balance between the two has to be struck. However, what has to be borne in mind is that indirect taxation has its least impact in a country where the wage gap is the smallest. Where the wage gap is large indirect taxation which is related to consumption expenditure, casts a heavier burden on the lower income groups than it does on the higher income groups. This increase of the GST is not harmful to the rich; they will continue to spend as they wish. But, to take up an extra portion of the disposable income of the lower income groups places an increasing and much heavier burden on them. When the gap between incomes in South Africa has been reduced, then there will be a better case for greater indirect taxation. Admittedly the gap has been reduced over the years to some extent but it is still large by world standards, and in view of this, indirect taxation is not a satisfactory and equitable way of dealing with the situation. In fact, it will discriminate against those who have to spend all their income.

In these circumstances, we believe that the increase has not been proven to be necessary and that there are in fact serious credibility problems about the estimates. Furthermore we believe that there are serious gaps in regard to the Budget because the new constitutional dispensation is not provided for at the present moment. If it is contended that this increase is necessary for economic reasons, we believe that there are far more effective ways of dealing with the situation than this increase in GST that has been imposed.

In these circumstances we regret that we cannot vote for the Second Reading.

Mr Speaker, I should like to join the hon the Deputy Minister and the hon member for Yeoville in congratulating the hon the Minister of Finance. I am doing so in my capacity as a member of the finance group of our caucus. We should like to take this opportunity to wish the hon the Minister everything of the best. It was always a delightful and very pleasant privilege and experience for our group to listen to the hon the Minister, to take cognizance of his expertise in the field of finance and economics and to learn from him. As a group we should like to wish him everything of the best and we also feel that he will not be lost to South Africa, particularly in the financial field. We also wish him everything of the best.

In the course of my speech I want to return to what the hon member for Yeoville said in respect of sales tax. It is striking, if one thinks back to 11 May when the hon the Minister announced the increase, and the reaction of the hon member for Yeoville at that stage, and one compares it with his almost moderate attitude here today, then one realizes that a change has taken place in his thinking as far as GST is concerned. Possibly he has gained more insight into the actual implications and has realized that this is actually to the benefit of South Africa.

At that stage the hon member for Yeoville attacked the hon the Minister and the Government because the GST had been increased. He argued that it was poor planning and that the previous budget had not been adjusted accordingly. He also accused the hon the Minister of allowing himself to be led by other factors instead of the economically acceptable information that was available. He also argued that the economic position prior to the preparation of the Budget had not been taken into account. What is of importance here is that when certain tax adjustments are made, whether it be additional or increased tax or whether it be tax concessions, this must be accompanied by cool, clinical reasoning. The available parameters and economic and financial trends have to be used in reaching such a decision. In my opinion political considerations do not play a role in this case.

The first factor in this connection was that the consumers did not see the warning lights that had begun to flicker long before the Budget, and failed to react positively to them, because there was a great deal of reckless spending on the part of consumers. Unfortunately this did not happen. In spite of high prices, a double-figure inflation rate and ridiculously high interest rates, consumers continued to spend as if we were living in a kind of utopia here in South Africa. The urgent need to save was not recognized. To put it mildly, the consumer simply spent everything he earned in an almost reckless way, and in many cases more was spent than was available. If we look at the financial reports pertaining to commercial and consumer goods for example, we observe that usually without exception there has been an increase in the turnover of the relevant undertakings during the past six months. We are dealing here with a dreadful anomaly, the kind of situation that scares one when one begins to analyse it. The South African economy is in a recession. This is a situation in which one would assume that the inhabitants of the country would be having a hard time. On the contrary, there is a flourishing trade in consumer goods, even luxury items. We think of the flourishing motor trade for example, in spite of economic pressure. To summarize, it means that in spite of the allegations that consumers were having a hard time, they continued to spend to an increasing extent. This cannot continue. I therefore want to argue that the increase in the GST to 10% should not only be seen as additional revenue for the Treasury, but that it should also be seen as a inhibiting factor to bring consumers down to earth. If the increased GST were to succeed in preventing consumers from spending excessively, I believe we shall have succeeded in achieving an important objective as far as the increase is concerned.

Recently we have had the tendency to buy on a large scale to avoid the 3%. This was from the time the announcement was made until the day after tomorrow, 30 June. This is and was an exercise in futility. In actual fact the consumer did not save anything. The people are using their scarce and expensive money to save 3%. Some of them even went so far as to purchase on credit or hire purchase in order not to pay the extra 3%. This is not sound business. It is absolutely ridiculous. Interest rates are too high at present to make use of credit facilities to make purchases, and particularly ordinary household purchases.

I want to discuss the increase in the GST to 10% for a moment. A GST of 10% sounds a lot; let us be honest with each other, 10% is a fairly large amount on large purchases. For that reason I believe and hope that it will have the psychological effect of deterring people and forcing them to buy more carefully and judiciously. What does the increase actually mean? In effect it means that GST is rising by 3% on all purchases except certain basic foodstuffs that are excluded from GST. The hon member for Yeoville said that it affected the poor man, the low income group, more than the person with a high income. If we look at the monthly food basket of the ordinary family, we have to remember that their daily milk, bread, meat and vegetables is included in that basket. Then the 10% does not look so bad. If the food basket totals R100 and R30 of that—I think this is a reasonable assumption—consists of basic foodstuffs that are not taxed, this means that that basket is only going to cost R107. What I am trying to say is that as far as the normal purchases of a normal household are concerned, including food, there need not necessarily be an increase in the GST, particularly not with regard to those persons with limited means.

The available income of the people to whom the hon member for Yeoville referred is of such a nature that they will very seldom be able to use it for purchases other than household consumer items, most of which consist of basic foodstuffs. I therefore maintain that in the long run this means that there is not going to be an increase of 10% for the poor man. We are not unsympathetic towards these people; on the contrary, we fully appreciate the fact that they have to pay an extra 3% on items other than food. But we must not wrest the situation out of it context either.

These people are not able to purchase many items other than the essentials, and for that reason I think we would be wresting matters out of their context if we were to argue, merely for short-term advantage, that they are going to be the people to suffer. The fact that basic foodstuffs are not being taxed places them in a fairly favourable position.

I want to repeat my thanks and appreciation to the Government that the hon the Minister and the department saw their way clear to excluding basic foodstuffs from this package.

The hon member for Yeoville has an amendment on the Order Paper in terms of which he proposes that the list of basic foodstuffs be extended. He referred inter alia, to canned foods. We have to be careful not to start a chain reaction of demands for exempted goods. The longer this lists becomes, the greater and more difficult control will become. We shall therefore arrive at a situation in which we shall not be able to exercise proper control. Then it must also be borne in mind—this is the second reason why the increase has been introduced—that additional revenue is being sought by means of the increase. If representations are made for every item that is used frequently to be exempted from GST, we shall find ourselves in the position that we are unable to generate any additional funds.

The hon member also wants to restrict exemptions on canned goods to goods manufactured in the Republic and the TBVC countries. I have a problem in this connection. I was unable to verify this fully, and I think this is in conflict with the arrangements agreed upon and contained in the provisions of the GATT. The hon the Deputy Minister would be able to react to this further.

I also foresee that basic foodstuffs cannot be exempted from general sales tax indefinitely. I foresee the day when we shall have to tax these basic foodstuffs on a differentiated basis. I therefore feel that we should not make this list of exempted foodstuffs too long and too elaborate.

I now want to discuss with the hon the Deputy Minister the fact that the exclusive method of levying this tax will be compulsory from 1 September. I want to approach this from a practical point of view. I do not have any difficulties with the exclusive method in larger supermarkets, speciality shops and dealers of that kind. I believe that they will be able to handle the situation because they can differentiate between listed goods and goods that are not to be taxed. I think it is possible for them to do so with their modern cash registers. My problem lies with the café on the corner, the smaller shop which is not able to purchase such sophisticated cash registers. It seems to me that in such cases the inclusive method would be the most practical method of collecting the tax. If the retailer can add the tax to the price of his goods and not add it to the exempted goods, it is there for everyone to see. The consumer shopping at a café or smaller shop is then able to ascertain what the price is and whether GST is being added to exempted goods. The consumer can then ascertain the price for himself, and inspection and control will also be far easier for the department. I am not convinced that the exclusive method is the correct method for the smaller businessman—I am now referring specifically to cafés and other small business undertakings. I should like to hear the opinion of the hon the Deputy Minister on this.

We shall therefore begin levying the increased GST on 1 July. I should like too appeal to everyone, and I am including my own family in this, to purchase with greater responsibility and care, particularly in the times in which we are now living. We are going through difficult economic times and if we continue with present pattern to expenditure we are not going to make the grade. I also want to appeal to dealers to ensure that all GST collected is paid to the State. At present there is a great deal of criticism of smaller dealers—let us call them the café on the corner—because they do not pay in all the GST they have collected. I do not want to join those critics, because those dealers are again going to be given the opportunity to prove that they mean well by South Africa. I think that they will play their part eagerly to implement the differentiated GST. A great responsibility is going to rest on those dealers and we want to ask them to act with great circumspection.

To summarize—this measure is not only aimed at increasing the GST to 10%, but it also provides moderate relief with regard to basic foodstuffs. The measure also contains provisions to enable charitable organizations to make purchases free of GST. This is a major concession for which we are extremely grateful. The purchase of apparatus for the handicapped will also be exempted from GST and I want to thank the hon the Deputy Minister and the other persons involved specifically for the fact that they considered the circumstances of these people compassionately.

The fact that sales tax is being increased is not the end of the world. Consumers will have to adjust and work together with the State with greater responsibility to make a great success of this. If we make the grade and a period of economic prosperity sets in again, we shall reap the benefits of this measure.

Business suspended at 12h45 and resumed at 14hl5.

Afternoon Sitting

Mr Speaker, the hon member for Gezina spoke just before lunch and he raised quite a number of matters. I wish to associate myself strongly with his appeal to the public to live within their means. However, the hon member also said something which, in my opinion, was going too far. He said that general sales tax was introduced as a restraining instrument to bring consumers back to earth. Those were his words, more or less. Surely we cannot adopt the standpoint that sales tax should be imposed as a restraining influence and to punish and tax people. This may work in certain respects, but one cannot punish a man when he has to purchase essentials and clothing, inter alia. One cannot yet away from that.

Before going any further with my speech, I first want to refer to the hon the Minister of Finance. I regret that he is not present, although I can well understand that he cannot remain in the House to listen to us when he has a great deal of other work, too. Personally, and on behalf of my party, I want to say that I have a high regard and a great deal of respect for the years of service he has rendered in this House. In his first eight years as Minister of Finance I regarded him as one of the great Ministers of Finance of South Africa. Then he introduced Budgets as I know him. I think he was also Minister of Economic Affairs for two years prior to that. In that capacity has acquitted himself of his task well and rendered good service. I have said in the past that when I want to praise a man, I shall praise him, and when I want to criticize him, I shall criticize him. Unfortunately, through no fault of his own, the hon the Minister was forced to introduce political Budgets over the past two years. However, we have a great deal of praise and gratitude for the tremendous service Prof Horwood has rendered to South Africa, sometimes in difficult circumstances. A few years ago I saw that he had problems with his health, but despite that he was always friendly and cheerful and he always tied the knot and ac quitted himself well in his post. He made his mark, and I want to tell him and his friendly wife—even if one makes her angry she still laughs—that we wish them a pleasant retirement and good health.

I now come to the hon the Deputy Minister of Finance who introduced this Bill. As I have said before, I want to say that we object most strongly to this. The Second Reading of the Budget was approved on 9 April and on 11 May it was announced that GST was being increased from 7% to 10%. South Africa cannot deal with its Budget in this way. It undermines the confidence of the public. Whom and what must they believe when the Budget is altered in this way after 32 days? In a matter of a few months this Budget has been altered twice—I think—by way of the Supplementary Budget and the like. South Africa cannot go on like this. It is the first time in my political career in this House that the Budget had been so drastically amended and tax has been increased to this extent. It cannot go on like this. I hope this is the end of it.

We shall refer to certain of the exemptions at a later stage. I want to say that if sales tax had been increased at the right time by, say, 1%, it would not have been necessary to come up with this drastic increase to 10%. We are in favour of general sales tax. This tax should be on a broad basis so that everyone will pay. It would have been much better—the hon the Deputy Minister can go and speak to businessmen about this—if GST had been increased over a period than to have a big increase now. My personal opinion is that there should be no exceptions. There should be one fixed tariff throughtout, but there should then be larger subsidies on essentials.

Where do we get the money for the increased subsidy?

The hon member must listen. I said that it should be imposed on all products throughout. A larger subsidy could then be paid on essentials. The same tax is still being collected. If the hon member does not understand that, I will do the sums for him. It would then have been easier for the department to exercise control and to administer it as well. Thirdly, it would be very easy … [Interjections.] The hon the Minister of Posts and Telecommunications is making jokes. He is probably thinking about the R20 on which he said the elderly should live. [Interjections.] The hon the Minister knows so much about finances that he wants the elderly to live on R20 per month.

If GST is imposed as I suggest, it would not be so confusing for businessmen either. I have documents of the Afrikaanse Handels-instituut and Assocom here. These people are going out of their way—apart from what is being done by the department—to explain the new GST to people. For example, I want to refer to a pamphlet of Assocom. The hon the Minister of Finance wrote a foreword to this pamphlet. There is absolute confusion and dissatisfaction amongst businessmen. I quote from this pamphlet of Assocom:

The pamphlet goes on to say:

It is therefore already so bad that people have to be warned, since there could be a change in respect of taxes again tomorrow. In the pamphlet an indication is given of which goods will be subject to GST and how this should be done. In the same circular or guide to businessmen the following is stated:

I now want to point out the following to the hon the Minister, and I quote:

Whatever one does, it is difficult to control this matter. I want to be realistic and point out that it is not easy for the department to control it. With the additional tax announced by the State, not only are problems being created internally in that certain products are being exempted and others not, but there are other problems as well. The hon the Minister should consider taking my advice. The hon the Minister himself said in his Budget speech that businessmen are suspected of being dishonest and not paying over all the taxes. There are people who are not happy about these accusations. There is a certain percentage who do in fact do so. We accept that. All those people are not sly and dishonest, however. I want to suggest something to the hon the Minister in this regard. Every month when businessmen pay over their GST and a receipt is issued the department should issue a certificate, emblem, sticker or label, or whatever, with that receipt which will indicate that the company, concerned has paid its sales tax that month. That document should then be displayed in the window, just as it is compulsory to comply with other regulations. It would not cost much to do that. The certificate would be issued together with the receipt. [Interjections.] It seems to me that the hon the Deputy Minister is not interested.

I hear everything you are saying.

The hon the Deputy Minister is talking aloud while I am speaking to him. [Interjections.] I should like to see more courtesy on the part of the hon the Deputy Minister. The issuing of such a certificate together with the receipt would be the easiest method of exercising control. If such a certificate is displayed in the window, an inspector of the department or the public can see immediately that that business undertaking has paid its GST. If it does not display such a certificate, the public can insist on seeing the certificate which indicates that the GST has been paid. That is a very easy method of controlling these matters.

I want to tell the hon the Deputy Minister that there are in fact problems with regard to GST. Of course, some people are hit harder than others. Hon members are aware that farmers or traders in the far Northern Transvaal or the Western Transvaal, or in any remote area, pay much more for their products than, for example, those in Cape Town, Pretoria or Johannesburg, as a result of high transport costs. Since these people have to pay an additional 10% in the form of GST they are hit very hard. We must be sober-minded and realize that these higher taxes hit hard. I just wanted to mentioned that in passing.

I want to bring another matter to the hon the Minister’s attention as well. Certain products are being exempted from GST. Supposing I was a farmer farming with three different products, viz vegetables, cattle and chickens. The vegetables I sell are exempted from GST. The cattle I sell are also exempted from GST under certain circumstances. For example, when I sell cattle at an auction to a fellow farmer or to someone who also has a licence, I do not pay GST on that transaction. If I sell chickens to a butchery, that transaction is not subject to GST either. However, if I sell live chickens, the transaction is subject to GST. For example, one could go and purchase a number of chickens from a chicken farmer and store them in the deep freeze, and one does not pay GST on that transaction. However, if poor people purchase a few live chickens and they want to keep them in their backyard with the purpose of slaughtering one every week, or according to their requirements, that transaction is subject to GST. The backyard is the deep freeze or refrigerator of the poor section of the population. I want to ask the Deputy Minister please to give his attention to this matter. Could one not consider exempting live chickens sold for slaughtering purposes from GST?

I want to raise another matter as well. I want to ask the hon the Deputy Minister, apart from investigations launched by his department itself, to ask the HSRC to launch an investigation into the recession in the economy as well as into the tremendous slackness in personal and other savings. Let the HSRC do that; then they need not waste their money and energy on investigating the Afrikanervolkswag. [Interjections.] Perhaps we could also ask another body to launch such an investigation. I shall get to that in a moment.

Before concluding, I should like to thank the department for the memorandum they have placed at our disposal. Just by looking at it, I estimate that it consists of 7 515 words. If I consider the commas and fullstops, it consists of almost 6 481. To me it sounds as if those could be the figures in Potgietersrus. Let the “DTD” do an investigation as well. [Interjections.] Look at the top echelons. The chairman will do everything in the interests of South Africa. The managing director is an expert on diets, particularly on starvation and oil diets. I am thinking of an ombudsman who could also be a photographer, and the secretary an expert on the distribution of rubbish. Then we have the “Dirty Trick Department” of the National Party.

Sir, we cannot support this legislation because we object to the fact that taxes are announced in this way. We shall therefore be voting against the Second Reading.

Mr Speaker, no doubt the major news story of today will be the announced retirement of the Minister of Finance and I, like the chief spokesmen on finance of the other parties, would like to say a few words in this connection. At the outset I should like to associate myself and also my colleagues in the NRP with many of the views expressed by the hon member for Yeoville when he spoke earlier today, regarding the Minister of Finance. I should like to say, as the hon the Minister himself said, that there are times when the arguments in this House become quite heated and possibly to uninformed observers sitting in the galleries, we might appear to be at one another’s throats. They may think that a great animosity exists between hon members. Yet outside the House one will notice that we are inclined to act as civilized human beings, and so it should be because, after all, this is what Parliament is all about. It is a talking-shop where we can voice our views; where we can disagree and where we can do so very frankly and bluntly. We hope that after having done that, that we can get some sense out of the policies that come out of this House.

Having said that, I should like to say that the hon the Minister of Finance over his 10 years in office has made a major contribution to South Africa. I am one who believes that any man who takes on the position of Minister in the Cabinet of a nation such as ours, is indeed a very brave and hardworking man, as the hon the Minister himself said in regard to his own staff, the Department of Finance and his own ministry. Those of us who observe the activities of his staff and also of the Minister know just how much time they put into their jobs. It is in many respects a very onerous and difficult job.

The past 10 years have not been easy economically speaking. The entire world economy has been going through major changes after the very liberal years of the sixties when money flowed like water. International banks allowed nations to borrow up to the hilt. Indeed, I recently read that the Argentine right now owes something like $60 billion and has an inflation rate of over 450% per annum. This gives an indication or some of the difficulties that nations are experiencing at the present time. A lot of this has been due to the free-lending ways of many international bankers and also the free-spending ways of many nations that have been permitted to spend money in that way because their politicians have allowed them to do so. For a Minister of Finance in South Africa to have maintained the nation’s finances at the high level at which they have been maintained, does indicate in my opinion that the hon the Minister of Finance has made a major contribution in this regard. In relation to many Third World and developing countries I agree with the hon the Minister that South Africa rates exceedingly high in international quarters. I believe that the compliments that are paid to South Africa in this regard are justified. However, as I have said, the role of an Opposition is one in which we are not found to be satisfied. There is an old saying which I leant while I was studying management some years ago namely: “Show me a satisfied employee or person and I shall show you an unmotivated employee or person”. That is quite true. If we sit in this House expressing a great deal of self-satisfaction, it means that we are not sufficiently motivated and that we are not approaching the problems of South Africa in the correct manner. It is for this reason that we in these benches are constantly badgering the Government in respect of certain issues, especially in regard to high Government expenditure with which I intend to deal this afternoon as well as the question of high taxation, which is, after all, what the Bill before the House is all about. As I say, I shall deal with this matter shortly, having said that, I want to convey the good wishes of the NRP to Prof and Mrs Horwood—the role of the wife of a Parliamentarian is never an easy one—and to express the hope that they have a long and very happy retirement together.

As far as the Bill before the House is concerned, it contains a number of amendments which are very much of a technical nature. There are many amendments which are necessary and which we welcome because they do tend to clarify certain issues which are a trifle confused at the present time in the minds of the public. We also welcome those provisions which include institutions catering for indigent people in the definition of “charitable institution”. This is very welcome because it means that in future these institutions will be exempt from the payment of GST on the provisions that they require for their activities. There is also clause 3 which provides exemption for the physically handicapped. The equipment required by these people because of their physical handicaps will in future be exempt from GST. This also includes the repair, adjustment or servicing of such equipment. This is a most welcome provision because these people deserve this concession.

I do not intend dealing with any of the other provisions providing for further exemptions, or the problems in regard to refunds and the methods of appeal where application for refunds have been turned down by the Commissioner. As I have already said, they are very much of a technical nature and the proposed amendments are intended to remove some of the confusion that has existed in the past.

I should like to refer briefly to clause 6 which deals with the entrenchment of the add-on method of pricing goods. As we all know, up to the present the vendor has been able to decide for himself whether he wanted to adopt an add-in or add-on system; in other words, including GST in the price of the article or otherwise adding the tax at the check-out point. We know that especially as a result of the provisions contained in this Bill vendors will in future have to follow the add-on procedure. However, the Bill does make provision for the Commissioner to issue a certificate of exemption to certain vendors if, by virtue of the type of business they run, the add-in method of applying GST has to be followed. One can think of petrol as an example in this regard, the price of which includes GST. One can also take the example of slot machines and so forth. This is a necessary provision that he should be allowed to, but clause 6 now very clearly lays down the procedures that a vendor has to comply with in order to get that certificate. I should just like to stress the provision that such a vendor will both in his advertising and in his place of conducting his business have to state quite clearly either, in his advertising or by signs in his business, the fact that the price does include the payment of GST. I sincerely hope that this will be given a lot of publicity. However, as the hon member for Sunnyside and others have said, there will possibly still be some unscrupulous vendors who will take advantage of people and in addition to the included GST charge an additional amount of GST. I sincerely hope that the public will become very much aware of these provisions.

To my mind, however, the two most important clauses in this Bill are the ones that, firstly, deal with the confirmation of the increase of GST from 7% to 10% and then clause 20, which contains Schedule 7 that contains the list of foodstuffs which in future will be exempt from GST. I should like to say at the outset that we in the NRP welcome the exclusion of certain foodstuffs from the payment of GST. We are very, very pleased that the department and also commerce were able to find their way clear to be able to do this and to allow this. The fact that certain foodstuffs are now excluded from GST is most welcome indeed.

However, having said all this, I regret to say that we in these benches are unable to support the Bill as a whole and for this reason I now move the following further amendment:

1. (1) it confirms the increase in the rate of general sales tax from 7 per cent to 10 per cent without any corresponding decrease in personal and company tax; and
2. (2) Schedule 7, which exempts certain foods from general sales tax, fails to include certain basic essential foods required by the lower income group.”

At the outset I should like to deal with the increase in GST. We in these benches have made our attitude very clear during this past session with regard to Government expenditure. Whilst I admit that something like R600 million in the yield of GST is going to be sacrificed because of the exclusion of certain foods from GST, the overall increase in GST from 7% to 10% is going to mean that the South African public are going to have to carry an even heavier tax burden overall. Whilst we concede it to the hon the Deputy Minister and to the hon the Minister who spoke earlier today that by increasing GST a certain amount of money will be taken out of circulation and that that will assist in dampening consumer buying, while we concede that there is some merit in this, the fact is that the State is extracting greater sums of money from the public in order to finance its ever increasing expenditure. We do not believe that South Africa can continue, especially in the light of the new constitutional dispensation which is just around the corner, with its present spending program. Therefore we believe that we should stress with the Government that there is a great need for greater emphasis to be placed on examining every avenue or every area of Government expenditure with a view to arriving at the correct priorities, priorities that will have as their main objective increasing the greater national wealth of South Africa rather than fritting away our wealth on expenditure that is not really contributing to the GDP. One must remember that one out of every three Whites in South Africa is employed by the Government. We must remember that, as the hon the Minister said earlier today, 25 cents out of every rand—I have been given information that this has now risen to 28 cents out of every rand—spent in South Africa is spent by the Government. This type of expenditure, I believe, is sapping the very vitality of the wealth producing sectors of our economy.

When we face the future, where we are widening and broadening the democratic process and where we are bringing other race groups into Parliament, people who are going to work for the betterment of their people when it comes to education, housing, hospitalization, pensions and so on, there is going to be an ever-increasing demand for more money to be spent by the Government. Because of this I believe the State has to examine every State department, every State corporation, every marketing board and every institution which falls within the State’s jurisdiction in so far as its expenditure is concerned with the view to economizing.

Hon members on the Government benches often ask: Where can we cut our expenditure? I want to say that for 10 years in this House I have spoken on transport matters. Last year we had a great debate when we considered the SA Transport Service Appropriation Bill about the immense loss which was facing the SATS, a loss which was estimated at R643 million. What happened this year? The hon the Minister of Transport Affairs came here and told the House that that loss had been reduced to a mere R11 million. This was the result of a massive economy campaign with the SATS. As a result of that economy campaign some 30 000 employees of the SATS were removed from their employment and are now available for employment elsewhere in more productive jobs in South Africa. This is the sort of thing which we should like to get from the State as a whole, that they examine their expenditure programme with a view to bringing about economy which will release some of these one-in-three Whites presently employed by the State so that they can go out into the rest of the economy, especially into the private sector, to generate more wealth for South Africa.

Therefore we believe that we cannot support the bill. The result of it will be the extraction of more money out of the taxpayer’s pockets to finance government expenditure.

With regard to the second leg of my amendment, the part relating to schedule 7, we believe that the list of foodstuffs is full of inconsistencies. Some of the items are rather illogical. I have looked at the amendments which the hon member for Yeoville has on the Order Paper, and we shall support those amendments to the hilt. There are one or two others which I should like to add because we believe that there are foodstuffs which should be excluded.

I think here particularly of rice. We believe that rice should have been exempted from payment of GST. I say this because in Natal where we have something like 0,75 million Indians we find that their staple food is rice. Why, in heaven’s name, the hon the Deputy Minister could not have included rice as one of the foods which are exempt from GST, I shall never know. When I speak about inconsistencies I agree with the hon member for Yeoville.

When it comes to the subject of meat, it means that the wealthiest man in South Africa can go into the most expensive butcher’s shop and buy the most expensive cuts of meat—fillet steak at nearly R8 a kilogram— and he is exempt from paying GST. Those of us who live in the rural areas and see the purchasing patterns of that labour, know that Black workers go into shops to buy canned beef or canned offal, or whatever it is. As the hon members have said, because they do not have refrigeration they buy canned food and yet in future will still have to pay GST on that. I cannot understand the logic of it. It is the same with milk. There are farmers on the Government benches and if they have watched the living pattern of farm labourers they will know that mothers buy a tin of condensed milk—I have often seen this—put a hole in the can and prevent it from leaking with a piece of newspaper. When their children need a bit of milk, they pull out the piece of newspaper, pour out some condensed milk which they shake up with some water and then feed it to their babies. Why cannot condensed milk be free from the payment of GST? This is the inconsistent and illogical side to this list which we just cannot accept.

Then there is the question of sugar. Why has sugar been left off this list? When the sugar industry went to the hon the Minister in the past to ask for an increase in the price of sugar because of rising costs of production, he has said that the price cannot be increased to fully remove rising costs because it is an essential foodstuff and people require it as a high energy food. At times when inflation ran at 12% to 15% the price of sugar only went up by 7½% or 10%. However, when exemptions from GST come along, what does the hon the Minister of Finance say? He says the GST cannot be removed from sugar because sugar is, after all, sweet and must therefore be a luxury. What a lot of nonsense that is. We know that sugar is one of the highest energy foods there is and we know how important it is to certain communities. Here I once again agree with the hon member for Yeoville when he says that canned jam etc should also be included in this list. I would also like to see canned syrup included in the list and I will tell the hon the Deputy Minister why. Syrup is used extensively by Blacks. One can go to any of the transit railway stations in the Free State or elsewhere to see this. Labourers on their way to the mines buy half a loaf of bread and then remove and break up the centre of the bread into small pieces. They also buy a small can of syrup, which they pour into the bread so that the bread soaks it all up and then they eat it. In the process they get the protein in the bread and the energy from the syryp. This is the eating pattern of the poor people for whom these exemptions are supposed to have been designed. Yet we find that those of us who like steaks and nice fresh fish are exempted from paying tax on these items.

Fresh fruit is included in the list, but who can afford to buy fresh fruit these days? The prices of fresh fruit are exceedingly high. Some poor families may want to buy a can of some of the cheaper brands of cling peaches so that they can give their children some canned fruit instead of buying expensive fresh fruit, but in future they will have to pay GST on it.

Because of all these reasons we will not vote for the Second Reading of the Bill.

What about “maas”?

Yes, I agree. No doubt the hon the Deputy Minister unfortunately does not know what “maas” is. Our criticism is that not enough thought and consideration has been given to those who really need to have GST removed from the articles of food they buy by the hon the Deputy Minister. For these reasons we will be voting against the Bill.

Mr Speaker, the hon member for Amanzimtoti spoke at length, but he really did not say anything on which one could elaborate. He referred to bread which is hollowed out and filled with golden syrup as a meal and asked that syrup should not be subject to sales tax. The hon member would then have to include red lemonade, for that is really the way to eat such a loaf of hollowed out bread. Inter alia, he pointed out that the State spends too much money on uneconomical things. He made the same statement in a previous debate. Since he was not present when he was given a reply on previous occasions, we now want to ask him to tell us very clearly where and how the State should save. I think he referred in a speech in another debate to a saving of 10%. He must tell us now on which items and in which way 10% should be saved, since every time he makes a contribution in this House it is a chimera. It is very easy to come up with suggestions and to make certain recommendations, but he must tell us how we should do this. Should we appoint fewer teachers? Should we appoint fewer people in the health services? Should we spend less on pensions? Should we spend less on salaries for officials? He must tell us where the State should save 10%. He must make it clearer. It is very easy to say in a vacuum without going into details that there should be a saving of 10%. I challenge him to rise on another occasion and tell us where specifically the State should save this 10%. We shall then see what he says. Possibly he would save like his party saved on voters in Rosettenville yesterday. [Interjections.]

The hon member for Sunnyside also referred to tax. He labelled tax as a punitive measure. One can look at tax as one likes, but I have never regarded it as a punitive measure. It is not pleasant to pay tax and no one likes paying tax, but tax has to be paid in order to be able to achieve a certain goal. Inter alia, higher taxes are imposed to achieve certain economic goals as well, for example, to combat over-expenditure. The hon member for Sunnyside regards it as a punishment that certain steps are taken for economic reasons. Since this results in economic discipline and the economy and over expenditure being placed on a better level and inflation being restricted in the process, the hon member should not refer to this as a punishment. I think we should see tax in the right perspective as a monetary and fiscal measure not only to provide the State with revenue, but also to achieve certain economic goals.

I want to say a few words about the consumer’s duty when it comes to spending, with regard to the new system in terms of the measures before us as well. I think the consumer’s responsibility in South Africa’s economy cannot be overemphasized. Consumers do not always buy judiciously. They do not always make use of the opportunities for competition in the market. Nor do they always use the market place to their own advantage. It is time for the consumers in South Africa to utilize existing opportunities to the full so as to scale down prices in the market place to the extent that it will be to their own advantage. In South Africa we find that inflation expectations are having a negative effect on inflation at present. We have seen this again recently. People expect an increase in prices, and the moment they expect that, they go and buy. Because they buy, they increase the demand. The hon member for Langlaagte has returned to the Chamber. He has all the knowledge in the world, but he will not understand anything about this in any case. As the demand for goods increases, prices increase. Therefore, because people expect an increase in prices, they automatically chase up the prices by purchasing unnecessarily, since very often they are things which they do not need at that moment. Once again we have the situation in which people incur bank overdrafts at 21% interest in order to obtain a 3% saving. It is this kind of action on the part of the consumer which is to this detriment eventually. Care will have to be taken that the actions of the consumer are in his own interests. The consumer will have to take cognizance that when he visits the trader in the market place the service he receives is the best.

As far as that is concerned, I want to remark on how sales tax could be controlled in general. It is a pity that when sales tax was introduced at the beginning, we in South Africa did not act in the same way as we did at that time with decimalization. At that time there was a complete revolution in the use of aids. We were all familiar with the old adding machines and cash registers which worked in pounds, shillings and pence. When the decimal system was introduced a complete revolution had to take place. It is a pity that we did not build this system into our auxiliary systems right at the outset when sales tax was introduced by, for example, stipulating that every trader applying for a trading licence could obtain it on certain conditions. One of the minimum requirements, for example, could be that he has to have a cash register which complies with certain minimum standards on which the transactions of the person have to be recorded. When he hands in his statement at the Receiver at the end of the month and pays his sales tax, a slip from the cash register could be attached as proof. We would probably not be able to eliminate all the problems in this way, but we would at least enable the consumer to insist on proof from the cash register of the transaction that has taken place. In so doing the consumer could assist in supervising, on behalf of the State, the taxes that have to be imposed, since the less tax paid over by the seller, the more tax has to come from another source.

It is not only GST that is affected, but income tax as well. We are all familiar with the term “hot” money. I am not saying that everyone has “hot” money, but we do know of many people who have “hot” money. This “hot” money costs the fiscus money in two ways. It costs money as regards GST, as well as income tax.

Perhaps it is not yet too late to give attention to this kind of aid to the trader. It could also be used by the consumer to protect himself and to see to it that the tax on what he purchases goes to the State.

This legislation will assist us in administering certain matters better, and I therefore take pleasure in supporting it.

Mr Speaker, before I react to some of the points made by the hon member for Springs, I would like to refer to the amendment moved by the NRP. We basically agree with their amendment, particularly as regards the fact that there has been no corresponding decrease in personal tax, although I do not agree with the question of income tax on companies. I believe that companies have got off relatively lightly in recent years.

If one actually looks at the place of sales tax in the fiscal policy of South Africa, I believe it is true to say that it is playing a more and more prominent role. In the year 1980-81 the amount of money which came from sales tax was R1 653 million. For the budgeted year 1984-85—before the increase from 7% to 10%—this figure has increased to just over R5 billion, which is an increase over that period of time of 203%. Obviously the figure is going to be higher because we are going to get the increase from this new tax. What actually interests me about this is the proportion of GST out of total tax revenue. It has actually increased from 13,5% in 1980-81 to 23,6% at the present moment. That is what it is budgeted for. I think the original intention—in this regard I agree with the hon member for Amanzimtoti—when sales tax was introduced was that it would help to keep the burden off individual taxpayers. That was the quid pro quo. Let us look at the figures to see what has actually happened. In 1980-81 the amount collected from individual taxpayers was R2 090 million. In 1984-85 it is budgeted to reach R7 265 million. That is an increase of 247%. The percentage of personal tax as a proportion of the total amount of revenue collected has also increased, from 15% to 34%. That is why I would agree with the hon member for Amanzimtoti on that point that the quid pro quo has not been there. Not only has sales tax increased, but also individual tax has increased.

I would disagree with them when it comes to companies. The hon the Deputy Minister will know my feelings on company tax. Let us look at the position. In 1980-81 companies paid R2 417 million in tax and in 1984-85 they will pay R2 900 million. During that period there was an increase of 19% in the amount of money collected, whereas the additional amount collected from GST has increased by some 200%.

I should also like to talk about the impact of GST on the economy. I have heard it argued here that the increase in GST is actually anti-inflationary. I think the argument is based on the premise that if people have to pay additional GST they have less money available for expenditure and that this actually curbs the demand for goods. If one looks at what has actually happened in South Africa, is that true? What in fact has happened is that GST has increased but that the demand for goods has not declined. Why? Because credit is very freely available.

Plastic money.

Yes, as the hon member for Houghton says. If one wants GST to be deflationary one has to keep the other things in control also. If credit is freely available an increase in GST automatically leads to an increase in prices because there is no countervailing force against it.

I want to say to the hon the Deputy Minister that I think the timing of this was unfortunate, because the ordinary consumer in South Africa is overspending. There is no doubt about that. He is not saving enough. Our savings have declined. Personal savings in South Africa have declined to an all time low if taken as a percentage of our income. In fact, it is quite possible that we are taking money out of accumulated savings. Therefore, in this sort of environment where there is over-expenditure, where credit is freely available and where people are not saving, to introduce an increase in GST whereby people are actually given an invitation to spend, is bad.

Business interrupted in accordance with Standing Order No 74.

Mr Speaker, we have now come to the end of this debate, a limited debate as far as time was concerned. It is true of course that no levying of tax of any kind is ever a popular matter, and I expected nothing else from the Opposition except that they would introduce amendments here expressing their protests against this increasing in GST. However, I did expect the Opposition Parties to do this in a more reasonable way, and also that they would offer alternatives. I am sorry that the hon member for Yeoville cannot be here. He apologized for his absence. He referred to the food items which had been excluded, and the other Opposition spokesmen also referred to those items.

I want to say at once that an exemption is an extremely problematical matter. If hon members could have seen the hundreds of representations which we received in connection with the exclusions, they would have realized what an extremely problematical matter this really is. Recently I had occasion to discuss the question of sales tax with one of the experts of the IMF. He told me that the countries of the world were coming to the conclusion that the ideal situation would be to keep the tariff as low as possible, single figures if in any way possible, and that there should be no exclusion. That is in fact the ideal situation and no one can get away from it, but unfortunately we are not living in ideal circumstances. We are dealing here with the problem of poverty, to which we cannot close our eyes and our ears.

Mention was made of irregularities during this debate, and I also mentioned the matter in my Second Reading speech. No generalization whatever can be made in this connection, however, and I reject the idea that our dealers in general are deliberately trying to commit irregularities. One can make one’s laws as strict as possible, but one cannot, after all, appoint a policeman in every enterprise. Consequently one can only try to limit irregularities to the best of ones’s ability by means of inspections, for example, and by increasing the inspection personnel by employing knowledgeable persons. But what I should like to mention here is the following: A few days ago considerable publicity was given to prosecutions in the courts of people charged with failing to pay over tax to the State. I should like to ask the Press today to give even greater publicity to such prosecutions in future. In that way they would really be doing the consumer a service and would assist in protecting him more effectively.

The hon member for Yeoville, as well as the hon member for Sunnyside, referred to the possibility of a person having some kind of written proof. The hon member for Yeoville said that there should be some written proof of the goods having been bought, while the hon member for Sunnyside, on the other hand, wanted written proof that a business undertaking had paid sales tax, and he wanted it to be displayed in the shop window where everyone could see it. These are all possibilities, but one should also take the practical problems into account. If we were to provide at this stage that every sales transaction should be accompanied by some written proof, it places an impossible burden on the retailer. The fact that a dealer may display a certificate in his shop window stating that he paid sales tax the month before is still no guarantee that he paid all the tax. One should also be careful of that psychological effect that a dealer may now say that since he has complied with the provisions of the Act he may as well cheat. The fact of the matter is that in a country such as Italy there is such an arrangement that some written proof must be submitted for all purchasers. It is also a fact that evasion of tax is exceptionally prevalent in Italy.

The hon member for Yeoville—and this was also the general tenor of the remarks of the hon member for Amanzimtoti—referred to the goods that were now being exempted. The hon member for Yeoville also said—in fact it also formed part of his proposed amendment—that canned foods should be exempted. We are not in any respect trying to suggest that this exemption applies to all the articles which could be exempted on meritorious grounds. That is not the case. Any person who thinks that we tried to define basic foodstuffs in this way, is making a mistake, because we did not. All that this legislation is trying to do, and all that we are trying to achieve with these exemptions, is to afford the public a certain degree of relief in respect of certain basic foodstuffs. The fundamental requirement that every individual should, to a greater or lesser extent, also make a contribution to the State coffers is being retained.

In his proposed amendment the hon member for Yeoville also referred to medicines, which he thought ought to be exempted. We already have the position where indigent persons are in fact able to obtain free medicine in this country.

What is the definition of an indigent person?

Surely there are certain standards which are prescribed and to which persons have to comply before they can enjoy those services. The hon men ber is a medical practitioner and he ought to know. [Interjections.] In addition there arc medical funds which make provision for people who are less indigent. Consequently I repeat that even if there should be a degree of merit in this matter, it is still not what we are trying to achieve with this legislation. I want to say once again that we are not trying to exempt all items that have merit. We are trying to afford the consumer a measure of relief.

It was also asked why it was necessary to levy these taxes. The fact of the matter is that the hon the Minister of Finance elucidated the reasons in full during the discussion of his Vote when he announced this tax increase. He said that he needed the money for fiscal reasons, but he also said that he needed it as additional income. He made no secret of the matter. In his Budget Speech he stated expressly that if it should appear that the revenue had been estimated too tightly and the expenditure was higher than had been envisaged, he would have no option but to increase taxes.

It is also important that additional revenue be obtained from these measures, for the reasons indicated by the hon the Minister of Finance. It is also important, however, that this is a fiscal measure which is depriving people of certain quantity of money so that less will be bought and so that there will be less insistence on purchases from abroad. We have an open economy and we import many goods. There will also be a reduced demand for dollars and this will also have a better effect on our exchange rate, as well as on our balance of payments. It could eventually also have a moderating effect on the inflation rate. Surely it is true that if the amount we have to borrow is less because we are receiving more money in the form of taxes, this could also have a moderating effect on our interest rates, something to which we are all looking forward. We are all looking forward to a drop in interest rates.

Reference was once more made to the question of the Sasol money. The hon member for Yeoville has referred to it on previous occasions. In the past, when the hon member and I had an opportunity to debate alternative forms of taxation, he always said that the Government should borrow the money. We should not increase taxation, but should borrow the money. The proposal the hon member is now making by implication is that we should use the capital amount which we received for the capital assets of Sasol which we sold to cover current expenditure. I think that is even more irresponsible than saying that the Government should borrow.

All of us would very much like to protect our domestic products against foreign products. The hon member for Yeoville requested here that we should not grant exemption to those food items that were imported. It is unfortunately the case that the GATT agreements which we endorsed do not make this possible. In any event, it is a two-edged sword. What we would then like for our domestic commodities also applies to the domestic commodities of other countries. They will then wish to apply the same degree of sanctions on our goods which we export to them.

The hon member pointed out, inter alia, that it would not help to increase industrial capacity in this country. At the same time the hon member pointed out the weak economic conditions in which our country finds itself. However, it is an interesting fact—it is stated in the latest quarterly bulletin of the SA Reserve Bank—that the utilization of industrial capacity increased during the last quarter from 84% to 86,5%. It is true that this is not the ideal, but it is nevertheless an excellent utilization. When we talk about an economic recession, therefore, it is necessary for one to see all these matters in their correct perspective. If we say that, comparatively speaking, things are going well with the South African economy, we are not implying for one moment that things are going very favourably. But if we look at the rest of the world, we can say that things are going well with the South African economy.

The hon member for Gezina referred to the large amounts that were being spent by the private consumer. I thank him for doing so because it is one of the most important reasons for our exchange rate problem with the South African rand and it is also one of the principal reasons for inflation. I do not think we can emphasize it strongly enough, and I should like to see the official Opposition expressing more forceful opinions in this regard. Their main speaker referred to the matter in a single sentence.

Ten per cent is a considerable rate; I concede that to the hon member, but what I am pleased about is that the hon member also emphasized the importance of the exemptions, which will afford the buying public a large measure of relief. They can even adopt a selective approach now in order to derive the greatest benefit from these exemptions. I thank the hon member for doing so. The hon member also referred to a specific problem, namely the problem of the small dealer for whom it would be more convenient to make all his prices inclusive, that is so to say to make use of the add-in system. I readily concede that this would appear to be the case, but there are important reasons for deciding that everything should be exclusive: In the first place so that there can be uniformity and in the second place so that the buying public can know that something still has to be added on to those prices. Another associated aspect is that one might find the unscrupulous dealer who, in the case of the uninformed buyer, could add to that price in which tax has already been included. For that reason we think it would be better if we have the one system where tax is not added in.

The hon member for Sunnyside said that he wished to place on record the strongest objection of his party to the levying of this tax. Apparently protesting is all that the hon member and his party can do, but when it comes to alternatives, he suggests subsidies. Does the hon member ultimately want a welfare state in South Africa? Surely it is the case that once a person has started with subsidies, one has to continue. Does the hon member want a welfare state here? [Interjections.] I must point out to the hon member that that matter was in fact investigated and it was found that if we were to subsidize those commodities on the basis that the people who needed it should receive the subsidy, it is a hopeless and impossible task to carry out administratively.

Moreover, the hon member made wild allegations about the so-called slump in the South African economy. On what did he base that statement? People are buying too much, far too much, and that he admitted. The purchasing power is too high. Last month was an all-time record month for the car market. The property market is excellent. On what does he base his statement when he says that he wants an HSRC investigation into the slump in the economy?

Is there no slump?

I have just told the hon. member that the utilization of industrial capacity was 86,5% and that it had reached that mark after it had risen from 84%. Does the hon member call that a slump? The hon member should at least put in a little study before making that kind of wild allegation here.

†The hon member for Amanzimtoti referred to the period of 10 difficult years that has just gone by. He also referred to free-spending banks and to the debt-ridden countries of the Third World. He paid tribute to the contribution made by the hon the Minister of Finance in keeping South Africa a creditworthy country under circumstances like these. I wish to thank the hon member for that.

*The hon member also moved an amendment in terms of which he firstly condemned this increase in tax because there was supposedly no corresponding reduction in direct tax. That is an exercise in futility, because what one is adding in the one case, one is subtracting in the other. Surely it was stated clearly that money was also needed in this exercise. Surely one cannot deduct everything one receives owing to one tax from the other one, because then one has nothing. No, it would benefit the hon member to think a little harder about these matters.

The hon member for Springs asked him on what we should make cutbacks. The hon member for Amanzimtoti said we should make cut backs. The other day I also asked one of the other hon members of that hon member’s party this question. He said we should cut back on the salaries of officials. He said that the salary account of the public sector was too high, and I then asked him straight out whether he was alleging that there were people who were being paid for not working. If I remember correctly, he intimated that he thought so. If one looks at the figures, however, one sees that over the past ten years the salary account of the public sector has in reality diminished in proportion to the total revenue of the State. When one investigates these things one therefore funds that it is not all that simple to generalize. The hon member referred to milk, meat and sugar, and said that it was illogical that these foodstuffs should not also be excluded from sales tax. I repeat that no attempt was made to grant exemptions in all meritorious cases. One could think of many others which ought perhaps to be excluded as well, but then one makes this exercise impossible to carry out. All the Government is trying to do in this respect is to grant everyone relief as far as sales tax is concerned.

I should like to thank the hon member for Springs for his contribution. He pointed out that there were other fiscal reasons why this additional revenue was needed and I thank him for doing so.

The hon member for Edenvale referred to the position of companies. I think that he cleared up the matter as far as the hon member for Amanzimtoti was concerned, and I need not therefore say anything about it. One could probably argue about the question of whether or not sales tax is inflationary. Personally, however, I think that it is strongly anti-inflationary, and I hope that we shall see the results of it. Credit is still too freely available but to limit credit further in an economy which is going through a period of recession is also a risky measure. We know that we could increase the deposits on hire-purchase contracts considerably tomorrow, but in the process we shall inhibit trade tremendously. In fact, the commercial sector has already requested us please not to do that. We therefore have the complex problem that a balance has to be struck; while one is going the one thing one should not omit to do the other.

I should like to thank all hon members who participated in the debate for their contributions.

Mr Chairman, clause 1 contains certain changes that were not discussed on the Select Committee. This makes one suspect that there are great problems within the National Party on this clause.

The policy of “local option” of the party seated to the left of me in this House …

What is its name?

I do not know. One cannot actually call it by a name because yesterday it voted half for the policy of the National Party and half for its own policy. Those members of the party who support their own policy, are divided between Mr Ian Jayes, their leader and the CP. I therefore do not even have a name for the party.

†However, the fact is that local option is no more part of the Government’s policy.

It has never been.

Oh, it has never been. That means you are out again, Vause.

The problem with this clause is that the State President can meddle in local politics. [Interjections.] He is the person who will decide, especially for a place such as Potgietersrus, that Indians, Coloureds or Blacks can be put in the centre of a town and the local authority there can do nothing about it. The State President is not an elected member of the people in that area and they will have no right whatsoever to attack him on his decision. He is therefore nothing else but a dictator. He will force decisions on people who will not have the right to vote him out or have any say in the matter.

*It is prescribed in the clause that the State President must consult the Administrator. It has already been said that the new dispensation is nothing but the appointment of a dictator which will lead to a process of the total take-over of the will of the people. What was important about the previous situ ation—I am one of those people who supports free enterprise—was that section 19 gave people rights, but because they were subject to group area laws, if problems cropped up, one always had the right to call them to order, no matter what population group they belonged to. This is now falling away. The people adjourning those areas no longer have rights which they can cause to be applied. They have no remedy to resort to. Of what use is the Strydom Committee? The Government appointed a judge and tried to politicize the group areas investigation. That judge made a few fundamental recommendations, but these were rejected by the Government. He proposed for example that people contravening the Act should be punished to such an extent that they could even lose their buildings if group area contraventions occurred.

That is not true.

Yes, it is true. When that hon member was a verkrampte he agreed with me. He has been battling for the past few years to choose between the left and the right. I am having trouble with him now. I think I shall stick to the right and he can go to the left. [Interjections.]

Order! Which clause is the hon member dealing with now? [Interjections.]

Clause 1. The entire problem with this legislation is that it does not contain an answer to South Africa’s race problem. This Government has not learned anything from 36 years of governing and adaptation. In South Africa there must either be total separation or one must decide whether one wants to integrate. One must simply take that decision and have done with.

What the Government is doing here is simply allowing a process to go sour. In practice one cannot achieve a final result with this clause and its implementation that can satisfy anyone. Why is the Government continuing with this course?

Why is the Government depriving people of their rights, even down to the third tier of government? I am not referring to depriving the Coloureds of their rights. I am always opposed to people being deprived of their rights. [Interjections.]

Of what rights are people being deprived?

The Minister must go and read the legislation. He must not ask me that. He and I are good friends after all, and he must not ask me to reply to this kind of question. He must read the legislation. He has a responsibility to see these laws in good time and must not ask me to explain things to him at this stage.

We cannot support this clause because it will satisfy neither people of colour nor Whites, and also because it will make the third tier of government absolutely impossible because those people are not going to have any real rights.

Over the years the legislation on gold proved one thing. The legislation now before this House is a refined method by which the Government is trying to apply a provision similar to those in the legislation on gold. One need only look at this blue book and the earlier Feetham reports to see that things never worked out when they were approached in a roundabout way. The Government must tell us where it is heading. It will have to explain its intentions, ie that which it is proposing in this legislation cannot be part of the new dispensation because the legislation cuts both ways, it upholds integration and also tries to preserve separation. The Government must decide in which direction it is going.

Mr Chairman, in listening to the hon member for Lang-laagte, one heard the voice of naked racism, racism at its very worst. The hon member suggests that in Potgietersrus, poor benighted place that it is, they should not allow Coloureds and Indians to trade in the central business districts. He suggests that they should not be allowed to own shops there and make money. However, I want to ask the hon member whether he believes that Coloureds and Indians should not be allowed to shop in the central business districts of towns within that constituency.

That might be a very good idea.

The hon member says I have a very good idea. He obviously approves of the idea, and yet I would believe that that hon member is in all probability a shareholder of companies that make money by selling goods to people of other races in this country. He is happy to take their money but he is not happy to allow them to have their fair share of the economy of South Africa.

However, that is not the only party that one can accuse of this type of behaviourism. I want to refer the hon the Minister to the report of the Riekert Commission which I am sure he has read on many occasions. There are two recommendations in that report that I want to refer to. The first is the finding of the Riekert Commission in respect of free trade areas. This recommendation of that commission is very much in line with the Bill that is in front of us today. There was, however, another recommendation and, as far as I can establish, that recommendation has up to this point in time not been altered or has not been attended to in any shape or form. This is the recommendation of the Riekert Commission in connection with Proclamations R3, R4 and R5 of 1968.

We are not dealing with proclamations now, but with legislation.

I appreciate that we are busy with altering the law but in terms of the law that this Bill is altering, the Group Areas Act, there are certain people who are prevented from trading in these very areas. Now, because of the amendments to the Group Areas Act, we are going to have Coloureds, Indians, Chinese and hopefully Blacks who will be allowed to trade in central business districts but they are going to be affected by these very proclamations in their trading within those areas.

No, you are wrong.

I should like the hon the Minister to clarify that. If he intends withdrawing these proclamations …

No, no!

…I am prepared to sit down and not take the matter further. However, the hon the Minister says he is not prepared to withdraw them, and I think that is scandalously racist. Let us see what these proclamations state:

This means that if a Coloured man in terms of this amendment works or owns a shop in a central business district area, he cannot employ an Indian or a White in these categories, as laid down in this particular proclamation. I want to ask the hon the Minister, who is not in his seat at the moment, whether he will do something about Proclamations R3, R4 and R5 of 1968.

You are totally irrelevant now.

On the Statute Books of this country there are still laws that have to be observed, and they affect the central business district of these areas that we are discussing in this Bill.

That has nothing to do with this Bill.

That is not true. In terms of this clause the State President issues a proclamation. He says that the central business district of Port Elizabeth can be open to all race groups. An Indian then buys a retail shop in that particular business district area and has a White manager. Will he then without having to obtain a permit be able to continue to employ the White manager of that business?

He can employ a man of any colour.

But only if he obtains a permit?

I said he could employ anybody.

Well, then, what the hon the Minister is in effect saying—and I want this on record, Sir—is that if a Coloured, Indian or Black businessman trades in a central business district area, he can employ in the categories mentioned in these proclamations a person of any race group?

Of course.

In terms of what law does that happen? Will they need a permit to be able to do that?

No.

They will not need a permit. Therefore, we have it on record—I think this is very important—that Proclamations R.3, 4 and 5 will not apply in CBD areas in terms of clause 1 of this Bill.

May I now ask about CBDs which the State President does not proclaim. Let us say that Cape Town’s CBD is not proclaimed in terms of this clause as being open to all race groups.

That has nothing to do with this legislation.

It has everything to do with it, absolutely everything. If the hon the Minister does not like my using Cape Town, perhaps I should use Pretoria as an example. It is far more likely that the CBD of Pretoria will not be open to all race groups. May I ask then whether Proclamations R.3, 4 and 5 of 1968 will still apply within Pretoria? I believe it is very important for the hon the Minister in his reply to set out for us—as they are so fond of saying—in an orderly manner firstly, which provisions of these dreadful proclamations are going to apply in CBDs that are open to other race groups in terms of a State President’s proclamation; secondly, which provisions apply to areas that are CBDs that are not opened up by a State President’s proclamation; and, thirdly, which provisions apply to businesses generally. Obviously, Sir, it is the viewpoint of this party that Proclamations R.3, 4 and 5 should be repealed immediately and in their entirety. I say this because they amount to discrimination of the worst possible kind. In this regard the evidence given before the Riekert Commission stated, inter alia:

This is a quotation from the Riekert report. The recommendation of the commission was, of course:

I would urge the hon the Minister to get on with this as soon as possible.

Mr Chairman, when the hon the Minister introduced this legislation yesterday, he said that it was really interim legislation because the committee could not make a full report and because the whole Act had not been investigated. His purpose with this interim—as he called it— legislation is to make certain concessions and to hone the rough edges of certain of the provisions of the Group Areas Act a little. The hon member for Bellville says that the residential restrictions are there to create social order or to combat social friction. That is how he put it. Now the hon member must concede that where there is social order the law is unnecessary and, conversely, if the law causes social disorder or irritation, it is not according to the spirit of the law as the hon member sees it. I am mentioning this because I should like to illustrate how clause 1, which is now removing certain restrictions and even introducing the right of ownership, can in fact sully relations. I shall come back to this at the conclusion of my speech and address a request to the hon the Minister.

In the Warwick Road area in Durban— the hon the Minister is familiar with that area; it is in the Grey Street complex—a small piece has been cut off by the freeway and that has now become the so-called Warwick Road triangle. This area is mainly an Indian area, but Coloureds and Whites also live in that triangle. It is mainly a trading area. The ground floor of the buildings are businesses where mainly Indians conduct business and above them are three and four storey residential buildings where Coloureds, Indians and Whites all live together, sometimes across the street and sometimes even on the same side of the street. Social order prevails there. It looks a little like Calcutta or Lagos—in any case, not like White South Africa.

In terms of clause 1 that area, if it were to be proclaimed as such, could become a free trading area and those who own those buildings, would be able to continue to do so. That is the case, after all. In my possession I have a letter to an owner of a building in that area which reads:

In terms of this Bill ownership will now fall away. He may now own that building. The letter goes on to say:

In that building Indians and Coloureds live in a few storeys above and some of them work below. Until now, before this legislation, that owner could sell that building only to a member of the White community in time, since that area has now included in a White group area. In terms of this Bill, however, he can continue to own that building.

He can, but who says that he will?

The funniest thing is that that person may no longer live in his own building, a building which he owns.

Those are merely theoretical possibilities.

They are not only theoretical possibilities; that is absolutely true.

Let us look for a moment at what this is going to do to social relations; whether they are going to improve, or whether this legislation is going to sully them.

Another letter reads:

Further on in the same letter it states that if he does not react to the letter—

In other words, there are ways and means. This is beginning to sully matters. It is not improving matters, but sullying them. After this high-level discussion and the friendly invitation, it states that they can go and look at houses in Phoenix which is approximately…

Order! I cannot see what this has to do with clause 1.

Sir, I am pointing out that a person may own a building but that he may not live in it himself.

That is nonsense. Where do you see that?

Order! The hon member is making out a case that a person can go and look at a house situated in another area, and that has got nothing to do with clause 1.

Sir, if it is your ruling that this question is irrelevant, I accept that. All I want to say is that such people can go and look at the houses from the outside, but they are not permitted to go in. I shall leave it a at that, however.

Since this is a temporary or interim measure, as the hon the Minister said, I ask the hon the Minister please to retain the status quo in places like the Warwick Road triangle with regard to residential occupation until such time as the Act has finally been looked at That is not asking too much. People have lived there harmoniously for between 40 and 60 years. I am asking that we do not put this further implementation into operation until such time as we come forward with the complete legislation.

Mr Chairman, as I indicated during the Second Reading debate, we obviously are quite happy with the basic principles involved here, but as I also indicated, I feel it is very wrong for the opprobrium for anything which goes wrong to be put right back on to the State President. This is to me quite a silly thing to do. It is incredible how the Government seems to have the unhappy knack of ensuring that what they do, even if it is something good, is done in such a manner that they can get severely castigated for doing it the wrong way.

At this point there is no question about it that the opening up of business areas to all race groups is definitely the will of the majority of the people in South Africa. There is no question about that. At the same time, however, to have the responsibility on the State President, what situation does it create? If anything is not right, the people who do not look upon us with a friendly eye, are going to blame the Government in general and the State President in particular for anything which is not right, but with the concept of local option with the Ministerial right of stepping in to investigate when there are appeals, it would not be the State President or the Government who is at fault. The example of Potgietersrus has been referred to. If in Potgietersrus they refuse to have Coloureds, Indians or whoever it may be in the town area, then it would not be the Government who would be at fault; it would be the town council of Potgietersrus. Why should the Government want to take upon itself the blame for this sort of thing? This is the only point that I wish to emphasize in this Bill.

There is another point upon which I should like to touch again because the hon the Minister did not give me a reply to it. I asked what constituted partially occupied premises because I was not quite sure what was meant by that term. If it means that if one has a caretaker in a flat on the premises, that makes a shopping centre partially occupied, well of course it would defeat to a very large extent what the Government is trying to achieve. If it means in the case of a shopping centre such as the Gardens Centre where they have in one part of it a large block of flats, that the shopping centre cannot be made available to other communities, then it would of course also defeat a large portion of what is intended here. I would appreciate it if the hon the Minister could give me some indication of what is meant by that.

Mr Chairman, yesterday the hon member for Umbilo raised the same matter he referred to again today and I explained to him then what the reasons were for my not being able to accept his view. I think we should agree to disagree as far as this aspect is concerned. As far as the question of residential buildings in free trading areas is concerned, I wish to confirm that such buildings whether they are used or occupied exclusively or partially will not form part of the free trading areas. In the case of a caretaker’s flat in a business complex, there should be no problem in granting a concession for such building to be used for business and relevant purposes.

*In regard to the hon member for Greytown’s reference to the Warwick Avenue Triangle, let me just say that I do not have any personal knowledge of that area. Nor do I think that what is said is relevant to the matter under discussion. I have just received a note from my officials, however, which I shall read to the hon member. There is only one portion of the Warwick area being used for business purposes, and we expect this portion to become a free trading area. The remaining portion is used chiefly for residential purposes and is in a White area. The majority of the inhabitants are Whites and not Coloureds or Indians. In consultation with the City Council the area has been replanned as an urban renewal area. The Indians living in the envisaged free trading area will, with permission, be able to remain there. That is what I have the department’s authority to say on that matter. I do not have any details about this case.

The hon member for Port Elizabeth Central questioned me about proclamation R228 and about the extent to which it would be applicable to the free trading areas. These restrictions on staff will not be applicable in free trading areas. These restrictions fall away when a free trading area is proclaimed. This is already the case in the approximately 30 free trading areas proclaimed in terms of this very section. The hon member must just use that snowy white head of his every now and then and he will be able to fathom for himself that it makes no sense allowing a Coloured or an Indian to carry on a business undertaking in an area … [Interjections.] Those chaps sitting there in the kitchen must keep their mouths shut.

Where is the Parliamentary kitchen?

In a moment I shall be telling that hon member where something else is.

Mr Chairman, on a point of order: Is an hon Minister permitted to refer to a portion of the House as the kitchen?

Order! The hon the Minister made that reference in a lighthearted vein, I know, but I do want to ask him rather to withdraw it.

I withdraw it, Sir. The hon member for Port Elizabeth Central can think for himself that it would surely be senseless allowing a Coloured or an Indian to run a shop or other business undertaking whilst placing restrictions on his staff. That is how simple the matter is. Outside such free trading areas things will, in future, be as they are at present. If there is no free trading area in Adderley Street, the same present-day restrictions will apply in terms of proclamation R228. I have already said, in reply to a question, that we are committed to repealing this regulation. There are problems that have to be ironed out. As I have said, it is not only our department that has an interest in this. In the select committee, however, I also asked hon members of the official Opposition to help me to facilitate the process involved in repealing the proclamation. They did not assist, and therefore these things must simply be endured for a short while longer.

The hon member for Langlaagte said we are now dragging the State President into local affairs because he would now have to make the decision. Obviously he knows, as well as I do, that the State President acts on the advice of the Minister. So it is, in point of fact, still the Minister, but this is the way it appears in the legislation. In the Bill it is stated:

In the Act in its unamended form, it is stated in the following terms:

What is the difference?

The new dispensation is the difference. Doing away with group areas is the difference. [Interjections.]

I do not want to argue with the hon member on that basis. All I hope to convey to him is that the Act is not being changed one iota as far as that is concerned.

The hon member also spoke here generally about our depriving people of their rights. In all good faith I asked him to point out certain of those rights to me. I think he then said I should read the Act. There are, however, no rights that are being taken away. It is therefore very clear to me, as far as that is concerned, that he is simply talking and that there is no substance in what he is saying.

He also said that at the moment there is a measure of control in regard to the approximately 30 thus far declared free trading areas. Those are the areas declared to be free trading areas in terms of section 19. He said that control was embodied in the fact that we issued permits, and that if we were not satisfied with what was happening there, we could always revoke such permits. That is correct. That is how things have been done up to now. After the same kind of investigation these free trading areas were also established in terms of a proclamation and controlled by way of permits. The same process is now going to take place, but the control by way of permits falls away. Long before I appeared on the scene, these free trading areas had already been established, and it has never been necessary to revoke a permit.

What would now happen if there were problems which made it necessary to reconsider a decision? I want to point out to the hon member that these free trading areas are also to be established by proclamation and that a proclamation could also be repealed through certain channels. So there will still be control, although control by way of permits is, of course, a more concise and, let me say, more convenient method. We do, however, want to get away from permit control as far as possible. Thereby I have now finished dealing with the matters which the hon member for Langlaagte raised and which I wanted to reply to. The other matters he broached are not related to this matter and I therefore do not want to go into them. I do not want to be distracted by them. I think I have replied sufficiently comprehensively to everything he said.

Mr Chairman, the hon the Minister has now for the second time raised the question that he could not introduce certain changes to Proclamation 228 because he could not get the co-operation of the Opposition. I do not want to go into the details of what was obviously a confidential select committee meeting, but the equivalent of what the hon the Minister offered us …

Order! I am sorry, but the hon member cannot discuss that under this clause.

But, Mr Chairman, the hon the Minister has raised the matter. He also did so during his Second Reading reply.

Order! The hon member should raise this matter during the Third Reading debate.

Mr Chairman, I want to thank the hon the Minister for his reply and explanation of the situation in regard to the proclamation. He believes that to apply it in these areas which have been opened up, would not make sense and I quite agree with him. However, my problem is that to have this proclamation in the first place does not make any sense either. It is obviously the intention of the Government to repeal it.

We are committed to it.

We are very glad that the Government is committed to this. Would it be possible for the hon the Minister to give us some indication of when this will happen?

Mr Chairman, whilst I was speaking about this clause, the hon member for Port Elizabeth Central said that I was a racist because I made certain statements. In other words, that means that the entire National Party have been racists for 34 years. The hon member supported them in Rosettenville, however.

No.

You voted there, did you not?

Order! The hon member must come back to clause 1 now.

The point is that the hon the Minister is trying to make out a case for certain provisions in the Act remaining the same.

When different races find themselves in a situation together a law can be used which denies the human rights of one group.

Order! I should be pleased if the hon member would confine himself to clause 1.

That is precisely what I am doing, Sir. The point I want to make here is that the hon the Minister claims that certain provisions in the Act are remaining the same. Although it seems that way on the surface, the abolition of proclamations and conditions which maintain group areas is creating a completely different situation. The hon the Minister must admit that.

Mr Chairman, yesterday afternoon I stated that schools and hostels in certain rural towns were standing vacant. In this regard I referred to towns such as Loxton and Strydenburg, once vital towns, where there were sufficient White children to fill the schools. The situation now, however, is that there are no longer sufficient children and that the schools and hostels are standing vacant to a large extent.

The proposed new section 19(1), inter alia, means that certain restrictions on the occupation and the use of certain buildings, land or premises for trading, commercial, professional or religious and educational purposes are being done away with. Yesterday I stated that in terms of this clause the government could tell the Coloureds that they can make use of the White schools and hostels in White areas. If that is not the case, the hon the Minister must tell us.

At present there are a large number of students of colour studying at the University of Stellenbosch, and a referendum was held about whether or not students of colour may live in the hostel.

Order! I am afraid that that is not relevant here.

I am referring to the hostel in a White area which is used for educational purposes in terms of clause 1.

Order! I shall permit the hon member to put forward his argument, but this definitely does not concern a referendum held amongst students.

The referendum was held, and the chairman of the student branch of the National Party was in favour of Coloureds being allowed to live in Wilgenhof and Dagbreek. [Interjections.] The hon the Leader of the Opposition and I happen to be former residents of Wilgenhof.

Order! Which clause is the hon member discussing now? [Interjections.]

We residents of Wilgenhof do not really tolerate interference from funny chaps. Sir, I even want to warn you in this regard!

I should like to ask the hon the Minister a question. If the Government progresses with its plans for reform as it is doing now, could the Minister legally grant permission to Coloureds to be taken up in Dagbreek, Wilgenhof, Huis Marais or Huis Visser in terms of this clause?

Is Dagbreek a free trading area?

“Educational purposes” are mentioned. Are they free trading areas? [Interjections.] I want the hon the Minister to tell us categorically that the NP will not allow people of colour in hostels in White group areas in terms of this clause.

Mr Chairman, the hon member for Langlaagte said that I intimated that this clause does not alter the legal position. That is not the case. It is clear to everyone that the clause does in fact alter the present situation. We all accept that.

The hon member for Port Elizabeth Central wanted to know when I foresee this proclamation being withdrawn. It is very difficult to say. As I have already indicated, certain matters still have to be ironed out. However, I want to reiterate that the Government has bound itself to this anew. We shall look at the matter with the necessary circumspection and withdraw the proclama tion at the earliest possible date. The hon member knows that when I have to perform a task, I do so.

The hon member for Kuruman asked me for two assurances. I can assure him that this clause in the legislation will not be used to place schools in rural towns at the disposal of non-Whites. There are other ways in which this can be done. However, it will not be done in terms of this clause. I can give him that assurance.

As regards the admission of non-Whites to White hostels, I want to say that in certain cases non-Whites are in fact granted permission to live in White hostels. I am not quite abreast of things, but I think the hon member’s own leader granted such permission on a previous occasion, as well. [Interjections.] I can do so too. I can assure the hon member that this will take place in terms of the same provisions as those his hon leader used, and not in terms of this clause. [Interjections.]

Clause agreed to (Conservative Party dissenting).

Clause 2:

Mr Chairman, earlier this session I spoke in this House on the position of the Chinese in South Africa. It is particularly important to us in Port Elizabeth because they are a large community there. Secondly, Port Elizabeth is the only part of the Republic of South Africa where there exists a Chinese group area. I want to thank the hon the Minister for rectifying this situation. We greatly appreciate that this Chinese group area will no longer exist and that Chinese will be allowed to live anywhere they choose, of course with the exception of those who marry Coloureds or Indians. This is all very well, and we welcome it. But I think it perhaps also raises some queries in regard to the troubled Proclamations R3, R4 and R5 in regard to the Chinese people. I should therefore like the hon the Minister to clear up this matter so that the Chinese people will know precisely where they stand. Let us assume that in a city there is an area that is not classified as an area which is open for occupation by all groups. Will Proclamations R3, R4 and R5, while they still exist, apply to Chinese people who wish to work in those areas?

Not at all.

So Proclamations R3, R4 and R5 will no longer apply to Chinese people. I think that is an important point to have clarity on. Perhaps I may be permitted to say that it is very welcome that this race group is getting the same priviliges that Whites get and one would hope that this process will be extended to other race groups as well. As far as the Chinese people are concerned, it of course still leaves us with the problem of precisely where they are going to be able to vote under the new constitution. I know this is not the hon the Minister’s business, but one does hope that there will be a definitive statement by the relevant Minister in due course on this situation.

Mr Chairman, in my opinion this clause could cause bigger problems than are being foreseen. When the rights of people are involved we in the CP consider the matter seriouly. We do not approach it in a superficial racist way, as has been alleged in this House today, because we believe that we have to consider the rights of one human being as against another within a pattern of life and within a situation that has been accepted by a population for 300 years.

In this clause the insertion of a section 49B is proposed, and it seems to me as if the following may happen: In the case of a Chinese, Proclamation 28 does not apply. Say for example a Chinese woman marries a White man who has two White children by his first wife. The Chinese woman then has two children from this marriage. Subsequently she marries a Coloured by whom she has three children. I should now like the hon the Minister to tell me where they could live in terms of Proclamation 28. Must the Chinese woman now go and live in the Indian area if she marries an Indian?

If the Chinese woman was married to an Indian, they could not have been living in a White area.

No, the Chinese woman was married to a White man. He died and she kept all the immovable property. Has she no alternative but to sell that property if she marries a Coloured?

To whom was this Chinese woman married?

She was first married to a White man; she then marries a Coloured. Can the Coloured come and live with her in the White area, or does she have to move to the Coloured area? [Interjections.] Therefore Proclamation 28 still applies to her?

Proclamation 28 has nothing to do with this.

Proclamation 28 still applies to her because she has to leave the White area. If she marries an Indian, does she have to go and live with the Indian? [Interjections.] The problem is that this clause has not been properly thought out legally, but only politically. It is only a temporary “eye-wash”. These matters are of particular importance in the whole setup of group areas and the hon the Minister must try and rectify this.

The Chinese woman has the franchise on our voters’ roll according to law.

Who says so?

I say so.

Order! I am not going to permit the hon member to discuss the franchise now.

Very well, Sir. I shall not deal with the franchise now because they obtain it in any event. If the provisions of Proclamation 228 are suspended in his case, what other provisions affect such a person? [Interjections.]

May I please ask a question?

No, Sir. I do not wish to reply to questions now. The point I want to make is that the Government has not given due consideration to the legal aspects of this matter. I want to repeat my example so that the hon the Minister can reply to me in detail on this.

An unmarried Chinese woman stays in a White residential area. She marries a White man who has two White Children, and he has two more children by her. He then dies and she becomes the owner of that house due to the death of her husband. She then marries an Indian. Does that mean that she has to move to an Indian area? [Interjections.] Does she lose her rights as far as her house is concerned? Then those two White children of her first husband have to become part of the Indian community.

Oh really, Barney man!

Wait a moment, this the factual situation in terms of this clause.

Laws are not made for such matters.

That is the factual position in terms of the clause. I say that these are problems that will arise. Therefore I ask that the hon the Minister give us an explanation of exactly what the intention behind this clause is. We cannot support this clause because it is not a well-considered statutory provision. I also wish to say that I am not opposed to the improvement of human rights as long as this is not to the detriment of the rights of other people.

I just want to say to the hon member for Port Elizabeth Central that his party voted for separate development in Rosettenville. The NP stated on their posters that they stand for separate development, and the PFP voted for the NP.

Order! What clause is the hon member discussing now?

Mr Chairman, on a point of order: Is the hon member for Langlaagte allowed to say something in this House that is completely untrue?

That is not a point of order.

Mr Chairman, I just wish to say to the hon member for Port Elizabeth Central that the provisions of Proclamation 228 and Proclamations R 3, 4 and 5 with regard to the Chinese lapse, because as far as group areas are concerned, they are now on an equal footing with the Whites.

This is also a reply to the question of the hon member for Langlaagte. He referred to a young Chinese woman living in a White area, but he could just as well have said that she was a young White woman. The consequences if a Chinese woman marries an Indian will in future be exactly the same, as far as the Group Areas Act is concerned, as in the case of a White woman marrying an Indian. That White woman may have two young White children, but the two cases are now absolutely on all fours as far as the Act is concerned. If an Indian marries a White woman, she has to move to the Indian area. That is what the Act provides at present, and that is how it remains.

No.

That is the position as far as a White person is concerned and it will now be precisely the same as far as a Chinese woman is concerned. Therefore the Chinese will be in the same position as the Whites.

Apparently the hon member is simultaneously discussing the provisions of the proposed sections 49B and 49D. The provisions of these two proposed articles cannot be linked here. In terms of the Group Areas Act—this is not the Population Registration Act—any White person who marries a person from another race group takes on the group character of the other group for the purposes of the Group Areas Act. In other words, a White person married to a Coloured has to assume the Coloured character for the purposes of the Group Areas Act, and the same goes for a Chinese, and this will continue to be the case in future. This applies to an Indian as well. Therefore we are not changing the situation. As far as the Group Areas Act is concerned we are simply placing a Chinese on the same basis as a White person.

In Mayfair there are about 10 to 15 Chinese who are married to Coloureds. Are they now to be removed from Mayfair?

A Coloured group area would of course be appropriate for them. But whether I am going to move them is a different matter. The fact remains, however, that they may not live in a White group area.

Mr Chairman …

Mr Chairman, on a point of order: The hon member for Langlaagte has spoken more than three times on this clause.

Order! I am keeping careful record. The hon member for Langlaagte is now speaking for the third time.

Mr Chairman, the hon the Minister must just grasp the problems I have in Mayfair. I said that there were about 10 to 15 Chinese who are married to Coloureds and the problem arises that we are faced with two situations. If the hon the Minister tells me that he is not going to remove them then he is not implementing his Act. However, if he does say that he is going to remove them, then the problem is created that the children there are in a White school. The children are already there. I want the hon the Minister to give us an explanation of exactly what he is going to do.

That is not a problem.

Mr Chairman, the position with regard to the Chinese will not change. They may not live in a White residential area. I am now referring to those Chinese who are married to Coloureds.

Clause agreed to (Conservative Party dissenting).

Clause 3 negatived.

New Clause to follow Clause 2:

Mr Chairman, I move:

Mr Chairman, may I ask the reason for this? If one looks at the amendment on the Order Paper, one sees that it has been changed so that it can be done at the State President’s pleasure. Why was it necessary to change it?

Mr Chairman, the hon member should really listen occasionally. In my Second Reading speech, copies of which I furnished to hon members, I spelt out precisely why I wanted to move this amendment. When this legislation is promulgated, all the present section 19 areas will automatically become free trading areas. We shall then start with 30 free trading areas. At the moment my problem is that there are about four free trading areas that have already been investigated, concerning which the reports have been written, but a decision not yet taken. If this legislation were now to become law before these matters are disposed of, then I should have to have these investigations carried out all over again ab initio. That is the reason.

New Clause agreed to (Conservative Party dissenting).

Title agreed to (Conservative Party dissenting).

House Resumed:

Bill, as amended, reported.

Mr Speaker, before the debate was interrupted last night the hon member for Sea Point referred to various problems in the field of housing and pointed out that some of them were major problems. In this regard I agree with the hon member. In his speech the hon member for Umbilo emphasized the fact that there was no co-ordination in the field of housing in South Africa and pointed out that this was a very important problem as regards the provision of housing in South Africa. I agree wholeheartedly with him, too, as far as that is concerned.

I want to add one problem in the housing scenario which the hon member for Sea Point did not point out. It is that the housing set-up in South Africa has developed historically in such a way that there are tremendous subsidy programmes in the provision of housing. I want to single out this whole issue of the subsidization of housing as one of the biggest problems in the field of housing in South Africa. I refer specifically to the subsidization of housing that is built as well as the subsidization of rentals. As far as this matter is concerned, I want to make the statement that no responsible Government could continue subsidizing rentals on the scale at which it is being done at present. I foresee a time when the subsidization of the rentals for houses built with funds from the National Housing Fund will have to be drastically revised. I also foresee a time when a single formula, not a differentiated rental formula, will apply to dwellings built with funds from the National Housing Fund.

In this regard I am referring specifically to Khayelitsha. The housing being built in Khayelitsha at present is too expensive. It will have to be subsidized to a phenomenal extent. Personally, I believe that the standard of the houses being built at Khayelitsha must be scaled down in order to alleviate the financial burden that is borne by the Government as far as housing is concerned.

There is one obvious shortcoming in the whole housing set-up in South Africa, viz the lack of co-ordination. The hon member for Umbilo also referred to the co-ordination of housing matters. The Bill before the House now creates the structure whereby norms, standards, programmes and methods in the field of housing may be co-ordinated. There are three spheres in particular where the coordination of housing standards and norms is of overriding importance. In the first place, there is the co-ordination of housing matters at Government level. Here I refer to the coordination of housing programmes of the central Government, the provincial authorities and the local authorities. Moreover, housing must also be co-ordinated as between the metropolitan area and the homeland. In the third place, housing must be coordinated as between the public sector and the private sector. Apart from all the problems referred to by the hon member for Sea Point, one of the biggest problems is co-ordination of the housing programme.

The chief aim of the Bill before the House is the introduction of the South African Housing Advisory Council, and we hope that this council will bring about the necessary co-ordination and will recommend to the Minister of the central State department methods of combating the problems. The SA Housing Advisory Council will consist of 15 members. It will be a mixed council on which approximately five officials will serve. The other 10 members of the board will be from the private sector, thus supplementing the know-how at the disposal of the council. The composition of the council is a demonstration of the partnership that exists between the State and the private sector with regard to the provision of housing. I can quote figures to prove it, but at this stage I just want to say that the State alone cannot meet the future demand for housing in this country. Therefore, by means of this council, a partnership will have to be created between the State and the private sector in order to share the housing burden so that order may prevail in the field of housing.

The Bill does not merely illustrate the partnership and does not merely co-ordinate housing matters, but also emphasizes the partnership between the State and the private sector. Clause 4 of the Bill provides that the council may make recommendations to the Minister regarding norms, standards and income groups.

These three aspects—the norms, standards and income groups with regard to the various population groups—are of the utmost importance in view of the new constitutional dispensation that we shall be entering because, since housing in the new constitutional dispensation will be financed out of a central fund, there will have to be an overall policy to co-ordinate norms, standards and income groups.

Where, then, are the own affairs?

I expected that. There must be an overall policy, and I shall now tell the hon member why. The money comes from the central Treasury, and in the field of housing it cannot be permitted that the Ministers of housing affairs of the three Houses of the new Parliament should decide for themselves to which income group members of the relevant population group have to belong to be able to qualify for this housing. Since the money comes from the central Treasury the Minister of one House cannot decide to spend that money on houses comprising 120 square metres, whereas the Minister of, say, the Indian House may decide that the minimum size of houses has to be 80 square metres. The housing programme financed by the State must be co-ordinated, and uniform norms and standards must apply as far as these aspects are concerned.

This co-ordination of housing norms and standards is of importance for another important reason. This co-ordination must be geared to achieving one goal, viz home ownership. Home ownerhsip is the surest basis of social and political stability. To that I want to add that the degree of political stability we achieve in this country will depend on the degree to which the basis of home ownership is broadened in South Africa. The new political dispensation is of historic importance with regard to this Bill as well, in that two very important matters are being combined here, viz a new constitutional dispensation coming into operation in the field of housing, and housing as such. The new constitutional dispensation is only a piece of paper containing sections. It can only work if the people for whom it is meant and written make it work, in the spirit in which it was written. Housing is one of the social elements in a society that ensure order and stability, and in this way will contribute towards an orderly community which will serve as a foundation on which the new constitutional dispensation can be based and can proceed.

The Bill is also of importance with regard to another aspect of the field of housing. This is that the dividing line between homeowner and lessee of a house is becoming indistinct. It will bode ill for South Africa, and for any other government, if the dividing line between home-owner and lessee coincides with colour distinctions. This Bill is aimed at confirming home ownerhsip among other population groups as well.

Finally, I wish to state that this Bill seeks to broaden the base of home ownership and to lend momentum to joint action aimed at broadening the base of democracy; broadening the base of participation in the economy and broadening the base of home ownership. As such it will be the recipé for success as regards order, peace and stability in South Africa. Because this Bill brings this about, it is a privilege for me to support it.

Mr Speaker, housing is one of the matters that one has to approach from the point of view of how efficient it is; whether housing is being made available which people are able to afford; whether it meets the needs of the family, as well as many other aspects that are involved in its supply.

One of the greatest problems encountered throughout the world today is that of ensuring that people have proper housing. Particularly in countries with a Third World structure, there are major problems in this regard because the cost of housing is rising to such an extent that people are barely able to afford, on their incomes, a house which, under normal circumstances, would meet the needs of a family.

As far as the technical character of this Bill is concerned, there are no problems. For example, there are no problems with the appointment of a housing advisory council and the value it could have. It is provided that experts from the housing and financial spheres be appointed to this council. Municipalities and other bodies are also being involved, and this, to a certain extent, means a return to an old dispensation which has not worked over the years. The reason for this is that it could never be dissociated from the machinery of State practices.

Housing, from a technical point of view and as proposed in the Bill, can be supported. A considerable improvement to the existing system can be effected. However, one always gets back to the political situation that is part of everything, because the constitution is a total failure before it has been put into operation.

I want to refer to the housing situation as a whole. In this country housing has become too expensive for the man in the street. He cannot keep up and he does not want to find himself in financial difficulties. Over the past month 4 000 people failed to keep up their housing payments to the United Building Society in certain parts of the Transvaal. This underlines a major problem that is developing.

Mr Speaker, I should like to ask the hon member whether it is not stated in the report from which he has just quoted that in spite of the 4 000 home-owners who have been unable to pay their bonds, the building society is not yet concerned about it at this stage?

That is the finest answer one could have! That is exactly what a businessman does. I do not worry if anyone cannot pay his debt of R1 000 if I can obtain his asset of R60 000 or R70 000 in three months’ time, and this is the case with regard to the building societies. Of course the building society will not be concerned about that because in three months’ time it can take over that house, which is valued at R60 000 or R70 000. It is not necessary for them to worry about one or two payments. That is not a problem. After failure to pay three instalments, the building society sells the house over which it has a mortgage bond.

The important point is that there is a considerable problem with regard to housing in South Africa. In earlier years, under the regime of the NP, the White person was privileged, but now he is becoming a lesser privileged person in the new dispensation. Reference is made to advisory councils, equal treatment, etc, but I should like to quote the following advertisement which appeared in Rapport Ekstra, the edition for Coloureds, whereas there was no sign of this advertisement in the edition of Rapport meant for Whites. The title of the advertisement is “Skep vir u kinders ’n toekoms— koop nou en spaar 40%”. I quote the advertisement:

Therefore the man is being urged not to pay rental because that is in any event money that is thrown into the water. I quote further:

According to this advertisement a Coloured person can buy a house for between R2 000 and R7 500 and get 40% discount on that.

Those prices are after he has obtained 40% discount.

Wait a moment. Can the hon the Minister mention to me one housing scheme for Whites in the Transvaal—I am not referring to Government villages now—where anyone can obtain a house or a plot for as little as R2 000?

Or a brick!

No, bricks are a little cheaper! The point is that this represents gross discrimination against the lesser privileged White people and the young people. Why did this advertisement not also appear in the newspaper for White readers?

Surely Whites cannot buy Coloured houses.

This situation is the beginning of a matter of discord. This is preferential treatment of people at a time before they enter the new dispensation, and benefits are being provided which can never be economically justified. As a result of subsidies and write-offs, the Government is in bigger trouble every month. Every month a bigger problem is being created with regard to housing, which affects the supply of services; plots and housing in general. This is something which must be considered. Technically one cannot really object to the provisions of this Bill, because we realize that certain improvements are necessary. However, when one considers the set-up within which this Bill is to be implemented, one finds that one no longer has an own affair. [Interjections.] One finds that housing is not an own affair.

It is, according to the Constitution.

The hon member states that housing is an own affair according to the constitution. However, clause 1 of the Bill reads:

1. (i) “advisory council” means the South African Housing Advisory Council established by section 2;
2. (ii) “Minister” means the Minister of the department of State for general affairs responsible for housing.

Therefore, this is a Minister in charge of the whole situation, a Minister of General Affairs, and he may be a Coloured or an Indian. He may take decisions, or he may take decisions together with the advisory council. His advisory council will follow his lead as regards the housing of all other groups. Therefore let us now forget about this story of own affairs. As far as housing is concerned, it is not an own affair, because if it cannot finance itself it cannot be an own af fair. It remains a general affair, and therefore housing is a general affair.

Surely every House gets its own finances.

The hon member for Bellville says that every House gets its own finances. Therefore he is now telling me that every House can also utilize that finance for housing as it sees fit.

Yes.

That is important, because why, then, is there a general Minister? Why do we need this clause and an advisory council? Surely, then, there is no sense in that. I believe that the hon the Minister must clarify this matter and tell us very clearly whether he regards housing as a general or as an own affair. The hon the Minister admits that this Minister may be a Coloured or an Indian. Is that correct?

That depends on the State President’s decision.

However, according to the Constitution it may be a Coloured or an Indian?

If the State President wishes to appoint a Coloured, he may do so.

Then, does the hon the Minister wish to suggest that the State President is going to discriminate against Coloureds and Indians in the new dispensation? Why did the hon the Minister not wish to reply to me now? The situation is that at this point it cannot be made out that housing is an own affair. All the sound technical points in the Bill are destroyed by the political activities proposed therein and by the political effect the legislation is going to have.

For that reason we cannot support this legislation. However sound the legislation may be technically, however sound its provisions may be and however practical and advisable those provisions may be, the political part of this legislation is not acceptable to us.

I now wish to come back to the hon member for Port Elizabeth Central. At the moment the hon member supports separate development. He must not tell me that that is not true, because in Rosettenville the NP said as far as housing was concerned that they were going to implement separate development and that they stood absolutely for separate development. Through the leader of the PFP in the provincial council of Transvaal, they said: “Each of you must support the NP.” Therefore the hon member cannot tell me that he is not in favour of separate development if he supports the principle of that.

You are talking nonsense.

Oh no. That is most definitely the case. Miss Minelli said: Support the NP. [Interjections.] Yes, that was in the newspapers. Separate development was the policy of the NP in Rosettenville. [Interjections.] That is the factual position and the PFP contributed approximately 700 votes to the NP in that election. Therefore they supported separate development. They must not come and complain to us now.

They know that you do not really mean it seriously.

That is a blatant untruth.

Mr Speaker, I am now dealing with this housing legislation. The NP said in Rosettenville that it advocated separate housing and separate schools—I do not believe it, of course—and Mr Gibson said: “Support the NP”.

That is a blatant untruth. [Interjections.]

I think Miss Minelli lives at Killarney. [Interjections.]

†The hon member for Houghton said that separate development should be supported as long as it is by the Nats.

It is Lisa Minelli and she lives in the USA.

I mean Mrs Menell. The whole South African situation must be viewed against the background of the new constitutional dispensation, and the problems or advantages of that new dispensation must be read in this legislation.

We cannot support this legislation. I repeat that technically it is an outstanding Bill. The ideas it contains are very sound, but to us it is politically unacceptable. The PFP must not deny now that they voted for apartheid and separate development in Rosettenville, or at any rate, the NP professed to stand for separate development.

Mr Speaker, the hon member for Langlaagte appears to think that the PFP is now following a completely different policy from the one we followed previously. However, if his description of our policy is as accurate as was his description of Lisa Minelli, I think that it is easy to understand why he has the wrong end of the stick in this regard.

Last night the hon member for Sea Point set out our attitude in general towards this Bill and also towards many of the aspects of housing as such. He mentioned two particular problems that merit attention, namely those of the aged and the poor, and I should like to make a few remarks in this connection this afternoon.

I want in the first instance to look at the situation of the older citizens of this country with regard to the housing situation and their economic plight. It is interesting and worthwhile to look at the three years in the life of this Parliament, this seventh Parliament of the Republic of South Africa, which was elected in April 1981. We should look at the plight of old people in those three years. The first outstanding feature is the fact that the cost of living has increased by 46% in those three years. That affects everybody including of course, old people and poor people. The result of this is that tens of thousands of pensioners are now desperate. Many are bewildered and demoralized and are eking out a miserable existence on a day to day basis. Many are worried sick, and I mean that literally, as to whether they will lose their flats and end up out on the street. Three years ago, in 1981, this in itself was a serious and controversial situation. Many of us will remember the statement of a Minister at that time about the R20 a month that pensioners were supposed to be able to survive on as far as food is concerned. That remark was made at a time when there was a great deal of concern about the plight of these people. Since then, however, the cost of living has increased by 46%; the cost of housing, as is clear from the consumer price index, has increased by 67% while white social old-age pensioners, and that is the best-off group of pensioners, have had their pensions increased by a mere 33%—less than half the rate that the cost of accommodation has gone up. I think the hon the Minister will know that accommodation forms a major part of the expenditure of people in that income bracket. In other words, the standard of living of the average White social old-age pensioner has dropped by about 10% in just three years, namely since this seventh Parliament began. One asks oneself: Does the Government not have the money? The answer to that must be “no". Government expenditure during that time increased by 57% while the pensions increased by only 33%. The Government therefore had money to spend on lots of things, but it chose not to give priority to the pensioners. The simple fact is that the Government is not prepared to ensure that the aged in our cities are properly cared for. These people have been devastated by inflation and there is an acute shortage of suitable accommodation. The Government’s response has been quite inadequate and the problems are mounting daily. While pensions have increased by only one-third, Government revenue from GST alone, and which is to be increased at the end of this month, has increased two-and-a-half times over those three years. I believe the way the pensioners have been neglected and their accommodation and other problems have been allowed to mount in recent times is a disgrace.

You do not know the facts.

I have mentioned a series of facts and figures here and if the Deputy Minister wants to dispute any one of them or ask me my source he is very welcome to do so. If he does not dispute any of them then I suggest that he does not interject that I do not know the facts. I have spelt out a number of the facts to him and if he does not agree with them he should check with the SA Reserve Bank and the Department of Finance. They supplied those facts and figures.

Coming to the problems of the poor, these are the people generally without housing or with severely overcrowded housing. Many of these people end up as squatters. In certain respects the Government has shown greater flexibility in recent times towards the problems of low income housing and that flexibility is welcomed. Unfortunately, however, the bulldozer mentality remains predominant in the Government’s approach to dealing with squatters. The hon the Minister is pointing at himself. He is co-responsible for this situation in respect of some communities particularly.

I wish to refer to one community in particular, and that is the Brown’s Farm squatters settlement in Philippi. I hope the hon the Minister knows a great deal about that because he ought to. There are hundreds of people involved at that squatters settlement. They are a mixed community. Some of them are so-called Coloured people and others are Blacks.

Why “so-called"?

A so-called Coloured is a person who has been given a racial tag by the Government because he cannot be conveniently fitted into any other logical category. The hon the Chief Whip ought to read the Population Registration Act to see what the definition of a Coloured is to realize that it is a so-called category. It is the left-over category; there is neither a logical nor a humane basis for that category.

That community has lived there for very many years. Some of the residents claim to have been there for up to 30 years, but whether it has been 10 years or 20 years or 30 years is neither here nor there because they have been there for a substantial period of time. They have been harassed from time to time in the past, but now that winter is here and the hon the Prime Minister is back from his tour of Europe, the need to have good public relations in the local and international media has disappeared or been reduced for the time being, there has been a massive and sustained assault launched in Brown’s Farm itself and in Nyanga East. Hundreds of shelters have in recent days and weeks be demolished and material confiscated.

What has that got to do with this Bill?

It has to do with housing and the problems of the housing of the poor, and this is what I am talking about. [Interjections.] This is exactly what I am leading up to. I want to ask the hon the Minister what sort of policies they are going to have in this regard.

If one looks at Brown’s Farm one finds that it has been raided for three successive days. There are scores of people who have been left without shelter in the rain and cold. [Interjections.] The hon member for Bellville is making noises there. He should go out and see for himself. There are old people, some of them infirm. There are also children as well as many persons in between. Some of those people are crippled and some in fact sick. Apparently some of them are suffering from TB. They are out there in the cold and rain today because the authorities are pulling down the shelters, as they have been for three successive days.

I believe it is an untenable situation. I want to ask the hon the Minister—I hope he will respond when he replies to the Second Reading debate—first of all, where he suggests that these people go? Let us talk about this case in particular because he is not directly and personally responsible for the Black people, because although he has joint responsibility with his Cabinet colleagues and his Government, he is not in the first instance responsible for Black people.

Let us look at the so-called Coloured people. Where must those people go? I hope that the hon the Minister will answer us and tell us where they must go. Does any authority or private organization or individual he knows about have housing of any sort available, or land or a site available for those people to go to? I want to know whether someone can go to them to tell them that for various reasons they cannot stay there any longer, but that there is a place where they are going to be allowed to stay. They can move their shelters there or, better still, if there is any housing available, they can move into that accommodation. What is the alternative being offered to them other than having their shelters demolished and being left out in the rain and the cold? Is the hon the Minister himself, specifically in relation to these people whose shelters are being demolished during this week, doing anything about the plight of these people? I would like to ask the hon the Minister whether he has done anything specifically about the people at Brown’s Farm. He chooses not to answer and not even look this way. I am not asking him about a ten year plan for housing. It is important that one has long-term plans as well and I am not denigrating any plans that there may be, but when you have a situation where people are out in the cold and rain and have nowhere to live, you cannot just look at a ten year plan.

Have you talked to their employers yet?

No, not individually. May I ask the hon the Deputy Minister whether he has spoken to employers. Does he have some suggestions to make? Now there is silence. We can talk to a mirror if we want to, but when we do not have any suggestions to take to people who have nowhere to live, it does not help to say to them that they should not worry when we are pulling down their shelters and they are out in the rain because we have talked to their employers. If they then ask what they should do, it is no good for us to remain silent. It does not help in itself just to talk to employers. What effect does hon members think this is going to have on the Coloured people that the Government is hoping will participate in a new Constitution? The Government has just finished a great drive to try to get them to register by telling them that this is a new beginning for them. What effect does the hon the Minister think this sort of thing is going to have on the mass of Coloured people who live in the Western Cape or elsewhere who get to know of what is happening at places like Brown’s Farm? What about the people there themselves? Does the hon the Minister really think that the people at Brown’s Farm will be interested in registering as voters and in turning out to vote in August? Does he really think that they are going to believe that a new consensus era is beginning?

They cannot register any more now.

If we had a real democracy in this country, he would be very pleased that they could not register in the Parow constituency as White voters, that is for certain. Does he really think that this is the way to encourage people to believe that a new era of consensus is dawning and that a new hand of friendship is being extended to Coloured people when this sort of thing goes on? What about the credibility of the Coloured political parties and leaders who have decided to participate? Does he think that this is going to assist them? The hon the Minister says that they are not Coloured people, but there are plenty of Coloured people there. I said at the beginning of my speech that it is a mixed community. The hon the Minister should know that there are Coloured people there. He should get his facts right. Of course, when you are demolishing shelters and leaving people in the rain, it does not actually make any difference whatsoever what colour they are or what race they belong to. However, I can assure him that there are considerable numbers of Coloured people at Brown’s Farm and always have been. In fact, he only has to look at the photographs and the names of these people in the newspapers to realize that it is a mixed community.

Our future depends far more on our treatment of the poor and homeless people of this country than on this or any other Bill. Pieces of paper can be worth something in themselves, but if our treatment remains inhumane and indifferent to their suffering, all the pieces of paper in the world are not going to help us. I hope that the hon the Minister will intervene to put a stop to these and other demolitions. No civilized society should tolerate such behaviour.

Mr Speaker, the majority of hon members on the Opposition side tried to make the debate on this Bill an occasion to conduct a general housing debate, as the hon member for Cape Town Gardens has just done. I do not even know if there are enough hairs by which to drag the matters he raised into this debate. Although I do not intend ignoring all the irrelevancies— one cannot do so; one has to reply to some of these things—I do want to point out to hon members that we discussed my Vote recently and on that occasion we discussed most of these matters in detail, except perhaps the matter which the hon member for Cape Town Gardens has just raised. Therefore hon members must please excuse me if I do not deal with the speeches of hon members who digressed from the subject.

At the beginning of his speech the hon member for Sea Point said, with reference to the new housing strategy, that we had made progress. I am pleased that he concedes that. He is not satisfied with the progress made, of course. Indeed, I myself am not satisfied, because there is still a great deal to be achieved. However, Rome was not built in a day. I want to tell the hon member that there was a great deal of resistance and scepticism as regards our new housing strategy, resistance that first had to be overcome. As far as I am concerned there is now a reasonable degree of acceptance of and even enthusiasm for the new policy, and we are also getting co-operation in this connection. I am satisfied that we have made phenomenal and dramatic progress in a short time. For the first time in the history of South Africa we have succeeded in getting the private sector, that has always made an important contribution to the provision of housing, involved in the provision of low-cost housing, because that is the Achilles heel as far as housing is concerned. This is a burden which, until quite recently, was borne by the State alone. Now we have succeeded in involving the private sector, too, in this aspect of the provision of housing, and this is occurring to an increasing extent. I wish to express my appreciation today for the efforts made by organized business to help in this regard to the extent that the present economic situation permits. I also mentioned certain matters in my Second Reading speech in support of this contention of mine. As I say, we have now distributed this burden, which was previously borne solely by the State, across the private sector as well, and this has made a significant difference to the provision of housing in South Africa. Under the present dispensation we are getting away from the obsolete and impractical concept that the Government is responsible for providing everyone with a house to suit his pocket. No state in the world—neither Russia nor the USA nor South Africa—can assume the responsibility, as we sought to do for years, to promise or try to give a house to everyone who asks for it. That is an unattainable ideal. I said that to the hon member yesterday, but he did not quite understand me at the time. If he thinks that this is an ideal which can be pursued in practice, then he is living in a fool’s paradise and not in South Africa.

What about the elderly?

I am coming to the elderly. I am not there yet.

You are very close.

Yes, I am very close to that, but I am not close to the point.

The hon member spoke very negatively and destructively about the sales scheme. I do not begrudge the hon member his attitude to the matter. I have to admit, of course, that we have not made the kind of progress we envisaged. Nor, of course, did we think that we should be able to finalize this enormous task within one year. The hon member will agree with me that if we had said in the first instance that we were going to sell the houses over a period of five years he could be sure that we should not have made as much progress as we have to date. Therefore we have tried to encourage the people to get the project moving. I have to some extent been disappointed with the progress that has been made, even in spite of the poor economic climate. Employers in the private sector who must play a decisive role in this regard are not in a position, or are not yet ripe enough, to help their employees. If we finance the sale of these houses, all the houses will be sold overnight. However, that is exactly what I do not wish to do. I specifically want the people who want to buy the cheap houses, to obtain the money from their employers or from other institutions so that the department can use the funds for other housing.

I want to convey my thanks to the hon member for Maitland who spelt out to the hon member for Sea Point very knowledgeably, and with great understanding, the problems that we are saddled with in this process. I do not believe I can improve on what the hon member for Maitland said. I want to thank him for the lesson he gave the hon member for Sea Point. It seems to me as if the hon member for Sea Point is living in a different world.

I am grateful to say that there are indications at present that the sales campaign has begun to gain momentum. On 31 March, 15 954 houses had been sold, and on 31 May the number was 22 290. These figures are in respect of houses that have already been sold, but there are of course thousands of indications and letters from people who wish to buy. However, many of these people are struggling to obtain the money. Therefore we are being accommodating and saying that it will take some time before the transactions may be concluded.

However, I am proud of the fact that due to this campaign, more than 22 000 poor people in the very lowest income groups in the country today have the privilege of being home-owners. 22 000 people have become home-owners over this short period, and had it not been for this sales campaign these people would never have had the opportunity to enjoy ownership of a home. Therefore, even though we are disappointed with the results thus far, we must not be negative. I am not sorry that we began this campaign. From every point of view it must eventually be a great success.

The hon member praised highly the contribution to housing made by the Urban Foundation. I agree with him, and we have very good relations with this foundation. The hon member asked me to consider appointing a member of the Urban Foundation to the Housing Advisory Council. That will be considered together with the others. However, it must be borne in mind that I have appointed one of the senior officials of the Urban Foundation, Mr Johan Kruger, on contract to co-ordinate the selling campaign. That is the thanks and appreciation that this official of the Urban Foundation gets from the hon member for Sea Point for his persistence and perseverence in achieving what has already been achieved. [Interjections.] If the hon member were to ask Dr Jan Steyn or other leading figures in the Urban Foundation what they thought of this sales campaign he would find that they agreed with me and not with him. Does the hon member concede that? [Interjections.]

I now turn to another aspect raised by the hon member and by other hon members, including the hon member for Cape Town Gardens, viz the question of the elderly. I accept what the hon member for Cape Town Gardens said, viz that the economic situation and the tremendous increase in costs has undermined the position of the elderly person, and that that goes for his expenditure on housing as well. That is a commonplace. The hon member said that it was not a question of the Government not having money available. He said that the Government was spending 57% more this year than in the previous financial year, but apparently has no money available for housing for the elderly. There are altogether 365 000 White elderly people above the age of 65 years in South Africa. Of these, 8,1% live in old age homes financed by the State. What is more, another 6%+ live in small flats or cottages built with funds from the National Housing Fund. Therefore more than 14% of these elderly people live in housing provided by the State. There is no other country in the world that comes anywhere near this figure. In England only 1,8% of elderly people live in Government housing, and in the wealthy USA the figure is 4,8%. Compare that with the figure of more than 14% for South Africa. [Interjections.]

Is that for all race groups?

There is no other country in the world where a larger percentage of elderly people live in State housing than in South Africa. [Interjections.] I am now coming to all race groups.

Your comparison is total nonsense.

The hon member’s glasses are not on straight.

Let me deal with all race groups. The fact is that over the past financial year the State has spent R48 million on housing for the elderly of all race groups. The amount that has been set aside this year and has in fact already been allocated is R60 million. This department has a limited budget. To spend R60 million of that budget on the provision of housing for the elderly of all population groups is an enormous amount which is not to be scoffed at. I do not believe that there is any other country in the world that does more as regards the provision of housing for the elderly than South Africa. [Interjections.] I do not seek to intimate thereby that there are no elderly people living in difficult circumstances, but within our financial ability we are doing almost more than we can.

The hon member also raised the issue of Black housing, and the fact that it is controlled by the Department of Co-operation and Development. With the limited funds at the disposal of that department and the tremendous backlog in and demand for housing that it is faced with—it is far greater than in respect of the groups that I look after—that department is performing a tremendous task. I agree with the hon member for Umbilo and other hon members who have referred to this that the backlog in housing for Blacks and also for the other groups cannot be eliminated through the normal channels of providing conventional housing. One will have to resort to informal housing. As far as self-help and self-build schemes are concerned, the Black communities, under the leadership of enthusiastic officials of the Department of Co-operation and Development, are far in advance of the other coloured population groups. As far as self-help and self-build are concerned—efforts to provide a roof over their heads through their own efforts—they are ahead of the other coloured groups. That is as far as I want to go on this matter.

The hon member for Sunnyside and the hon member for Langlaagte, like the hon member for Sea Point, asked how many housing departments there will eventually be. To everyone who wants to read the Constitution, the schedule and my Second Reading speech, it will be clear that there are certain matters, such as those we are dealing with now, which will be general matters. However, there will be other things, for example the provision of housing, slum clearance, urban renewal, community facilities and rent control, that will be own affairs controlled by own departments. Probably these will not in all cases be full-fledged Government departments, but there will be a Minister in each of the Ministers’ Councils in charge of the housing of the relevant groups, inter alia the matters I have just spelt out and others. Those matters that are excluded and are regarded as general housing matters are spelt out in the Constitution. Everything not mentioned in the Constitution is an own affair. I do not know what may happen in the future as a result of rationalization, but for the present—and I do not foresee a change easily occurring in this regard—Black housing will continue to be controlled by the Department of Co-operation and Development, as at present.

Therefore it is a general affair?

Yes, if it falls under the Department of Co-operation and Development, it is a general affair.

The hon member for Maitland asked that we consider a library at our data bank. I do not want to go into this in detail. The hon member spelt it out here, and in my opinion it is an idea that has merit and should be given further consideration, and the department will consider it. He also mentioned the limitations and the inability of building societies to make a bigger contribution in regard to housing. He thought that it was possible that we could in the interim make certain concessions before the inception date of the legislation that is at present being drawn up and which will create a new dispensation for building societies, which will probably be passed in Parliament next year. However, the legislation is being dealt with by the Minister of Finance, and accordingly any interim concession must, unfortunately, also be considered by him. I am not empowered to do so.

The hon member for Maitland and the hon member for Umbilo rightly pointed out that the biggest task awaiting the new advisory council was to carry out an in-depth investigation into the existing standards and norms of housing, which are regarded by all experts in that field as being far too high for our country’s ability to pay, and to establish rational minimum standards which can be enforced. As the hon member for Maitland rightly said, there is no point in our trying to keep the individual prospective home-owner in check while Government bodies set increasingly higher standards for services, building methods and so on. The whole housing strategy must be aimed at the proper education of everyone concerned, and the new legislation creates the necessary channels to achieve this aim.

†The hon member for Umbilo and other hon members like the hon member for Bellville also referred to the need for compulsory action in the implementation of realistic norms and standards. I fully agree with them that this has been one of our greatest problems in the past. To ensure that this does not happen in the future every Minister responsible for housing will be compelled to carry out the national housing policy determined in accordance with clause 7 of this Bill. Furthermore, an annual report has to be submitted to the Minister for general affairs in which progress in regard to the implementation of the policy has to be reported.

*Various hon members referred to the composition of the advisory council and expressed concern that not all members need necessarily be experts in the field of housing. However, I want to give the assurance that the advisory council and its working committees will consist of only the best talent in the field of housing from both the private and the public sectors. There will be no reason why other interests need be represented on the council or committees, and the private sector will predominate.

I want to say to the hon member for Sunnyside that there will be members of all the population groups in this advisory council, just as there are—and were in all the years that he sat on this side of the House— Blacks, Coloureds and Asians together with the Whites on the National Housing Commission.

The hon member for Stellenbosch made mention of the fact that the new advisory council would deal with macro policy matters and that departments of own affairs would have to carry out the policy. I endorse this opinion and want to add the role of the departments for own affairs should not be underestimated. The engineer who designs a road or a town or services is not the builder, after all. In the same way, one does not expect the architect to be the building contractor as well. Therefore it will be the task of the department of general affairs to do the necessary planning, and to leave the real construction work to the department for own affairs.

The hon member for Bellville discussed the subsidization of housing. Although this is not really a matter which is entirely relevant here, I do agree with the hon member that this causes major problems, particularly in areas like Pretoria, where it has a significant influence on the cost of housing.

The hon member also discussed the high standards, and I cannot disagree with him in this regard either. He added that Government bodies such as the Department of Posts and Telecommunications and the Department of Transport Affairs, as well as all other Government departments and State corporations that provide housing, ought to act in a more co-ordinated fashion so that each would know what the other was doing.

The hon member for Langlaagte said that housing had become too expensive. That, too is a commonplace, but it is just as much of a commonplace that as far as housing is concerned many people are living far beyond their means, and therefore they have no one but themselves to blame if they suffer as a result. In all other cases it is true that mortgate rates and the other costs of accommodation have become so high that people have to sell their homes and try to find a place somewhere else.

The hon member also mentioned an advertisement placed in the Coloured section of a newspaper to advertise the houses that we want to sell in our sales campaign. The hon member then asked where Whites could also have the opportunity to purchase such cheap houses. I want to tell the hon member that White houses are sold to Whites in the same way, but that one cannot advertise White houses in a Coloured newspaper because the Whites do not buy the Coloured houses. The hon member is not present at the moment. He did not show me the courtesy …

He received a telephone call.

Very well, just tell him that he should use his head a little. There was a time, quite long ago, when houses built with departmental funds were sold to Whites for as little as R400 to R500. However, it is a long time ago since an ordinary house …

That was a generation ago.

Yes, that may be so. It is not so long ago. The fact is that that is where we are now with the Coloureds, the Indians and the Blacks. The prices of the houses we are selling today are calculated on the average of the historical building and replacement costs. Therefore the department is not losing on the houses we are selling at these discount prices. However, what we are doing for the non-Whites we are also doing for the Whites. All prices are being calculated in the same way. Incidentally, the situation is that of the houses made available for Whites thus far, 9,34% have been taken, wheras the Coloureds have only taken 1,79% of theirs. That, therefore, is the story. The hon member cannot, therefore, say that we are discriminating against Whites in this instance. We are doing exactly the same for the Whites as we are doing for the other colour groups.

The hon member for Cape Town Gardens also spoke about Brown’s Farm. The hon member misused this debate by raising that matter today in such a way. The department became aware of this matter for the first time this morning when they read about it in the newspaper. As far as we are concerned, the people living there are Blacks, but I shall instruct that it be ascertained whether other people are also there. As far as the department is concerned, however, we have not thus far been involved there, and I take it that the divisional council or whoever is responsible acted in terms of the law on squatters. However, the department is not involved, and as far as we are concerned they are Black people. However, the department will investigate whether there are Brown people, too, and what can be done in this connection. That is all I want to say at this stage. However, as the Namaqualander said, we are “bewusteloos van hierdie aksie” (unconscious of this action).

I have tried to reply to this debate in as much detail as possible.

Question agreed to.

Bill read a Second Time.

Mr Chairman, I move the amendments printed in the name of the hon member for Yeoville on the Order Paper, as follows:

1. 1. On page 5, in line 62, to omit all the words after “(a)” up to and including “Council,” in line 67.
2. 2. On page 7, from line 7, to omit paragraph (b).
3. 3. On page 7, from line 19, to omit paragraph (j).

During the Second Reading of this Bill we gave a number of reasons for opposing it. The first reason why we opposed it was because we believe it will lead to fragmentation of financial control in the monetary affairs of the country. We believe there is ample and enough evidence in South Africa and South West Africa—this was also brought up during the course of the debate—to point to the dangers inherent in this.

We have a second reason for opposing the Bill and that is that we believe that Parliament must remain responsible for the allocation of funds between the different houses in the new system.

That, we believe, is the responsibility of Parliament, a responsibility which should not be assigned to a Minister.

Thirdly we believe that it is Parliament’s duty to retain the efficient administration of funds. We do not believe that sufficient control will be exercised over this if this Bill goes through as it stands at the moment. Finally the point was made that the executive authority should always be responsible and accountable to Parliament. During the course of the Committee Stage we shall move amendments to the Bill before us to rectify the various problems which I have just mentioned.

There is one other issue on which I should like to dwell briefly and that is that during the course of the Second Reading debate this party was attacked on the grounds that the federal policy which we propose will have the same result as the fragmentation which we criticized as coming about through this Bill. I should like to respond very briefly to this and to point out to the hon the Deputy Minister and other hon members on that side who have spoken that this of course, is patently not true. Federation means devolving powers to other authorities and these other authorities, as we envisage, would be in a geographic federation. This leads to far more effective and better administration. It seems, however, that hon members on that side of the House do not see the difference between duplication and a federation, because what the Government is actually doing, is that they are duplicating services, they are triplicating services and in the case of this Bill they are quadruplicating a particular service. That is what we mean by fragmentation. If the same service is rendered for different groups by different authorities all living within the same geographical area, then duplication triplication occurs which leads to inefficiency in administration. So there is actually a very big difference between what we were attacked on, namely our federal policy, and the principles in this Bill which result in fragmentation and duplication.

I now come to the amendments moved on clause 1. If one looks at clause 1 one sees that what in effect happens in terms of the clause is that we are creating four treasuries and four Ministers of Finance. As far as I know we do not at present have a name for the Minister who will be in charge of financial affairs in each of the three Houses of the new Parliament, but we are going to have four treasuries and four Ministers of Finance. What actually happens then, is that we have the fragmentation which I have already mentioned.

By means of these amendments we are trying to revert back to having one treasury. With one treasury we shall have better administration and control and also as has been pointed out, we believe that if we have one treasury it will not in any way necessarily detract from the autonomy which any House may have over its own affairs. This point was stressed by the hon member for Yeoville and I repeat that we do not think that having one treasury is going to affect the autonomy of any House. It is in the interest of all of us that we have this centralized and proper control over finance.

In addition, one Treasury will mean that we shall not have a proliferation of posts. As the hon the Leader of the Opposition mentioned in his speech during the Third Reading of the Appropriation Bill, under the new system we are going to have a vast proliferation of more departments and more posts. At least, if we have one Treasury we shall not have four mini-departments of finance. We shall not have four standing committees who will deliberate on public accounts or the accounts of the own Houses.

To recapitulate, what we are seeking to do with these Amendments is to maintain the status quo, that is one Treasury for effective control.

Mr Chairman, I rise on behalf of the NRP to say that we cannot support the amendments moved by the hon member for reasons which I stated very clearly during the Second Reading debate. It is very clear that what we have here is a basic difference in the political philosophy which is followed by the PFP and the NRP.

We in the NRP are pluralists, which means that we acknowledge that in a country such as South Africa we have a plurality of people, that is to say a large number of different ethnic groups or types of people and that the Constitution and the laws that govern the country should take cognizance of this fact to ensure that no one group feels that it is being dominated. The new constitutional proposals entrench this principle and what we have before us is a measure which will in future so structure the financial affairs of the nation so as to ensure that this domination does not occur.

The hon member for Pietermaritzburg South said that the measure before the House is not like the PFP’s federation or federal policy. In terms of that, as I understand it, they will have possibly 11 or 12 separate legislative assemblies which will govern certain affairs of 11 or 12 geographically separate states which will make up South Africa. One might ask why it is necessary that they should propose a federal system at all if they are so concerned about reducing the number of treasuries or legislative bodies. Why do they not just have one legislative body for the whole of South Africa? Their explanation will probably be that they cannot have that because of the diverse nature of South Africa on a purely geographical basis and that it is therefore essential to have 11 or 12 separate states or provinces. There is agreement between the governing party and the NRP that because South Africa is structured the way it is, it is this Parliament which will have to look after the political rights of the Whites, Coloureds and Indians. Following the pluralistic philosophy it has been essential and necessary that the political structure of this Parliament and the financial control mechanisms flowing from that should be divided to take cognizance of the fact that there are these three groups. We therefore believe that in order to ensure that the Whites, Coloureds and Indians of South Africa will feel secure in future and that their own self-determination is not threatened, that their identity is respected and that the political system will not result in one of the other groups dominating them, this type of legislation is absolutely essential. It is for this reason that we are supporting the Bill and why will not support any amendments emanating from the PFP.

Mr Chairman, I think I should respond to one or two matters the hon member for Amanzimtoti raised. It is common cause that we have accepted that we are going into a new Constitution. We have stated clearly on a number of occasions that we are going to do our best to make that Constitution work. So, in the context of this particular Bill we are not advocating anything concerning which there is an ideological difference between us and that hon member. Our only reason for our amendments to this Bill is that we feel that it is in everyone’s interest to have efficient and effective control over the financial affairs of South Africa. We believe that this can be achieved better by means of one Treasury and one Minister of Finance. The argument of the hon member for Amanzimtoti appears to be that, if this is done, we would be taking away some of the autonomy of the separate Houses and therefore we would be getting back to a centralized type of system. We do not believe that having centralized control at Treasury level in any way necessarily detracts from the autonomy of a given House at all.

Then, of course, I must respond to the question he raised about a federation. A federation is the devolution of power to geographic areas. That is often the most effective and efficient type of administration. The closer one gets to the people being administered, the better.

[Inaudible.]

What we are actually arguing about—it appears to escape the hon Chief Whip opposite as well—is that we should not have overlapping functions in respect of a particular area, because that leads to duplication which is, again, inefficient. That leads to the type of bureaucracy the hon the Chief Whip is obviously so much in favour of. That is why I ask the hon member for Amanzimtoti to reconsider what he said.

Mr Chairman, it is quite clear that there is a completely different attitude, philosophy and approach between us to resolving problems. The hon member for Pietermaritzburg South said that their philosophy or policy in this regard would not lead to the autonomy of the three groups being removed. That is what he said if I heard him correctly. He said it would be better to have one Treasury and one Minister of Finance. That may be his view of how to resolve problems, how to resolve differences between groups and how to inculcate self-respect within a group, but we, as pluralists, believe that groups of people require to control certain things themselves where those things concern themselves. Therefore, we believe that, having had money voted to them by this Parliament, the Indians, the Coloureds and the Whites should have jurisdiction over the administration of those funds. That is why we suggest, as is also provided for in the Bill, that each Chamber should have a Minister in charge of administering the funds that have been voted for it by Parliament. We believe that this is necessary in order to ensure the self-respect of the group. What is so important in a plural society is that people can walk tall down the street, being proud of what they are and without feeling that someone else is determining their own affairs.

The hon member then went on to talk about a federation. He said that their form of federation is a devolution of power to geographic areas. We in this party believe it is far better, in a plural society, to devolve power to the groups and that that is the only way in which one can resolve the conflicts between groups. The measure before us does exactly that. It devolves power to the groups over those things which they hold dear. There is, therefore, a total difference between pluralist thinking and the thinking of the PFP. They do not take cognizance of any of the inner feelings of the groups. They do not recognize that for a particular ethnic group to retain its self-respect, it must have control over those things which it holds dear. This is a philosophical difference which exists between ourselves and the official Opposition.

What about the Anglo-Saxons, George? Why are they not represented here? [Interjections.]

This is the sort of interjection which one expects from the hon member for Pietermaritzburg North.

Will there be separate ones for the Muslims and Hindus?

I will expect that in time to come problems will arise within the Indian Chamber concerning the Hindus and the Muslims. It is only through the philosophy of pluralism, which respects people’s feelings, that one will overcome those problems. If in the Indian Chamber one group, one which may have a majority over the other, starts dominating; as for example in this Chamber, should the predominant Afrikaner group pass laws which dominate the English-speaking group, or should the predominant Christian membership of this chamber force its will on the minority civil membership conflict will occur. [Interjections .] One has to inculcate into the people the philosophy of pluralism. This is where I believe the hon the Prime Minister was so correct yesterday when he called upon politicians to stop fighting one another on a purely party political basis. We should rather look at what is required in South Africa in order to resolve these intergroup problems and differences. That is the intention of this Bill, and that is why we need to have these separate Treasuries and Ministers so as to acknowledge the self-respect of these people.

When are you going to dissolve your party?

Order! That has nothing to do with the clause under discussion at the moment.

Because of philosophical differences, I cannot support the amendments of the hon member for Pietermaritzburg South.

Mr Chairman, the hon member for Amanzimtoti says we are trying to ensure that the administration of funds be retained in the hands of the central Treasury. Nothing can of course be further from the truth.

We accept the fact that there will be own affairs and general affairs and we also accept the fact that the funds which are allocated for own affairs will be administered by the own affairs Houses. The own affairs Minister of, for example, education, will administer the funds that are handed to him from a central treasury in terms of our proposal. We do not believe it to be necessary for him to administer those funds and to have the funds taken in by the central treasury by way of taxation, which is a general affair, and then be handed from a general affairs treasury to an own affairs treasury and from an own affairs treasury to a Minister of Coloured Education. We are not attempting, in any shape or form, to prevent a Minister of Coloured Education administering the funds which are allocated to him. However, we see no need for a body to be between the central treasury and that particular Minister. We see no need at all that there should be multiplication of treasuries. It does not seem to make sense because all they will do is to administer transmission accounts, the name given to certain accounts by building societies. There will be a transmission account from the central Treasury to the department concerned. For the hon member for Amanzimtoti to suggest that we are trying to destroy the administration of own affairs by the other Houses, therefore simply does not hold water.

For the hon member for Amanzimtoti to say that in terms of federation they believe this should be on a group basis rather than on a geographic basis, simply shows the racist thoughts of the NRP.

Order! The hon member may not now discuss the principle of the Bill.

I regret you are quite right. Sir. [Interjections.]

I want to make a final point. They talk about the general Treasury and the different treasuries and the hon member seems to think that these treasuries fit in with the idea of local option. I would have thought that at long last Rosettenville would have taught him that local option is a dead duck.

Mr Chairman, we have been listening to arguments concerning the various political philosophies which were discussed here. Let us rather cut the matter short and say that on 2 November last year the electorate overwhelmingly pronounced itself in favour of the reasons for the new dispensation to be introduced. This is the technical way in which those things should be done. What we have before the Committee at the moment is really nothing new. Our existing system embodies exactly the same principles as those that have been embodied in this legislation. We have our various provincial administrations and various local authorities. Not one of the hon members of the Opposition referred to section 9 of the Exchequer and Audit Act which remains applicable, in its unaltered form, to all the treasuries. That section provides for a single central control over the Paymaster-General’s account. That account remains under the control of the central Treasury. There are going to be own affairs Houses, something which those hon members say they accept. The Houses will also have their own Budgets. If those hon members read the Constitution, they will see that those are not the only amounts which will be allocated in the central Budget to be administered in the same way, but that there will also be other amounts over which the separate Houses will have their own discretion. So it follows inevitably that they should also have their own treasuries. If, under such circumstances, one then has one central Treasury, it is in fact a constitutional absurdity. For that reason I am unable to accept these amendments.

Mr Chairman, I cannot allow the opportunity to go by of responding to the hon member for Port Elizabeth Central. As a pluralist one either commits oneself to respecting people’s feelings and having an equitable system for all groups, or one does not. I want to put it to the hon member that one either devolves power to the group to administer its own affairs completely, or one does not. The way we see this is that the three Chambers with their Councils of Ministers will have to draw up their own Budgets. There will be a priority planning committee under the central Minister of Finance who will advise as to how much money will be available.

Mr Chairman, can the hon member tell me if what he is recommending means that each individual House should be given the right to tax?

I am not saying that at all. What I am saying is that the central Cabinet, through the representatives there will indicate from the three chambers the financial state of the country to the three respective Councils of Ministers. Those three Councils will then have to draw up their budgets within the constraints of the financial state of the country. There will therefore have to be a Minister in charge of the financial affairs of each Chamber’s activities who will be responsible for this. It is for this reason that we believe it is essential to have things the way the Bill proposes. To follow the hon member’s arguments, one might just as well then ask: Why have separate Ministers of Education? Why can one not have a central Minister of Education and let him just pass the money on to the Directors-General in charge? [Interjections.]

[Inaudible.]

The hon member says it is correct, that he would prefer that.

Business interrupted in accordance with Standing Order No 22.

House Resumed:

Progress reported and leave granted to sit again.