Mr. SPEAKER intimated that a letter had to-day been received by the Clerk, of the House from Lady Smarrt acknowledging the resolution adopted by the House on the 19th July and conveying her sincere thanks for the sympathy extended to her and her family on the death of her husband.

As regards the current financial year I told the House that I had estimated the revenue as £31,063,000 and the expenditure as £29,950,000 which would leave a balance of £1,113,000. The revised estimate of expenditure which I laid on the Table last week amounts to £30,316,766. The increase above the figures I gave in March is due to the fact that the requirements for old age pensions, relief of distress and certain other services were considerably more than I then expected. I made provision in March for an expenditure of £250,000 to complete the provision made in the first print of the Estimates laid on the Table in February last. The amount really required is £620,000 more than that provision and the increase is explained in the last paragraph of my memorandum, which was laid on the Table last week, as an introduction to the estimates. The return of revenue for the first few months of the current year showed that the estimate of revenue from customs will probably be exceeded and I have therefore increased the estimate of revenue under this head by £350,000, and the estimate under various other heads by £97,000. This gives a revised estimate of revenue of £31,510. This estimate is based on the existing scale of taxation which means that it does not allow for the 20 per cent, exemption which was granted last year in respect of the tax for 1928. The revised figures are therefore: Revenue, £31,510,000; expenditure, £3,317,000. That leaves a surplus of £1,193,000.

In accordance with the proposals which I made in March last the surplus will be used in the following way: In the first place the exemption of 20 per cent, will apply again for the 1929 income tax and this will cost £800,000. Then I intend, as hon. members know, to make certain other concessions as regards income tax, namely, the increase of the deduction for children from £60 to £75, and the raising of the age limitation for children from eighteen to twenty-one years. Further, widows and widowers will be treated as married persons for rebate purposes. Then there is the proposed concession to the farming population, namely, the concession to allow the deduction of capital expenditure on farms made during the year for farming, dipping tanks, dams, boreholes, fencing, expenditure for the prevention of soil erosion, and the eradication of weeds, from the income in calculating the tax. It is permanent farming expenditure which may be deducted. Then I also intend to grant a concession to industrialists, and that is the giving of a rebate in respect of plant and machinery not in use. These concessions will mean a loss of revenue of £140,000 for this year and £170,000 for the succeeding year. Then we propose to make certain reductions in customs and excise, to which I referred in March, as follows: (a) Abolition of the customs on thread, trek chain and accessories, and motor paraffin which is used for agricultural purposes ; (b) reduction of the customs on woven materials made of artificial silk and linen, underclothes except shirts and knitted articles, carpets and floor coverings, gas and electric cooking, warming and cleaning apparatus; (c) deduction on the excise of Is. per 100 lbs. on sugar used in the Union for manufacturing purposes, which will fall to the benefit of the jam and sweets industries. Further there is a reduction of excise on spirits used by public hospitals of 7s. 6d. a gallon. That is the customs duty now charged on spirits used for industrial purposes. These exemptions and reductions mean a sacrifice of revenue of £262,000 and of £170.000 for the current year. All these concessions which I have stated mean a sacrifice of £1,232,000 for a full year and brings the surplus for the current financial year to 83,000.

Since my speech in March the Board of Trade and Industries has examined the position of certain industries and has recommended a number of tariff alterations on certain articles for protection purposes, or the free admission of certain articles which local industries require. Report No. 99 has been laid on the Table to-day and reference thereto shows that the Government was not able to adopt all the recommendations made with reference to the increase of customs duty. The increases adopted by the Government are included in a resolution which I will lay on the Table this afternoon, and which are as follows:

Condensed milk.—The tax, besides the existing duty of 12s. 6d. per 100 lbs., of a suspended duty of 2s. 6d. per 100 lbs. on full cream condensed milk, such tax to come into operation as soon as additional condensing factories are established in the Union. There are signs that certain companies will proceed with the erection of certain factories, and the amended customs duty has been adopted in the hope that the factories will be established in the near future.

Ready-made clothing.—An increase in the duty of 5 per cent, ad valorem “from 15 to 20 per cent.”

Knitted underwear.—A suspended additional duty of five per cent ad valorem to come into operation as soon as certain underclothing is made in the Union on a commercial basis. This increase is in connection with certain weaving industries which exist in Cape Town and other cities, as in Johannesburg, in the latter place particularly in connection with the children of silicotics.

Spindle chairs.—The duty is altered, as in the case of bentwood chairs in 1926, from 25 per cent. ad valorem to 20 per cent. ad valorem, plus 1s. a chair.

Wax cartons.—To restrict the free admission of wax cartons to that used in the trade in honey, dairy-fat, meat and fruit products. That intended for other purposes will be liable for a duty of 30 per cent. ad valorem if printed, and 20 per cent. if not printed.

Castor sugar.—Increase in the duty of 2s. per 100 lbs. to bring it to the same scale as ordinary refined sugar. This is merely to remove an irregularity in tariff. The financial effect of these increases will not be important, and it may be regarded as cancelled by a large complementary list of exemptions of customs duties which I propose making on the advice of the Board of Industries, and which will also be laid on the Table by me. These exemptions and reductions are largely intended to release local industries from customs duties on the raw material, and plant and appliances which may be imported. Examples are the exemption of bone meal, and certain chemical compositions used as cattle fodder, scales for calculating milk, and wood cellulose for packing fresh fruit, safety valves for mining work, certain chemicals which are used in the mining industries, garage workshop, machinery and copper pipes for manufacturing purposes, also come into account. Then exemption from customs duty is proposed in the case of certain classes of machinery which require local management, such as the treatment of sewage and refuse, and for the filtering of water. Instruments for slaughtering stock and cartridges for use in slaughtering stock. Collectors of antiques in the Union will be glad to know that we intend to exempt articles which are more than a hundred years old. The clause in the tariff which deals with motors will be amended to meet the requirements of the local assembling trade, and to remove difficulties experienced in interpreting items. I have only mentioned a few out of the long list of exemptions and reductions which will be laid before the House and to which I refer the House.

The estimates for expenditure from loan funds have been laid on the Table. The total provision is £11,238,000 and the actual expenditure for the year will undoubtedly fall well within this figure. Hon. members will see that on the first page of these estimates I give an estimate of revenue on loan account of £7,500,000 of which £2,700,000 represents the balance of revenue accounts on the 31st March, 1929, which I intend to carry forward to the loan account, £1,630,000 revenue from mining leases, £1,970,000 revenue from the State diggings, £110,000 revenue from Crown lands and £100,000 as a contribution to the capital programme of public works. The last mentioned amount is intended to prevent the loan account and the debt being unduly handicapped by work of more or less insignificant nature. Besides credit on the loan account of £7,500,000 we begin the year with a credit balance on the loan account of about £1,300,000. We therefore ought to fulfil our obligations to our capital account for the current year without borrowing more than £2,000,000. With the prospect of a scarcity of funds for investment overseas and consequent increased rates of interest, we can consider ourselves fortunate that we are at this time in the position of carrying out a considerable capital programme without the necessity of raising large loans abroad. The items in this year’s Estimates to which I want specially to call the attention of the House are the following: (a) the number of important and very necessary buildings in Cape Town (Deeds and Surveyor-General’s Offices), Pretoria (Public Buildings), Johannesburg (Post Office), Durban (Public Offices) which appear on the programme for Public Works. (b) Increased provision of £50,000 on the Estimate for telegraphs and telephones required to expedite the supply of farm telephones.

As I said in March the Government intends to use a considerable amount of the diamond revenue in irrigation and boring operations. As regards irrigation work, in anticipation of a careful investigation of the irrigation policy, no new works will be commenced except three which were started as relief works in drought-stricken areas, provision for which is made on the loan vote, Labour. The vote for boring has been considerably increased and has provided for additional equipment to cope with a still larger programme of work. (d) The provision of local works and loans amounts to £350,000 as a first instalment of £1,000,000 which will be made to the provinces for roads during the next three years. (e) As the unsatisfactory conditions of life in a portion of this city are attracting considerable attention it will possibly be well to say that the obligations of the Government with regard to advances for housing amount to £3,581,000, and £2,563,000 of this sum has been paid up to the present. To this must be added £350,000 capital repaid and advanced again. Consequently there is still over a million of public money to advance when required, as well as the repayments which are available to be paid out again as further advances increase from year to year. About £600,000 has been set aside for the requirements of Cape Town. Year after year the provision on the estimates was considerably larger than the amount required during the year, so that the financial arrangements of the Government are not responsible for the slow progress in this respect. The provision for the current year (including Loan Vote and if this sum is not enough arrangements will be made to increase it). It is earnestly to be hoped that the local difficulties which up to the present have delayed the improvements in local conditions will he speedily removed. As to the future, when I spoke in March last about the estimate of customs duty, I said that I thought that our imports were too high, that a large portion of the population was really living above its income, and it consequently was not safe to assume that the imports would continue on that scale.

The imports during the past three months have remained at the previous high scale and I was consequently obliged to considerably increase my estimate of revenue from customs duty for the current year I still hold the same opinion as in March. While the general condition of the country is satisfactory there are certain aspects which make it necessary to treat the future prospects with care. In the first place the price of wool, our largest agricultural article has considerably fallen. In the second place the bank overdrafts have considerably increased—this may indicate that the imports are abnormally high or otherwise—and in the third place there is, in my opinion, too much long credit in this country, especially in the purchase of unnecessary articles, as is often the case with motor cars. I know that the hire purchase system is approved of by economists of repute and while I am prepared to admit that there may not be much harm in a person of fixed income pledging his income for twelve or eighteen months in advance I do not think that it can be a sound practice for the farmer of this country. Owing to the fluctuating seasons and markets his revenue is too uncertain for him to follow this practice. Let the farmer buy his motor car, but first save the money and then pay cash. Besides farmers, there are too many others who spend too much on motor cars, in whose case they are undoubtedly nothing but a luxury. Long credit is given in respect of other unnecessary articles. It is by no means my intention to create alarm and yet I regard it as my duty to call attention to these aspects of our economic life.

Mr. M. L. MALAN seconded the motion.

1. 2. It will assist hon. members if I first of all recall that the original estimates for 1928-’29 submitted to the late Parliament provided for a gross expenditure during the year of £29,414,222.
2. 3. During the session immediately preceding the dissolution, estimates of additional expenditure to the net extent of £770,237 were approved, which, when added to the original estimates, made the total revised estimate of expenditure for the year 1928-’29 £30,184,459.
3. 4. On the basis of the actual revenue and expenditure for the ten months ended 31st January, 1929, it was estimated, as will be seen from the green book which was distributed last session, that the total revenue for the year would amount to £30,514,766 and the total expenditure to £30,184,459, thus indicating a surplus for the year amounting to £330,307.
4. 5. To this was added the surplus for the year 1927-’28 amounting to £47,217 and so an estimated accumulated surplus to the 31st March, 1929, was anticipated of £377,524.
5. 6. The accounts for the year have been closed and the actual results are therefore now available. These show that the total revenue was £30,350,783 and the total expenditure £30,054,959, thus showing a surplus from the year’s working of £295,824 which, when added to the surplus for the year 1927-’28, amounting to £47,217 showed the actual accumulated surplus at the 31st March, 1929, to be £343,041.
6. 7. This was an exceedingly close result to that estimated, namely £377,524, a difference of only £34,483.
7. 8. In regard to the disposal of this surplus, I will have something to say at a later stage.
8. 9. Hon. members will be interested to learn, that compared with the previous financial year, railway earnings increased by 785,891, while the expenditure incurred on the main services of transportation and mechanical departments in earning that additional revenue involved an increase by the comparatively small amount of £98,656.
9. 10. Arising out of these figures it is gratifying to find that the operating ratio, that is the relationship of railway working expenditure to railway revenue, continues to improve.
10. 11. For the year under review it was 77.80 per cent as compared with 79.83 per cent. for the previous year (1927-’28) and 80.68 per cent. in 1926-’27, or an improvement over the previous year of 2.03 per cent, and over 1926-’27 of 2.88.
11. 12. These figures are indicative of the keen interest which the staff has taken in effecting economies in working and in the prevention of waste. I am sure hon. members will agree that every credit is due to the officers and all grades of the staff for their efforts in achieving this satisfactory result.
12. 13. Our efforts will, of course, be continued in this direction.

1. 14. Turning now to the estimates for the year 1929-’30, which were laid on the Table last session, as I then outlined in detail, the prospects for the current year, I will confine myself now to a recapitulation of the main features only, so that those hon. members who were not present on that occasion may not be handicapped in their understanding of the position and at the same time I will avoid a tiring and perhaps an unnecessary repetition of the lesser important details.

1. 15. The expenditure then for the year is estimated to be £31,181,118, made up of—

1. 16. Compared with the original estimates for the year 1928-’29 that amount represents an increase of £1,766,896.
2. 17. The increase is distributed over all heads of working expenditure, but the heads mainly concerned are—

1. 18. In comparison with the actual expenditure for the year just closed (1928-’29) we anticipate additional expenditure during 1929-’30 to the extent of £1,126,160, made up of—

the heads under which this increased expenditure will mainly be accounted for being—

Maintenance of permanent way, £196,000; running expenses, £51,061; depreciation (increased contribution to renewals fund), £390,233; road motor services, £82,338; interest on capital, £292,865.

Main services, £33,354; depreciation (increased contribution to renewals fund, £11,354; interest on capital, £29,547.

Main services, £17,912. Total £1,104,664.

1. 19. It is estimated that the train and engine mileage for the current year will exceed that of last year by over 2,000,000 miles, or 3½ per cent.
2. 20. This, of course, is due mainly to the increase in tonnage of goods and mineral traffic (almost 1 million tons) which in turn is responsible for the increase in running expenses and traffic expenses.
3. 21. Increased expenditure will also result from giving effect to the decision to improve conditions and rates of pay of European labourers, grade 3 clerks and telegraphists, certain grades of coloured labourers, and running staff.
4. 22. It has also been found necessary to increase the provision for depreciation of permanent way and rolling stock assets.
5. 23. This increase amounts to £390,233, and is due to the increase in the capital assets of the administration. Expenditure on new lines and new rolling stock alone has increased in round figures by a sum of £14,000,000 since 1924-’25 at which date the lump sum of £1,500,000 was reported to be approximately sufficient contribution for depreciation. The provision now found to be necessary is £1,890,233.
6. 24. The continued expansion of the road motor services and extension of the activities of the tourist branch are also responsible for increase in expenditure.
7. 25. Briefly then these are the main causes of the increase in expenditure of £1,766,896.
8. 26. Here I may add that, in consequence of the increased expenditure due to the improved rates of pay to certain grades of staff, and the decision thereon being taken after the first print of the estimates had been tabled, it appeared at first that it would be necessary to incorporate the consequent increases in supplementary estimates.
9. 27. A review of the whole position, however, bearing in mind, on the one hand, the smallness of the amounts that would require to be asked for in respect of each of the many wages accounts throughout the estimates, and on the other hand, that an almost corresponding saving would be effected under many of the same accounts by reason of economies that will be effected, indicated that it was unnecessary to disturb the estimates that have been submitted, thereby maintaining the gross expenditure at £31,181,118.
10. 28. On the revenue side the general economic conditions of the country indicate a justification for assuming an increase in revenue over that of last year.
11. 29. It is anticipated that the total revenue from all sources will amount to £31,075,947 made up of—

1. 30. In so far as railways are concerned this represents an increase of £512,000 or approximately £10,000 per week more than during last year.
2. 31. The average revenue per week for last year was £500,000, so that we are budgetting for a revenue per week of £510,000 and so far as the year has gone there is every reason to think this will be realized.
3. 32. The estimated expenditure, as previously mentioned, amounts to £31,181,118 and so it will be seen that we are budgetting for a deficit on the year’s working of £105,171.
4. 33. In the event of this deficit being experienced it will be liquidated from the rates equalization fund which has a sufficient balance at its credit to do this and still leave something for probable future deficits.

1. 34. Mention of the rates equalization fund brings me now to consideration of the supplementary estimates of expenditure which have been laid on the Table, in which hon. members will observe that they are confined in their scope to giving effect to the appropriation of the accumulated surplus at the 31st of March last.
2. 35. As I stated previously, the surplus was £295,824 to which is added the surplus for 1927-’28 amounting to £47,217 resulting in an accumulated surplus of £343,041.
3. 36. It is proposed to devote this surplus to the specific purpose of (a) writing out of capital account the value of the Sea Point line, approximately £56,000, (b) writing out of harbours capital account a portion of the remaining cost of dead assets at harbours of £100,074 and (c) a contribution to the rates equalization fund of £186,967, thus appropriating the whole of the surplus of £343,041.

Hon. members will therefore see that we are commencing the current year with a closed account.

1. 55. This now leads me to mention the commission which, as hon. members are aware, was appointed this year to investigate and report upon the question of road motor competition and its bearing upon the transport services of the Administration; also the measures, if any, which should be adopted in the public interest for better regulation, co-ordination and control.
2. 56. The Commission comprises one representative each of commerce, industry and agriculture; two representatives of the Railway Administration, and a chairman appointed by the Governor-General.
3. 57. In February last the commission invited, through the medium of the press, considered views and suggestions in writing upon the various phases of road transport, and thereafter commenced a tour Of the Union for the purpose of receiving representations from chambers of commerce, local bodies and others interested.
4. 58. The commission visited Port Elizabeth. Kingwilliamstown and East London during April; Kimberley, Bloemfontein and Harrismith in May; Durban and Pietermaritzburg in June; and was due at Johannesburg and Pretoria in July.
5. 59. The sittings of the commission have met with a gratifying degree of public support, but in view of certain comments which have been made, I would take this opportunity of supporting the chairman of the commission in his efforts to dispel the erroneous impression that the commission is a railway commission, whose aim is to find justification for restricting road transport and bringing it under the control of the Administration. As will be seen from its composition, the commission is more representative of public interests than of railway interests, and its members are, within the terms of reference, unfettered in dealing with the problem before them in the best interests of the country as a whole.
6. 60. It is necessary, however, that the public should realize how closely the prosperity of the Union is bound up with the economic stability and efficiency of its railway system.
7. 61. Many countries in Europe have found it necessary to exercise some form of control over road transport; this is also the case in America and some of the Dominions.
8. 62. A reasonable degree of regulation and control does not necessarily imply vexatious or arbitrary restraint, and it is hoped the private motor transport interests will co-operate heartily in the effort now being made to evolve a system equitable to all.
9. 63. The commission will not complete its labours for some little time—the very nature of its work precludes an early conclusion.

1. 64. In conclusion I desire to reiterate a few words of well deserved praise to the officers and men of all grades in the railway and harbour service.
2. 65. I cannot speak too highly of the support given to me and the railway board by the general manager and his senior officers particularly, and of the general efficiency manifested by all sections of the personnel during the past year.
3. 66. I am sure this House, and the public generally, fully appreciate the loyalty, zeal and efficiency of the staff of the railways and harbours service.