I move—

Agreed to.

I move—

Agreed to.

I move as an unopposed motion—

Agreed to.

I move the motion standing in my name on the Order Paper—

Sir, you will notice that it is based on claims that the Government has been guilty both of incompetence and of ineptitude. I propose to substantiate that claim primarily by reference to the mismanagement of our fiscal and economic affairs and an examination of some of the consequences of that mismanagement. In that regard I propose to pay particular attention to our gold mining industry, to agriculture and the position of those people in South Africa living on fixed incomes. I want to make it perfectly clear at this stage that the fact that I am highlighting these issues at this stage of the Session and that we have sought common ground with the Government in respect of foreign affairs does not mean that the issues which I raise to-day are the only differences between the Government and ourselves. In fact, those differences are so great that they cannot be dealt with either in one speech or in fact in a whole debate lasting some considerable time.

Sir, I make no apology for seeking out the threatening crisis in our financial life for attention so early in the Session because I find that financiers, economists, organized business, organized workers and even the Governor of the Reserve Bank are all warning that we cannot continue as we are doing without ultimately courting disaster. You see, Sir, in the gold mining industry soaring costs of production are already drastically reducing the life expectancy of the entire industry, an industry which is South Africa’s greatest asset and its greatest source of stability in the economic sphere.

Then, Sir, if you look at the position in regard to the agricultural industry, you will find that rising costs are making it increasingly difficult to produce the nation’s food at prices that the ordinary man can afford to pay.

That is no lie.

The result is that we are faced with a gravely embarrassed industry which may be faced with the problem of trying to cope with South Africa’s population explosion and feeding the people in the next 30 or 40 years.

Then, thirdly, wherever one goes in the country one finds genuine complaints from salaried people, from wage-earners, from pensioners and people with fixed incomes, that they cannot make ends meet with the ever-rising cost of living which this Government seems quite incapable of controlling. I think the situation bodes ill for the future and I have no hesitation whatever in laying the blame for the situation which has developed fairly and squarely on the shoulders of the Cabinet. I feel blame attaches to the hon. the Minister of Finance—not as yet the new Minister of Finance whom I would like to congratulate on his appointment to this very responsible post. We realize the responsibility that attaches to that Ministry and he has a great deal of sympathy from me in the difficulties with which he is going to be faced. I want to say at once that responsibility and blame attach to that Ministry for their financial mismanagement of the boom and for their failure to cut Government expenditure realistically. Blame attaches also to the Minister of Economic Affairs, now the Minister of Finance, for his stop-go import policy, and for his injudicious imports replacement drive. Sir, I think blame attaches also to the hon. the Minister of Railways for his failure to do what every businessman was exhorted to do by the Government, namely to absorb cost increases instead of passing them on to the public.

That is nonsense.

In his case it has added more than any other factor to the continuance of cost inflation in this country. Then blame attaches to the hon. the Minister of Posts and Telegraphs, who is following the same policy in the Post Office. Sir, his increased telephone charges are no bagatelle in a country which is already staggering under the burden of increased costs of living. I think blame attaches also to the hon. the Minister of Labour for his complete inability to appreciate the realities of the labour position in the country or, if he does, in his timidity in not informing the Cabinet that he cannot maintain an economy for 17½ million people using only the skills of 3½ million, and that an adaptation of labour policy is a sine qua non of further progress. I could go on, but I think that responsibility and blame attach of course to the hon. the Prime Minister, who in the last resort must take full responsibility for the incompetence of the members of his Cabinet, for not calling to order those who are ploughing a political furrow in defiance of the economic interests and the security and prosperity of the Republic of South Africa. I think there is very little doubt that inflation has to a large measure got out of hand. I think it is a simple axiom that South Africa cannot hope to enjoy greater wealth as long as price increases are taking place faster than increases in income; and that is the situation you have and have had for some time with this Government in South Africa. It is a situation which they seem to be powerless to remedy at the moment. I do not know why the necessary steps have not been taken. They have been warned on many occasions; they have been given advice. They have given us their ideas of what they were going to do. I do not know whether it is that they are afraid or whether they are just incompetent and unable to improve the situation. I want to ask now quite pertinently what happens to the promise made by the late Prime Minister, Dr. Verwoerd, last June to the housewives of South Africa that unjust exploitation of consumers would not be permitted and that the rising cost of living was receiving the urgent attention of the Government. I will tell you what happened to that promise, Mr. Speaker. It was massacred by the then Minister of Finance and the Minister of Transport in their Budgets last year. According to them, everything in the garden was lovely until 30th March of last year. The country, as the Minister of Finance himself said, could even afford wage and salary increases to civil servants and railway workers. Then came the Railway Budget of last session and the national Budget which completely changed the entire picture. Extra taxes and tariffs amounted to approximately R140 million, and there were strenuous exhortations to the public to pull in their belts, to stop spending, to save and in fact to put their shoulders to the wheel in no uncertain manner and to push the Government out of the mess it had got itself into. But, Sir, did the Government stop spending our money? Look at what has been happening. Every year the Public Service seems to swell like a Mark Saxon monster. If you look at the information supplied by the Bureau of Statistics last year, you find that the Government increased the total number of its public servants from 272,000 to 320,000 in one year. It increased them by 17 per cent. The non-White total went up by 22 per cent, but the total increase was 17 per cent.

Your figures must be wrong. Did you say civil servants?

I did not mean the civil service but the Public Service. [Interjection.] Not only did their numbers increase, but their price to the public went up by R10 million or approximately 13 per cent.

You are not referring to the municipalities, are you?

No, but I will deal with the municipalities in a moment and I will tell you something about a good municipality, one run by the United Party. The population is increasing by approximately 2 per cent per annum. Is it necessary for the Public Service personnel to be increased by 17 per cent in one year? Is such flamboyant Parkinsonianism really necessary? [Interjections.] I do not believe that that sort of thing is inevitable if you have competent administrators in the Government. My contention can be proved if you refer to the Johannesburg Municipality, which is run by the United Party. There you have a growing population and it has been proved that it can be served with extended facilities and only a tiny increase in staff if care is taken to improve the efficiency of the staff and see that they are properly trained.

The Railway staff has actually been reduced.

But look at the consequences.

Johannesburg is a city with a population of about 1¼ million people. It has been provided in the last five years with improved and extended facilities in the fields of health, housing, care of the aged, transport, recreation, non-White affairs, with an increase of only .5 per cent.

Is that why I have to provide all the houses in that area?

The reason is perfectly simple. The City Council embarked on a policy of improving the efficiency of its staff and seeing that they got adequate pay increases. Look at that record when you compare it with the sort of increases that we have been faced with under this Government, increases in telephone services and the cost of telephone services, increased rail fares. I know the Council’s wage bill for Whites went up 36 per cent and the non-White wage bill 33 per cent. That is approximately 8½ per cent per annum.

Compare that, Sir, with an increase in staff of 17 per cent in the Public Services and 13 per cent in one year. Incidentally, Sir, in regard to the rise in the cost of living one wonders whether the employees in those Public Services are any better off than they were a year ago. I said that the Government had continued to spend our money and if you look at their record over the past six or seven years you will see that expenditure from Revenue and Loan Account has more than doubled in that period. It has gone up from about R963 million in 1960-’61 to R2,085 million in 1966-’67. It has more than doubled, Sir, it has gone up by 116 per cent. Taxes last year rose by R93 million and there was an increase in rail tariffs estimated at R56 million. Now, Sir, what have we got for that? I believe it is the task of a Government to control inflation and to protect the standard of living of its people. If it fails in that it is letting the whole public of South Africa down because it becomes pointless for the wage and salary earner to work harder if his income gives him less and less and he can buy less with it. It is pointless to save if an ostrich nest egg to-day becomes a pigeon nest egg to-morrow owing to inflation. It is fruitless for our industrialists to compete in foreign markets if rising costs price them out of the market as a result of Government activity. I know that the control of inflation in an expanding economy is a complicated business but it is a job the Government is supposed to know. The truth of the matter is I believe that the Government has allowed this matter to get so out of hand over the years that the patchwork approach that it has adopted has turned out to be useless. Ever since 1961 they have either taken the wrong steps or they have done too little or they have done it too late.

In 1965 when the Budget was discussed we asked the Minister of Finance whether he envisaged a rise in the cost of living. His reply was that he hoped that it would come down. Now Sir what happened? After he had delivered his speech we said that we saw nothing in it that would bring the cost of living down. In fact we thought that it would go up. But what happened even last year? The hon. gentleman was still persisting. He said “I think we have succeeded in combating inflation without causing any serious disruption to the national economy. To-day we can feel more at ease in this regard than we could six months ago”. Well, Sir, who was right? Was the Government right or was the United Party right. Between the March Budget of 1965 and the March Budget of 1966, the cost of living rose by about 3 per cent. Then came the election and the Budget last year and we saw a rise of about 1.2 per cent in one month. The rise from September to September or from November to November was close on 5 per cent. And Mr. Speaker, it is still going up. What was the position in November and December? In November there was a rise on the figure for September. In December it remained the same and I am very interested to see what the January figures are going to be, especially after the statement of the Governor of the Reserve Bank a little while ago. The question I want to ask is this. How was it that we foresaw these increases and warned against them and the Government apparently did not? How is it that we drew attention to the fact that one of the main causes of inflation was the increase in rail tariffs which over the last seven years have increased more rapidly than the general prices? How is it that we asked the Minister of Transport to take cognizance of their effect before he presented his Railway Budget? But did he Mr. Speaker? No, he certainly did not do that. The tariffs went up once more. I think that everybody knows that higher rail tariffs increase the prices of every commodity affected by the rise in transport costs. Somebody has got to pay that R56 million. That somebody has turned out to be Jan Burger, the ordinary man in the street.

In other words you did not want any wage increases.

Mr. Speaker, this interjection of the hon. the Minister does reveal him as having a very short memory indeed. He was told last year when the Railway Budget was discussed how he could finance that R56 million. He was told to make use of the rates equalization fund. He was told what to do but he would not take advice. He does not take advice. He is reaching the stage where he believes that he is the only one who knows anything about this business. You see, Sir, having passed on these costs himself he then sanctimoniously asks commerce and industry not unnecessarily to pass these costs on to the consumer and to the public and to try to absorb them themselves. This interested me enormously. Since the election we have had very solemn warnings from the Government about how to pull in our own belt. We have seen interest rates unfrozen, we have seen rent control, we have seen the threat of price control, we have seen the hints of a wage freeze and then the hon. the Minister of Transport comes and makes a fool of his whole Government and everything that they have been doing and does the very thing that he has warned against and that his Government is warning against and passes the increased cost on to the public straight away. He can of course do this because the Railways are a Government monopoly and it is much easier to pass on the increased costs than run the department more efficiently. Look at what the effect has been of these increased tariffs on such things as sugar, cement and such like. The sugar industry has; estimated that the increased railage would involve about R750,000 and on cane it would be about R355,000, on harbour and handling charges it would be about R95,000. That was the estimate from the industry. I warned at the time, namely last November that the industry would not be able to absorb that R1.1 million. What happened? Within a month that price of sugar was up by half a cent. Now take the ripple effect from that, namely increases in the prices of biscuits and sweets, condensed milk, minerals and a wide range of consumer articles containing sugar. Look at the position regarding cement. For years the position was held stable with regard to the price of cement and other building materials but with the increase of tariffs we have an announcement from the chairman of one of the biggest firms last year that with the approval of the Price Controller the increase in rail tariffs had been passed on to the public. We know very well that you cannot build houses without cement.

Do you know what the increase in regard to these materials was?

Mr. Speaker, does not the hon. the Minister realize that these increases have a snowballing effect? What starts as a small increase on the Railways gets to be a very much bigger increase by the time that the consumer public has to pay for it and pay for it two or three times over because it occurs in so many things.

Mr. Speaker, we have seen the same thing happening with petrol. We have seen the South African Agricultural Union making a request that rail tariffs be reduced to their former level. I believe the position is that the farming industry has taken so much that it just cannot take any more, and the result is that those increases in tariffs will be passed on to the public as well—it is the snowballing effect.

Mr. Speaker, the Minister of Transport is not the only sinner. It seems to me to be infectious in the Cabinet. The next one to fall was the hon. the Minister of Posts and Telegraphs. During the recess without reference to this House the hon. the Minister raised his postal charges to a sum which has been estimated as likely to bring him in between 10 and 14 million rand per year extra, a 40 per cent increase in the price of local calls alone. Then he says that commerce and industry have supported the idea of an increase to finance a Post Office Development Fund. I do not know to whom he referred but there is a statement by Mr. Leslie Lulofs, President of the Federated Chamber of Industries and Mr. Basson, Chairman of the Associated Chambers of Commerce, saying that they had rejected the suggestion of an increase when it was made to them. They say that while some individuals in commerce and industry might have approved of the proposal as a method of making additional capital available to the Post Office, the two organizations as such definitely rejected this suggestion. I may say, Sir, that it was based on two factors, namely additional costs to business and the belief that the cost for such services should be met by borrowing and not by raising charges. There was a complaint from the Johannesburg Chamber of Commerce, which criticized the increase. They said the increases would have an inflationary effect.

There was a statement from the Durban Chamber of Industries. The increase was described as “a totally deplorable inflationary move”. The statement continued: “It is astonishing that the Government should adopt such extensive anti-inflationary measures on the one hand, and then come up with such a primarily inflationary innovation on the other. The move flies in the face of accepted business principles. Development should be financed from a capital or loan fund”. Sir, I know we are going to be told that the Minister of Finance did his best to cut expenditure. It seems to me that lack of care on the part of the Ministerial doctor has led to galloping consumption of the people’s money in South Africa. You know, Sir, that if you want a job done about the house, and you get in an electrician or a plumber, if you get a good man in the end it costs you far less than having a bad man on the job. That has been the position in regard to the finances of our country. The way this Government has been going on, they were acting like apprentices who will never get their tickets in running the finances of the country.

During the last budget debate I placed five propositions before the House. The first was that I agreed with the Minister of Finance himself that the cost of living in South Africa had been rising at a rate which was too high and was clearly harmful to the economy. The second was that this rate of increase was symptomatic of inflation, largely caused by the Government’s own spending spree over a period of years. The third was that the Government had made it very clear that it was prepared to combat inflation to the last cent of the ordinary man in the street and to the last rand of the ordinary South African investor, but it was not prepared to cut its own expenditure or discipline its own expenditure adequately. The fourth was that the efforts of the Government to deal with the situation in that budget were almost certainly doomed to failure and more like to aggravate and inflate the economy than to curb it. Fifthly, Sir, the man in the street, owing to the Government’s ineptitude, was not only going to be expected to pay higher taxes, but he was also going to be subjected to ever-rising living costs. That was last September, Sir. Every one of those statements has been substantiated by what has happened since then. Every single one of them. It is amazing to me that this Government still creates the illusion of “kragdadigheid”. It seems to me that all we really have is obstinacy and fanaticism, laced with a good dose of ignorance as well.

Later in the session I raised the matter with the hon. the Prime Minister. I said to him that what the Government did to protect the value of the salaries and wages of ordinary people in South Africa in the following three months was going to be one of the major tests that he would face on his assumption of office. I said that I was sure that people outside would support me if I said that what we wanted was evidence that the Prime Minister was passing that test and we wanted that evidence before the commencement of this Session of Parliament. I pointed out the various remedies which had been proposed by this side of the House. What has happened? The fact that new steps had to be taken in December showed quite clearly that the steps taken in the last budget during the last session of Parliament were inadequate. The question is whether the steps taken in December are going to be adequate. Do you know, Sir, I believe that they have been taken too late. I do not believe that they are going to be adequate.

If you look at the statement by the Governor of the Reserve Bank at the Pretoria East Rotary Club earlier this month, I think you came to the conclusion that, quite clearly, he would not have spoken as he did if he was confident that what was done in December was going to be adequate to meet the situation. Quite clearly he does not think that the battle against inflation has been won. What does he do, Sir? He makes an appeal to the Government, to the big man and to the small man. He calls upon the small man to ask himself what he can do to make the credit squeeze more effective. He asked him to spend less, and not to press for wage or salary increases, or shorter hours or fringe benefits unless there was greater productivity. By inference, he advises him to save—he does not, of course, say what he is to save out of, Sir. I do not want to criticize the statement of the Governor, but I must say that I felt myself very much in agreement with a local newspaper which said that if, as a result of that appeal, there was a voluntary savings levy by every one in South Africa, it would believe that the age of miracles was not yet dead. I do not think it is going to happen. I do not believe that he would have spoken as he did if he were satisfied that the steps taken in December were adequate.

What were those steps? There was a joint statement by the Ministers of Finance and Economic Affairs which was realistic in realizing that the battle against inflation had not yet been won, but which was unrealistic in describing inflation as too much money chasing too few goods and not bringing in the second leg, which was too much money chasing too few job seekers. It has been in that regard as well that the Government has been a sinner in increasing inflation by competing with the private sector for the available labour that has been on the market.

The relaxation of import control which has been proposed will undoubtedly make a contribution. It was suggested before by this side of the House. I think it is a pity that it has come so late. I think the action to sterilize excessive short-term funds by the issue of treasury bills to banks and to private companies is not, of course, a new idea. The question is: Why has it only been applied so late? I do not think it is going to do much to cut across the activity of the so-called “grey market” which has been going on for some time. The restriction on bank credit and the suggestion of the earlier re-payment of foreign loans cannot do very much more than they have done already in restricting credit. It is interesting to note the position in regard to price control. I do not think the Government has got either the data or the officials or the machinery to apply that price control, and particularly not in respect of services, even if it can do so in respect of goods. It is odd to find remarks about unsound trade practices to be brought to the knowledge of the Ministers when there is already a Monopolies Act which seems to cover that very situation.

The last statement, Sir, seemed rather amusing. Where there is a condemnation of speculation, when one recalls the extent to which this Government itself, through the Industrial Development Corporation, is engaging in new industries particularly in Border areas which must in the nature of things be speculative, it is rather amusing to find this warning coming from the two Ministers. Taken all in all, I find it difficult to believe that these steps are going to be adequate and are going to counter what the authors of the Stellenbosch Survey of economic conditions and prospects of 1967, warn might be a danger. They said that unless adequate steps were taken to combat inflation, it could be expected to rise by at least another 4 per cent per annum in the coming year. They pointed out that such a development evokes cumulative forces and that it might easily be that the year thereafter the rise could be very much greater. It is for that reason that I make no apology for drawing this matter again pertinently to the notice of the hon. the Prime Minister because I think this is one of the vital problems with which we are faced at the present time. What has the effect been of the Government’s failure to deal with inflation on an industry like the gold-mining industry? When you examine that industry you find that it is facing a complex crisis, a crisis involving a serious shortening of the life expectancy of certain of its mines and at the same time strained relations with certain of the labour forces in that industry. I do not think that I need emphasize to this House the importance of the gold-mining industry. I think that it is one of those industries which has made South Africa’s good name in the outside world and which has shown that we are an organized community who can conduct our businesses with the greatest integrity. But South Africa is still bound up with the future of that industry for better or for worse, and any government which lets this industry down lets down every citizen in South Africa and affects his cost of living and his future prospects.

By 1965 our gold exports were R775 million. If you realize that all other exports together from every other industry were only R300 million more than that, then I think you realize what a tremendous part it plays. The production has actually been virtually doubled in the period from 1956 to 1965 so that to-day we are supplying 73 per cent of the free world’s gold. That very fact has emphasized the importance to the western world of stability, responsibility and civilized government in South Africa. Those mines spend about R260 million a year in buying South African produce, and they buy whether there is boom or depression. That is why a man like De Kiewiet could describe the industry as “a mighty fly-wheel” maintaining the equilibrium of our economy and protecting us against violent ups and downs. Not only does it spend that amount, but in salaries to White employees alone it is spending approximately R130 million a year. But it is a hazardous occupation. I believe that the men in charge of the industry pay well. I believe that they want to pay better if they can do it in the circumstances, and if the Government would only assist them to combat the inflationary tendencies which are causing costs of production to rise.

I want to make just one more remark about this, and that is that if you consider for one moment what the hiatus will be in respect of exports if this gold-mining industry ceases to function, then I think that one realizes the magnitude of the task that will have to be fulfilled to replace it with anything else.

I know that the Government is concerned at the threat to the prosperity of the industry, and I know that it has permitted redemption of capital before taxation, and it has given special loans to cover working losses and capital expenditure. It has also given grants towards the pumping of water. These are all very welcome, but they do not go to the root of the problem, and the root of the problem is that this industry has now reached its peak, and having reached its peak, it is beginning to decline because of the effect of inflation. Because, Sir, inflation to the gold mining industry means higher working costs, and higher working costs puts up the grade of ore that can be worked. I know that it brings in a bigger yield for the time, but it shortens the life of the mines, and it means that millions of ounces of lower grade ore will all have to be abandoned because it is not payable to mine them. It also means that you have to have a higher average minimum grade of ore before you can open a new mine.

Now, all these things have the effect of shortening the life of the industry. It means fewer jobs for miners’ sons who want to follow in their fathers’ footsteps. It means also fewer prospects, less wealth, less prosperity for those many thousands of people throughout South Africa who are connected with this vast industry in one form or another.

You see, Sir, that the inflation in the country causes most intractable difficulties for this industry. They have already been disturbed at the forecast in the economic development programme of an increase in costs of 2 per cent per annum. You can imagine with what alarm they must be viewing the situation when we see an increase in the cost of living of close on 5 per cent from November, 1965, to November, 1966, and you can imagine what it must mean in respect of a reduction of the life of the gold mines.

I know that the Government cannot recompense them for what has happened. But one thing is certain, and that is that we cannot go on the way we have been going on over the last five years, because according to the industry’s leaders the cost of milling has gone up 23 per cent in the last five years. Working costs have gone up in five years by almost R1 a ton. Do you know what the effect of that has been? It has been that 40 million ounces of gold have to be left in the ground because it is no longer payable to work them—40 million ounces of gold over that five-year period. It means that we are losing the future prospect of R1,000 million to be used for foreign exchange purposes. That has been the cost of inflation over the past five years to this industry.

Now, Sir, something has got to be done to combat that situation. I realize that one of the ways in which it could be combated may have to do with the productivity of the labour force in the industry. I know that the industry is struggling with what many people regard as an antiquated labour pattern in the industry. I know that there have been experiments with the goodwill of some of the workers, and I know that they have had to be stopped because of the reaction of the workers to them. I know that new attempts are being made, but I know also that the industry has been gravely embarrassed by the fears of the White workers concerned that their economic security and their future will be undermined by experiments of this kind. I think that everyone is aware of the stresses and strains that have been developing in the industry. But I want to say one thing to-day that I think I can say with conviction, and that is that one may or may not agree with the fears of the mine-workers, but the fact is that they are there and they have to be coped with. They have already led to a revolution in the Mineworkers’ Union. They have already shown that the Government is not only powerless to deal with the position, but apparently they were misinformed and very ignorant of what the situation was in the Mineworkers’ Union. Those fears are there. We have to have regard to them. They exist, I believe, very largely because of the unscrupulous actions of this government in the past, because it was by creating, encouraging and exploiting this type of fear that they built up one of the strongest weapons in their political armoury. And now the chickens are coming home to roost, and there you have the Government like an ineffective scarecrow where the chickens are no longer scared. They do not seem to be able to do anything about it.

The question now is what steps can the Government take to give the mineworkers satisfactory guarantees that they will not be replaced or impoverished. Those are the questions that require answers, and require answers quickly, but in respect of which there does not seem to be any positive contribution by this government at the present time. Laws to limit the right to strike and prosecution of the mineworkers’ leaders are not the answer to this problem. The Government has to undo the evil it has wrought in the hearts and minds of these people through the years for political purposes, and it must ensure to them the security that they are entitled to demand and without which, factually and psychologically established, no experiments of any kind are going to be successful.

I say that there is a tremendous responsibility upon the shoulders of the Government in this regard, not only for South Africa but also for the free world. Because here I want to recall with approval something said by the new hon. the Minister for Finance only a week or two ago in Germany, when he pointed out that already the lower grades of ore in South African gold mines could no longer be mined, and that, unless something happens soon, the western world in twenty years’ time would have no resources of gold at its disposal, and all the resources of gold would be in the hands of Soviet Russia and its mines. I agree with the hon. the Minister, and I say that inflation reducing the life of our gold mines is against the interests of free men and women throughout the world.

I agree with the hon. the Minister. I know that he was pleading for an increase in the price of gold. That would be a wonderful thing for South Africa and I think there we can all support him. Tragically, Sir, we do not control sufficiently whether that price is going to be increased or not, but what we can control, or at least make a contribution towards that end, is inflation in South Africa and its effects upon our own industry. We can, by getting the goodwill of the workers concerned, embark upon changes that will lead to greater productivity and lead to a longer life for those mines. In fact, if only the Government used half the energy in coping with the problem and fighting inflation as it has used in pressing for a higher price for gold, we would be in a very much stronger position to-day. It is a pity that this Government is so ineffective in that regard.

But it is not only in the mining industry that the effects of inflation are being seen, but also in agriculture, the other key industry in this country. When you look at reports in respect of that industry, you find that not only has agriculture had a bad year but you find that it has been through a difficult period for a large number of years and you find inevitably it has been very hard hit by the Government’s steps to curtail credit; because although the Minister of Finance wanted to protect the industry, we found that the risk factor in agriculture was so great that the commercial banks no matter what the directions from the ministry, were afraid that they would place themselves in an embarrassing position by lending too freely to agriculture in the drought areas. The result has been that the agricultural industry has felt these restrictions perhaps far more than any other section of »the community. That is without doubt the belief of the S.A. Agricultural Union which, in its latest reports, supports that view by reference to the extent to which Land Bank advances to the industry have increased over the past two years, and it does something else, Sir: It emphasizes that the agricultural sector did not participate in the prosperity in the country during the period 1961-’65. Its entire growth during that period was 5.8 per cent as against a growth of 31 per cent in the national economy.

It shows very clearly that over the 10 year period from 1956-’66, producer prices for agricultural products did not keep pace with the depreciation in monetary value. That has been the situation, Sir; that is the extent to which inflationary forces have hit the agricultural industry. I know that there have been price increases since then but I know also that if we continue as we are at the moment then there is no doubt that the cost structure of the agricultural industry is going to go on rising, and we know that it is going to be particularly affected by increased interest rates. Sir, we have seen no Government plan so far for institutions dealing with specialized short-term and medium-term credit for agriculture. It is small wonder, Sir, that the Agricultural Advisory Board, when it drew up the terms of reference for the commission of inquiry into agriculture in South Africa, made a special request that although the commission was sitting there should be no delay in giving aid or assistance to agriculture. I think they realized that all was not well with the industry; and now the various commodity committees of the S.A. Agricultural Union, the interested bodies throughout the country, are preparing the evidence to place before that commission. Sir, without claiming the gift of prophecy I believe that one of the things that is going to be stressed most is rising costs owing to the inflationary condition in the country and I believe that you are going to find the cereal growers, the mealie growers and the wheat farmers amongst the foremost of those to be hit by rising costs. In the preliminary evidence which is being prepared I find already that the maize committee says, “Die koste verbonde aan implemente en masjinerie is vir die mielie-produsent ’n belangrike knelpunt.” And this is what the commodity committee for winter cereals says—

Sir, these things must act as warnings to the Government, because it is quite clear that the Government is going to come under tremendous pressure to increase food prices to the producer in the very near future. They are going to be faced with the fact that if they do not control inflation they will either have to increase their prices or embarrass the industry responsible for the feeding of South Africa at a time when a population explosion is expected. I have no doubt also that the Government is going to be approached to change the whole system of income tax as applied to the farming community, and I have no doubt also that there is going to be a host of complaints about the lack of research, the lack of information and the lack of technical services to the industry, all of which hamper productivity.

Do you want more officials?

I want more research and more technical services. Properly used, they would bring down prices, not increase prices. Sir, we have seen the effect on the gold mining industry; we have seen the effect on agriculture. What has been the effect of this inability to combat inflation on the ordinary man with a fixed income in South Africa to-day? Sir, he is living with the spectre all the time of the fact that the rand that he brings home in his pay-packet cannot buy as much as it was buying a year ago and that it cannot buy as much as it was buying a few months ago. He has the knowledge also that this Government, instead of really combating inflation, is largely responsible for it because of the spending spree on which the Government has been busy over the last four or five years. Sir, what attempts have there been to deal with it? In nearly every case those attempts have resulted in heavy blows for the small man in South Africa, and there is no satisfactory evidence that proper discipline has been exercised by the Government itself. In fact, it seems as though the small man has had to carry the main burden all the time. What happened? After the wage and salary increases last year the workers could be excused if they believed that they were going to be protected against the effects of creeping inflation, instead of which it is no longer creeping inflation, it is galloping inflation. The value of the increases which they were given less than a year ago have possibly been dissipated already. Sir, the trade unions warned last September. They said that if the cost of living index reached 118 points, compared to 110 in 1958, a danger point would have been reached; the value of wage and salary increases given before the election would be wiped out; the workers would be back where they were, struggling at that time. They also warned that once that figure was reached there would be a new round of demands for wage and salary increases. Well, Sir, that figure was reached in September. I would have thought that those warnings would have alerted the Government, would have made them more self-disciplined in their own spending, but by September last year that figure was reached and it has gone higher since then. Sir, it is a statistical measure; it does not mean much except as a scientific record of the fact that people are suffering and that money in itself is no guarantee because the Government is allowing its value to be eroded. But once again the small man who has no real control is being appealed to; he is being cajoled; he is being threatened; he is being told what to do in this situation. He is told to spend less. Of course, he can truthfully reply, “Even if I spend the same as before, I find that I buy less with it”. He has been told to save more, and his answer to that is this: “What do I save when merely to live causes me to fall into debt? Why should I save when I know that my savings will not retain their value and that the value of those savings is being reduced every day?” Here, Sir, I want to pay a tribute to the responsible attitude of most trade union leaders in South Africa. As is their duty, they fight the case of their members for better conditions, but I think I can say that their demands have not been irresponment to halt the spiral of inflation, to check the rise in the cost of living; they have put sible to date. They have called on the Govern-forward concrete suggestions. I think this is true of the Public Service organization, of the Post Office officials and technicians, of the railway men of the hon. the Minister of Transport, of the Trade Union Council and other great associations and unions. I want to say to the Government to-day that while that responsibility has been shown and while we can pay a tribute to those people, the fact remains that there is a breaking point beyond which these people will not go. I think the Government should be warned that the members of the trade unions cannot be persuaded indefinitely that all and even greater sacrifices should come from them while profits rise and Government expenditure is higher each year. The tragedy of it all, Sir, is that I believe so much could be done. The Government’s own employees have been taking the lead in warning the Government of the dangerous situation which it is allowing to develop. That is quite understandable, Sir, because the increases given to them before the election have turned out to be dead sea fruit. They are of no value to-day; they have putrified, and they are back where they were a year ago. I think that all over South Africa there are workers, responsible men, who are worried and concerned about this position. They are demanding action from this Government to see that the value of their rand is not eroded further. They want to be saved from disaster. Perhaps it is too much to expect any drastic action from this weary Government, but at least they owe it to the housewives and to the farmers and the breadwinners of South Africa to realistically cut their own expenditure and to set their own house in order. We have told them before that they will not solve this problem by bare fiscal measures; you will only solve it by having proper regard, first of all, to the excessive spending by the Government; secondly, by realistic policies to increase productivity in all spheres of our economic life, and, thirdly, by a dynamic attack upon our manpower problem. Those plans have been outlined in this House before. I believe I am speaking for the vast majority of the people of South Africa when I say that what they are seeking are prosperity, security and happiness. They do not mind sacrificing some measure of prosperity, but they want that security without which nobody can be happy. What they object to, and object to very strongly, is to have not only their prosperity undermined but their security based on economic strength also undermined and whittled away by incompetence and ineptitude by the people at the top, as is the situation at the present time.

Mr. Speaker, I resolved to take part in this debate immediately after the hon. the Leader of the Opposition because I think that on this occasion at least, this being my début on such an occasion, etiquette requires that I should reply to what the hon. member said. In the second place the terms of his motion suggested that he would try to put forward arguments to show that this Government was incompetent and inept. I listened to the hon. member and even if I had perhaps had any semblance of a thought that some of my colleagues were not very capable or very competent, I must honestly say that I am standing here as a person who has full confidence in every one of them, because I did not hear anything from the hon. member which can arouse in me as much as a suspicion that any colleague of mine in the Cabinet does not deserve his place there.

They are all heaving sighs of relief.

The hon. the Leader of the Opposition intimated that the Cabinet was inept and incompetent. Now, there are three Parliamentary occasions which are pre-eminently appropriate for the discussion of three different topics. Firstly, there is the motion of no confidence, and I have always understood it to be—and I believe every other Parliamentarian has understood it to be—the occasion on which the Opposition states its policy as opposed to that of the Government.

Why?

One expects that from an opposition.

But then one must have an opposition.

My hon. friend is right; then one must have an opposition. On this occasion one expects the Opposition to state its policy, and I expected such a statement all the more because the Opposition is said to have acquired a few new policies during the recess, but I have heard nothing about them here. The second occasion is that of the Budget debate, in the course of which one expects matters of a pre-eminently economic nature to be discussed. And then there is, of course, the debate on the Committee of Supply, during which individual Ministers can be called to account. I then deduced that the hon. the Leader did not intend following this pattern, but that he was blatantly—as he has done on this occasion—accusing Ministers of incompetence and ineptitude. This is, of course, not the first time that he has done so. The hon. the Leader of the Opposition made the same speech on 25th January, 1966. I quote from Col. 24 of the English Hansard—

Subsequent to that there was an election. But the gem of that debate was this—

And I can still recall how the hon. the Leader proudly threw out his chest when he said it—

And then he said this—

That was the indictment before the March elections. It would seem as though the Leader of the Opposition got a bit confused, because the major part of his speech, the first part in particular, was an election speech for the Johannesburg City Council. Let me tell the hon. member that he should at least come to say goodbye before he leaves if he intends standing for election on that occasion. You see, Sir, this accusation of incompetence and ineptitude has been made before every election, and sometimes afterwards, too. Let us look at what the hon. member for Yeoville had to say on 22nd January, 1960. That was just after the referendum had been announced. What did the hon. member say in Col. 235?—

You see, we are not the United Party.

… You may have a secret suspicion that we shall not be able to govern South Africa as a republic either, but for heaven’s sake, if we are leading this country to its doom, don’t let’s do the Queen the dishonour of asking her to sign the death warrant of South Africa; let us have our own President to preside at the funeral of the South African State.”

Mr. Speaker, I am quoting this on purpose to prove that these prophecies of doom have been heard before. After all, not all of us have been members of this House only since yesterday. Listening once again to the hon. the Leader of the Opposition to-day—as I have often done in the past—I arrive at two conclusions only. If he were right, South Africa should have been bankrupt long ago and the United Party should have been in power, but because the latter has not happened, the former cannot either. My problem was that I expected that the hon. the Leader, if he did not accuse me personally of being incompetent, would at least, as he had done before, present me with a charge of incompetence against my colleagues. Now I have to make do with the meagre fare the hon. the Leader has placed on my plate. I must admit at once, and it is no secret, that I am not the greatest economist South Africa has produced. Everybody knows that. On this occasion, therefore, I do not want to enter upon any involved economic theories. Nor do I think it would be fair of me to do so, because I do not think it is a good thing that two people should on the same day speak about something of which they do not know much. What did the hon. the Leader use as a starting-point? In the first instance the hon. the Leader did this—and I envy him this gift because I wish I had been endowed with it. The hon. the Leader of the Opposition is pre-eminently endowed with the gift of stating a fact so that it sounds like an accusation. The fact he stated in the first instance concerned the gold-mining industry. The elementary facts are that the price of gold has remained constant over the past 34 years. That we know. But, as we all know, the cost structure has risen in the meantime. That we all know. The hon. the Leader of the Opposition knows as well as I do that this Government has no control whatsoever over the pegging of the price of gold. That we understand. Increasing the price of gold is not a matter that rests with us, no matter how hard we may have worked for it in recent years and how much we may have pleaded and begged and exerted ourselves for it. It is not for us to increase the price. Consequently the Government cannot be blamed for that state of affairs. That is why it follows as night follows day that certain mines which could have been worked if the price had been increased, simply cannot be worked at present. But why does the hon. the Leader lay that at the door of the Government in the form of an accusation, because surely he knows as well as I do that the only way in which that can be done is by lowering the salaries and wages of mineworkers. [Interjections.] That is the principal way in which it can be done. [Interjections.]

Mr. Speaker, now I hear a chorus from the other side of the House, but those hon. members are too late. They should have helped the Leader of the Opposition when the United Party was in power, because I listened to him and I did not find the answer. Now, all of a sudden, all of them are clever and all of them know the answer. No, there are only two ways of doing that, and one of them is mainly a question of wages and salaries. And surely the hon. the Leader does not want to tell me that they should be lowered or that the Whites should be replaced by Black people? Is that what the hon. the Leader of the Opposition wants? [Interjections.] The only difference between the hon. member and me is that he need not say anything at all to prove that. It is true that the cost of living has risen; none of us disputes that. It is true that South Africa has to wage a struggle against inflation, but what is equally true is that in this country inflation has by no means assumed the proportions that it has assumed in other comparable countries. The hon. member does not tell us that. In this country it has not assumed the proportions that it has assumed in other comparable countries, because the Government acted in good time, and the Ministers pre-eminently concerned with that will, when the opportunity comes, account for themselves in that regard, because they took the necessary steps and measures in good time, as I shall prove to the hon. the Leader. Neither did the hon. the Leader tell the House that—in spite of this incompetent and inept Government and this Cabinet, which is being exposed before the world in this way as one of the reasons for our having inflation in South Africa—this Government is also one of the reasons for the enormous amount of confidence being shown in South Africa. Despite the threats which are being made against us, despite all the propaganda which is being made against us and despite the fact that the hon. the Leader of the Opposition is blazoning it abroad that this is the weakest Cabinet, one of our problems is the excessive confidence in the future of South Africa under this Government. Does the hon. the Leader of the Opposition think for a single moment that that would have been the case if he had been in power? No, Sir, I think he himself has given the answer to that. The Government did what was required in this regard in good time. Inflation is a delicate matter. The hon. the Leader of the Opposition knows that as well as I do. If one does one thing which under given circumstances combats inflation, it may under other circumstances promote instead of combat inflation.

The last Budget?

No, Sir. I am coming to the last Budget. Now that it is a thing of the past, the hon. the Leader of the Opposition uses the increases in Railway tariffs which were agreed to last year, as an important plank in his platform. But when my hon. friend the Minister of Railways was dealing with this matter last year, one would have thought that a church council meeting was in progress here. How little those hon. members had to say for themselves then! The few arguments they did put forward were refuted by the hon. the Minister on that occasion. That is where the hon. member’s capacity for stating a fact and making it look like an accusation comes in. Surely, it is perfectly obvious that, with the wage increases that were granted, the Minister had to increase tariffs apart from making use of the fund of which he did make use.

He did not make use of it.

The hon. member’s facts are wrong again, as usual.

I accept my colleague’s word and I know that he did do that. Railway finances are not very difficult. If the hon. member for Yeoville applies himself to it, he will be able to talk about the matter with some measure of success. It was obvious that one had to do that. The hon. member need not look at me in that way. I am doing my best to keep above the level of the hon. the Leader of the Opposition.

What does a Government do in regard to such an inflation problem? One cannot go to laymen for advice in that regard. When one has to cope with such an economic illness, economists are pre-eminently the people one has to consult in order to find ways and means of combating it. Apart from the fact that the Departments of Finance and Economic Affairs have at their disposal most competent officials to advise them in this regard, the Government very timeously established an Economic Advisory Council consisting not only of its own people…

“Temporarily” is the right word.

I said “timeously”. The Economic Advisory Council does not only consist of people who share the views of this side of the House. The hon. the Leader of the Opposition knows that. It consists of people who hold all sorts of political views.

It does not only consist of people taken from one sector of the professional world. Indeed, it covers all sectors of the professional world. In spite of the fact that, as I have said, I am not the best economist in South Africa, I have gone out of my way and the Cabinet has gone out of its way not only to face up to this problem and to devote many special meetings to that purpose, but we have also obtained the advice of every possible expert in this field and, let me add at once, have acted on that advice. In respect of this matter there is nothing the hon. member can say which this Government has not already been told. The hon. the Leader of the Opposition— and this is where the whole weakness of his argument lies—cannot mention me a single argument advanced by any economist as to what this Government should not have done or what it should have done and neglected to do. That is the test. Now the hon. the Leader of the Opposition says that it will come. From whom will it come? If it does by any chance amount to anything, why does it not come from the Leader of the Opposition? Surely, I should expect it to come from the Leader of the Opposition himself.

Since the Leader of the Opposition always runs with the hares and hunts with the hounds in this regard, he once again said, on the one hand, that the farmers were getting too little for their produce and, on the other hand, that the cost of living was too high, because people were paying too much for their food. That is an old argument we have dealt with in this House ad nauseam. The Leader of the Opposition also adopted the attitude that the Government had overspent. Ever since last year we have been asking the Leader of the Opposition to mention us a single item on which the Government has overspent should have spent less. We have been waiting for him to mention us any item of any significance. We did not hear of such an item. Neither did we hear of such an item from the Leader of the Opposition to-day. The Leader of the Opposition probably saw the statement made by the economic adviser which was not merely his personal opinion, but the condensed opinion of experts and economists from all layers and employers’ and employees’ organizations. It is the joint opinion of these people. Do they agree with the Leader of the Opposition’s accusation on this point? If they agreed with him, I would have stood accused. But what are their views?—“The Council felt that had it not been for the timely steps taken by the Government in July and August to curb overspending, the rate of inflation would undoubtedly have been much higher.” In other words, the Government did not wake up all of a sudden only yesterday or the day before. The hon. the Leader of the Opposition knows as well as I do that in the third quarter of last year there was what the economists call an upsurge in the economy which even the best economists did not anticipate at the beginning of the year. Does the hon. member remember that?

Yes.

He remembers it. Why does he make accusations of this nature if he knows that? In spite of the fact that the unexpected wave of prosperity came just as an unexpected wave at sea, the measures taken by the Government in July and August had their effect. The effect was so successful that there was no rise in December as compared with November, and a very small rise in respect of November as compared with October. [Interjection.] No, Sir, I shall tell the hon. member what it is about; then he can judge for himself, surely. This is what it is about: both restrictions and expenditure should be curtailed as far as possible. I sat in the Cabinet along with my colleagues and we saw to it that only what was essential was done and was to be done in this regard. When the time comes for us to discuss these matters, I want hon. members to tell me where we are spending and should not be doing so. We shall get the same position this year. On the one hand hon. members say that we are spending too much and on the other hand hon. members say that we are spending too little. The economists suggested that redundant short-term funds should be sterilized, and that was done. There was the question of restricting bank credit, and they indicated the course of action to be followed in this regard and the Government followed it, just as its own departmental officials indicated to the Government what it should do. There was the question of relaxing import control, which was done at the right time by the Department of Economic Affairs. There is the question of price control. Selective price control was introduced by the Government, and I not only want to agree with the hon. member that it is very difficult and unpracticable to introduce general price control at this stage, but I also want to say that I myself have gone out of my way to discuss this question with the different economists and to get to the bottom of it. In general the advice one was given in all quarters was that at this stage one would do more harm than good if one simply introduced general price pegging. That is why it had to be done on a selective basis, and that was in fact done. Certain unsound commercial practices came to light and the Government has taken and will take active steps against them in future. There was the spirit of speculation owing to the unprecedented confidence people had in the future, and the Government warned against it and, where necessary, took steps against it.

I now ask the Leader of the Opposition: What should the Government have done which it has not done in regard to this whole matter? Why does the hon. the Leader of the Opposition not say that one is dealing with a worldwide phenomenon here, that economists the world over are having to fight against it? Why does the hon. the Leader of the Opposition not give credit to the economy of his own country by saying that it has been combated more successfully in South Africa than perhaps in any other country of the world? Because these are the facts, and there will be other hon. members who will inform the hon. the Leader of the Opposition of them.

The hon. the Leader of the Opposition said that what the people expected and were entitled to was “prosperity, security and happiness”. I make bold to say that, relatively speaking, they have all three these things. Inflation is not necessarily a sign of decline. Not all the economists say that. Inflation is very often the result of too much prosperity, and one asks oneself—one knows South Africa—what the position is here.

The hon. the Leader of the Opposition spoke about security. One takes a look at the world around one and there are few comparable countries where one can find the security one finds here in South Africa—thanks to this incompetent Government which is in power here.

As regards happiness, I make bold to say that the people of South Africa have for many decades not been as happy as they are at the moment. And part of that happiness is the knowledge that the hon. gentlemen sitting on the opposite side will never come to power in South Africa. And I share in that happiness.

I conclude. I listened very attentively to the hon. the Leader of the Opposition. I tried my best to find out what his charge against the Government was, and apart from the fact that he referred to a general symptom which is found throughout the world and which has been combated very successfully in South Africa, although every one of us must do our share in that regard and we must constantly be on the alert against it and continue to apply the measures which may from time to time be necessary to combat it, I failed to find any reason whatsoever why I should not have confidence in any one of my colleagues.

I believe that under the circumstances South Africa can feel happy about the fact that its affairs are in the hands of my colleagues sitting here on my right and on my left. And, you see, Mr. Speaker, I am not the only one to think so. The electorate of South Africa also think so. Last year the electorate of South Africa had the opportunity of expressing themselves positively in regard to this matter, and I do not have the slightest doubt that if such an opportunity had to present itself again next year or whenever, the electorate will reaffirm their confidence in this Government.

That is why I as Prime Minister responsible for this Cabinet which has now, in this personal manner, been attacked by the hon. the Leader of the Opposition on paper—on paper and in the newspapers of yesterday and the day before, but when it came to substantiating it here across the floor of the House he could not do so—have no hesitation in moving the following amendment—

Mr. Speaker, the hon. the Prime Minister told us that on this occasion he felt that it was his duty as Prime Minister to speak early in this debate, and we appreciate that. But I must say, having listened to his speech this afternoon, that that is the only reason that I can see for his having come into the debate at all. Because the subject which we were discussing—and the Prime Minister, I understand, does not approve of our discussing it on this occasion—is largely an economic one. As the hon. the Prime Minister has told us on more than one occasion he does not pretend to be an economist and therefore he did not intend to really discuss in detail the subject which my hon. Leader has put before the House. The hon. the Prime Minister has told us that he is fully satisfied with his Cabinet. Well, all I can say is that he is very easily pleased. Apart from his political views, I regard the hon. the Prime Minister as a highly intelligent gentleman, and I should be very interested to see how long he remains satisfied with the whole of his Cabinet.

It is only a question of Hobson’s choice.

Sir, the hon. the Prime Minister crossed swords with the hon. the Leader of the Opposition on the question of the gold mines. I think he misunderstood the object of what the hon. member for Rondebosch was saying because we were discussing the cost of living, and he was trying to emphasize the effect on the gold-mining industry of the steadily rising cost of living, of inflation. Of course, when the Prime Minister tells us that inflation is taking place all over the world, that is perfectly true, but he knows very well that other countries have no gold-mining industry, and no other country in the world depends for its economic welfare on the gold-mining industry to the extent that we do. Gold is the one thing which has a fixed price which cannot fluctuate in terms of supply and demand and market prices, and that is why in this situation in which we find ourselves today, with costs steadily increasing, it is so vitally important for the country to see that at all costs the cost of producing gold is kept as low as possible. That was the argument of my hon. friend the Leader of the Opposition. I will give the hon. the Prime Minister the benefit of the doubt by saying that I think he misunderstood the argument which my hon. friend was advancing.

He did not understand it.

Well, he is not an economist. He has said so; let us leave it at that. Broadly speaking, the hon. the Prime Minister, as I understand him, concedes that there is inflation. He concedes that there is a situation to be dealt with. He considers that it is being dealt with by his Cabinet with great success. There, of course, he does not agree with some of his expert advisers who have told us within recent weeks that the position is still very serious indeed. However, that is his view. But he gave us to understand—at least I got that impression—that his intentions were very good; that he has good intentions in continuing the good work of his excellent Cabinet in keeping down the cost of living, in combating inflation, and generally looking after the welfare of the country. I am sure he means that. Of course. Sir, one knows very well where the path which is paved with good intentions leads to, in the words of the Proverbs, and we only hope that in the case of the hon. gentleman his good intentions will lead to a happier destination than that outlined in the Proverbs.

I could do worse; I could be in the Opposition.

The hon. the Prime Minister is talking out of sheer ignorance; he has never had the privilege of sitting in the Opposition. His political education has really been quite incomplete, because until you have sat in the Opposition you cannot call yourself a parliamentarian, I think.

However, to come back to the motion which refers to incompetence and ineptitude—a very wide subject, of course—I want to confine myself in the short time available to two words, inflation and productivity. I doubt whether I shall have time to get on to the subject of productivity; I may have to deal with that on another occasion. I think these are the two key words to the problem which faces the new Minister of Finance. Mr. Speaker, we greet the new Minister of Finance in his new capacity. He has just concluded his last task in his previous capacity, the task of leading a very important mission abroad, a mission which may have very far-reaching consequences in the future. We look forward to hearing from him at a later stage on this subject, but in his new capacity I can only hope that he will prove to be more amenable to good advice from this side of the House than his amiable predecessor, because I do not think there is any doubt that had his predecessor only listened to us in past years, the task of the present new Minister would have been very considerably lighter today and I think that many of the problems which he is going to have to deal with would have been avoided or might not have arisen at all. I think that is one of the points which the hon. the Prime Minister missed in his reply in asking what else the Government could have done. One of our main complaints is not what the Government could have done, but when it has done it. The point is that had some of these things which were done in the second half of 1966 and which are now being done in 1967, been done in 1964 and 1965 we might have seen a very different state of affairs in the country at the present moment. Indeed in our opinion the most glaring failure of the Government, its most glaring failure amongst many in this excellent Cabinet which we face year after year, is and has been its unreadiness and its apparent inability to cope with the rising cost of living, with the growing inflationary pressures and with the general overheating of the economy. Steps have been taken, bit by bit, but they have never caught up with the inflationary pressures, with the rise in the cost of living and with the over-heating of the economy. It is true that early last year it looked as if things might be calming down but for reasons to which I will refer later, that did not happen. Of course, Sir, politicians are rather like elephants; they have long memories, and we remember that this new Minister of Finance is the hon. gentleman who in 1961 set the ball rolling with his clarion cry to spend for prosperity…

It was necessary at the time to do it.

Now speaks the economist.

I do not think that the hon. the Minister, who was very busily engaged in other matters at the time, was concerned with that. At any rate, the result of it has been that the present situation has developed, despite warnings not only from this side of the House but from many other quarters, and the Government has allowed the present situation to develop. In fact, the hon. gentleman who looks so benevolent, and I think is benevolent in his personal capacity, is now in a difficulty, and I think it is ironical that he is now called upon to rectify the position that he started in 1961. Perhaps it is poetic justice. Anyway, we shall watch what he does very closely and I hope, for the sake of the country, that he will succeed in stabilizing the economy which, according to his own experts, at the moment has not yet been fully stabilized. I only trust that having survived his slogan in regard to spending for prosperity, the Minister in his new capacity will not take as his new slogan “Tax for Prosperity”, because that will be just as disastrous as the previous one. That the position needs rectifying is, I think, common cause. The hon. the Prime Minister conceded that. Dr. Dönges, too late, recognized it too. He talked eventually about the country trying to do too much too quickly, or words to that effect. He used to talk to us about the battle against inflation not being won yet. More recently he talked about combating the persistent price increases in the country, and quite recently, I think in conjunction with the new Minister of Finance, he talked about taking further steps to restrict the upward movement in the economy. The Reserve Bank has issued periodic warnings on the subject and so did other responsible bodies. But as far as we are concerned, we warned the Government four years ago that with our limited resources it was humanly impossible for the private and public sectors to go full steam ahead with their respective plans and schemes without dragging the country into difficulties. Nobody can deny that we were right, because that is exactly what has happened. The Government took no notice then but eventually they did, but when they did they were first of all too slow in realizing it. They only woke up during the second half of 1964 when the previous Minister of Finance took his first timid steps to control things; and in the second place they were too slow and too timid in acting when action was necessary. The position can be summed up, I think, in a few words, as we see it now, by quoting from the Reserve Bank’s statement of December, which says—

The Barclay’s Bank Review this month puts it more simply. It says—

That is the position as we see it and that the new Minister has to face after six years of mismanagement of the country’s economy by the Cabinet of which he is a member, six years of the most favourable conditions. Is it any wonder, Sir, that we talk about incompetence and ineptitude? My leader has referred to the Reserve Bank’s almost impassioned appeal to the small man to economise and to save more. Of course, it is good advice, but how much can the small man do? Most of them are men with fixed incomes, many of them being pensioners and many of them are married men with young families. Many of them are farmers who have, as we know, the great bulk of them, had a desperate time during the last few years due to drought, etc. It is a fact, as my leader has pointed out, that the small man is already bearing the bulk of the brunt of the economy measures and the effects of inflation. He is seeing the steady increase in the cost of living. Food is up and rents are up and interest rates are up as well as excise duties. Tobacco has gone up and customs duties are up. He has the Budget to look forward to. As for saving, how can he save? The Minister’s predecessor complained in November that for the last five years only one-tenth of 1 per cent of savings went into Government securities. Is that surprising? The first essential for saving, especially in Government securities, is a sound and stable currency. A stable currency, as long as you have a rising cost of living, you have not got. I think the hon. the Minister of Finance, when he comes to take part in this debate, while he will agree with me and with the Reserve Bank that we must all do what we can under the existing circumstances, will also agree that the contribution of the small man, whilst valuable, will not be very significant. As long as prices continue to increase, he will spend his money rather than wait for the value of that money to decrease, when he will have to buy the things he needs at a higher price.

But we are not concerned with the small man so much to-day as with the part the Government plays in all this. One of the measures mentioned in the statement of 7th December was that there would be further restrictions in Government spending. Of course, we have heard that before. We heard it again this afternoon from the hon. the Prime Minister. But what are the facts? I do not want to give a lot of figures, but in 1963-’64 the Budget had risen to R857 million, but this current year it increased to R 1,268 million, an increase of nearly 50 per cent in three years, plus additional Estimates that we have not got yet. In regard to loans the figures were R286 million, and it has risen to R478 million, also an enormous increase. Dr. Dönges told us in this House that he regarded 2 per cent per annum as a reasonable rate of increase for Government expenditure. The Budget this year, at a time when the whole country was being called upon to economise and to save, increased by 10 per cent, five times what Dr. Dönges himself said was normal, and I think it will be more than 10 per cent when we get the Additional Estimates. So where does this restriction come in? One can only hope that the new Minister of Finance will have a more realistic idea of what restriction of Government expenditure really means.

The other charge we have against the Government on this theme is that whilst taking anti-inflationary steps they counteracted so many of them by their own actions. I have referred to the Railway rates. There was an enormous increase in Public Service pay which had been piling up for years. If that had been done gradually some years before it would not have had the same effect. There has been an increase in customs duties. We asked the Minister last year whether the Board of Trade had recommended some of those increased customs duties, and he said no, some of them had been turned down by the Board of Trade, but they were still put on. There was the telephone call increase to which the hon. the Leader of the Opposition referred—a 40 per cent increase in the cost of local telephone calls. I wonder if the hon. the Minister can tell us just what the position is in regard to this telephone system. The hon. the Minister of Posts and Telegraphs made a speech—I am not sure whether it was made by him or his Secretary but the speech came from the Department—to the effect that the Department was now achieving almost sovereign independent status. They were going to finance their own capital expenditure in future and the were really going to run their own show. Now if that is true it is a very important development in our financial set-up and I should have thought that such a statement should have come from the Treasury and not from the Minister concerned. Are we to understand that the Post Office in future is going to be on the same basis as the Railways with a separate Budget and that there will be a separate Select Committee on the Post Office and so on? I think that if the hon. the Minister could elucidate what is puzzling many people it would be a very good thing.

Towards the end of 1965 and early in 1966 there was a large inflow of short-term capital and that has been blamed for increasing inflation and having an inflationary effect. I cannot understand if this is the case why that importation was allowed. If the Government was really alive to developments and to the w~ things were taking shape, why was there suddenly a very big introduction of capital, largely short-term capital, permitted at all? Surely if this had an inflationary effect, it should have been stopped. As a matter of fact, I think that the hon. the Minister in his previous incarnation aided and abetted some of it. If I am right, two or three years ago if you wanted to import capital goods you were told by the Department of Commerce and Industries that you could get a permit for their importation provided you could arrange overseas to defer payment for two or three years. If you could do that you could get your capital goods. In other words, you were importing capital. Now that is completely swept away and in the most recent statement we are being told that anybody who has debts abroad and has the money to pay for them should do so. That apparently has gone by the board. Who has changed their mind? Why was the position completely different two years ago? This seems to me to show lack of foresight and lack of planning. We warned the Government that it was humanly impossible to go ahead in that way with the private sector and the public sector but the Government took no notice.

In the interests of national security they started conscription. They went in for a very big armament programme. Both of these took a large bite out of the labour and material forces of the country and the financial resources of the country. They went ahead with various grand schemes which I need not refer to since all hon. members know about them. They also embarked on a policy of national self-sufficiency which I suppose might be described as coming under the head of national security as well. It seems to me that this was carried much too far and it was accompanied of course by a spate of customs duties to protect these small industries and to bolster them. Now we hear that the Government is encouraging a shipbuilding industry. We are told that the Government is spending R50 million on 50,000 ton tankers. There is talk of a new Iscor and a new refinery all to be established by short-term and not long-term borrowing because the Government apparently finds it impossible to borrow on a long-term basis. I ask, Mr. Speaker, where is the economy on the part of the Government. The things to which I have referred are desirable and I am not criticizing their desirability but I am querying whether under existing conditions they are all necessary at the present time. It boils down to this. Throughout these years the Government has refused to face the facts and I hope that the hon. the Minister in his new capacity is going to face up to the facts because they are so simple and so straightforward. They have been repeated ad nauseam and he knows it. The Government has shown a lack of foresight and a lack of clear thinking and a lack of courage in not facing up to them. It is true that there was an election last year but that should not have deterred them. They have shown a lack of co-ordination between the public and the private sector and even between Departments. On occasions even Departments have done things which are clearly in conflict with the national policy of the time and therefore we say that on the past record we have no confidence in the ability of the Government and this Cabinet with all its talents and the Prime Minister at its head to restore a balanced economy, to stabilize the value of the rand which is the first thing which must be done to protect the savings of the people and to maintain the standard of living of the so-called small man whose standard at the moment is threatened. If we go on as at the present time his standard of living will definitely decline. Therefore, Sir, I say that this motion is fully justified.

Mr. Speaker, the hon. the Leader of the Opposition and the hon. member for Constantia have been trying their best to represent the economy of South Africa as being in the most mutilated and dilapidated state. But I think one can forgive them for doing so, because they are obsessed with mutilation and dilapidation. If any party is mutilated and dilapidated after all these years, it is the United Party, more so than ever after the last election. The Opposition is accusing the Cabinet of ineptitude. After listening to them, one may well ask oneself: “Has not the Opposition, instead of establishing ineptitude on the part of the Cabinet to-day, succeeded preeminently in demonstrating their own ineptitude?” They made statements here which are not true. They made conflicting statements. Before I give you an outline of the true state of the South African economy, I want to refer to some points raised by the Opposition. The hon. the Leader of the Opposition said that inflation had grown more rapidly than the increase in revenue. Here I have the December quarterly report of the Reserve Bank. It states:

In other words, after the increase in prices had been allowed for, there was a real increase of 5 per cent. The hon. the Leader of the Opposition claims that inflation has grown more rapidly than the increase in revenue. That is not correct at all.

He said that agriculture had experienced hard times. Sir, we know that agriculture has experienced hard times. Nor does the Government deny that. But the hard times for agriculture were attributable mainly to natural factors over which the Government has no control. Now, after the copious rains, it is predicted that this will be a record year for agriculture. The Leader of the Opposition and the hon. member for Constantia referred to a statement made a year or two ago by the present Minister of Finance. In 1961 he said: “We must spend for prosperity.” Later he said: We must save for prosperity. Now the Opposition is dissatisfied with that. What is the position, Sir? I can draw only one conclusion from that. It is that one should have only one policy, regardless of the circumstances and regardless of conditions in the country. One should only spend for prosperity or one should only save for prosperity. But, Sir, that is impossible. After 1961, particularly after Sharpeville, conditions were such that there was not enough economic activity. We had to create economic activity. One of the best methods of creating that activity was to spend. At that juncture that statement was more than justified. The economy is not static. It fluctuates very rapidly. In 1964 circumstances were entirely different. They were exactly the opposite. The economy became over-heated. The hon. the Minister then said that we should save for prosperity, which was quite correct from the economic point of view. And yet the Opposition objects to that. Mr. Speaker, I cannot see anything wrong with that. It is their reasoning which is at fault, not the statement by the hon. the Minister.

Allow me to refer to some suggestions which were made with a view to solving the problem of inflation. The question of higher productivity was referred to. That is brought up year after year. We on this side of the House have also said that we find that unobjectionable. Everybody knows that the economy of South Africa is mainly in private hands. It is not in the hands of the Government. Ours is not a socialist economy. The Government is doing everything in its ability to impress the necessity of higher productivity on the employers and employees. Even a publication like The Statist said some months ago that although the Government can provide incentives for the achievement of higher productivity, it is not principally the duty of the Government but that of the employer and of the employee. The Opposition, however, seeks to place all the blame on the Government. There have also been references to the increase in railway rates and to the import tariffs levied in the last Budget. But the Opposition failed to explain how the Government was to have met those additional commitments. Were the Railways and the Post Office to incur deficits? If deficits are incurred, surely the money has to be found. Where is that money to be found? They did not explain that. We know that the effect of the increase in Railway rates and of the import tariffs was in fact inflationary. We also know that certain measures taken by this Government gave rise to an increase in the cost of living. But, Sir, does the Opposition not know that if a patient is ill and the ordinary treatment has proved unsuccessful, drastic measures have to be taken? The patient must then be operated on. He must first be made somewhat more ill in order to cure him ultimately. That is also true as far as the economy is concerned.

I want to come back to the dilapidated and mutilated image of the economy of South Africa which the Opposition has been trying to present. I want to refer to an international publication, The Economist. On the cover there is a photograph taken during the announcement of the election of the hon. the Prime Minister of South Africa. The Prime Minister is surrounded by a number of members of the Cabinet. The caption reads as follows: “Do you want to fight these men?” I must say, the expressions on the faces of these members of the Cabinet and of the other members present are really striking. Their expressions show determination. Having read the article, one may arrive at the conclusion that The Economist might have gone even further. They might have said: “Do you want to fight these men and this country, with its great economic strength?” I want to read to you what is said here. There is also a reference here to the problem of Rhodesia. Among other things they say the following: “The real economic fear is that the confrontation may yet spread to South Africa.” They then continue by pointing out that Great Britain cannot afford an economic boycott of South Africa because that would jeopardize her own position and the security of sterling. Then the article continues:

Mr. Speaker, in the international field the economic image of South Africa is so strong that an authoritative publication such as this admits that if the United Nations tried to compel South Africa to support their attitude towards Rhodesia, it might destroy not only England and not only the British people, but the United Nations itself. If that is not an image of economic strength, I have yet to see one. I shall give some further examples to demonstrate the state of the South African image, and to show that that image is exactly the opposite of the one which the Opposition would present to us. Some years ago the Opposition made a great issue of the fact that South Africa could not obtain enough foreign capital. They said that it demonstrated the lack of foreign confidence in our country. In the past nine months we have enjoyed a considerable influx of foreign private capital. In the first quarter it amounted to RIO million. In the second quarter it was R64 million. In the third quarter it was R45 million. That gives a total of R119 million. That represents private capital, not state capital. Is that not proof of confidence? Is that not evidence of South Africa’s image of stability? The hon. member for Constantia said that we should stop that foreign capital. He said that we should lock the door to it. I cannot understand how they can say something one day and something else the next. This is really chopping and changing.

Mr. Speaker, there are other examples to illustrate the image of South Africa. I referred to foreign capital. Let me also tell you about the earnings on that capital. Here I have the Commonwealth Survey, “a record of United Kingdom and Commonwealth affairs”, of October, 1966. Here it is pointed out that Australia received more capital from Great Britain than South Africa did. They say—

But if we consider the earnings we notice that although Australia receives more capital than South Africa the earnings were the other way round. What do we find in this report? It says—

That is the image of South Africa abroad, an image of power, of strength, of confidence.

Allow me to give a final example. The Leader of the Opposition also said that we should seriously come to grips with our manpower position. Over the past year immigration experienced a record year. In 1966 the total number of immigrants was more than 35,000—that is the net immigration figure—as against 25,000 in 1965. In other words, there was an increase of 9,680 in one year, which represents an increase of 37.7 per cent. That is South Africa’s image among employees abroad. A moment ago I presented the image as it is seen by the businessmen, by the investors, and now I present the image of South Africa among the common public. Once again, it is the image of a country to which it is worthwhile immigrating, “because I have a better future there than in my own country”. I could continue along these lines. But I want to come back to the image in our own country.

The image in our own country is quite as favourable. I have already pointed out that the real increase in our national income represents approximately 5 per cent, that is, the net growth, which is considered a very good average. I may point out that the industrial growth in the first nine months of last year reflected an increase of 6.4 per cent compared with the same period in 1965. I may point out that despite the lamentations we have heard about the mining industry, there was nevertheless an increase of 6 per cent in the production of the mining industry. I could give you numerous other examples of the domestic image of South Africa.

Finally I just want to refer to the question of employment. Although it is regarded as essential to have approximately 2 to 2½ per cent unemployment in a country in order to obviate the danger of inflation, the employment figure in respect of Whites, Indians and Asiatics—unfortunately that is all South Africa has at her disposal—is nothing less than 99.17 per cent. In other words, the unemployment figure is only .83 per cent. Is that not the image of a strong economy, of a rapidly growing economy, of a sound economy?

I now come to this problem of inflation. The hon. the Prime Minister has already said —and nobody can say it better and with more authority than he can—that the Government is more than aware of the dangers and problems of inflation, and that the Government is doing everything in its ability to restrain and control that creeping enemy to the security of the family—if I may call it that. But let us consider all the problems on our way.

In the course of the past year we increased our exports considerably. There has been a total increase of no less than 17 per cent. The increase in respect of the Africa territories amounted to 32 per cent. The increase in respect of America amounted to 32 per cent. The increase in respect of Europe amounted to 11 per cent. The increase in respect of Asia amounted to 17 per cent. But those increased exports brought more money to South Africa. As I will point out to you at a later stage, that is one of our problems, namely too much short-term money. I am sure the Opposition would not advocate reduced exports.

The increasing immigration is also stimulating greater economic activity. On the one hand it is instrumental in reducing the labour problem and the pressure of labour, but on the other hand it gives rise to greater economic activity. They bring money with them. They need housing, food, clothing. The overall effect of the additional economic activity to which they give rise is in actual fact much greater than the labour relief they bring. But would the Opposition suggest that we should not have immigrants? Of course we want them. But I want to point out that it aggravates the task of combating inflation, rather than to facilitate it.

Let me refer you to the liquidity in our banking system which is one of our major problems. That liquidity is there despite the severe measures taken by the Government, namely credit restriction and the highest rate of interest in our history, and that liquidity is still increasing. In September the surplus liquidity of our commercial banks, as against the minimum requirement, was 8.9 per cent. In October it was 9.8 per cent. In November it was 10.1 per cent. That liquidity—an excess of money—gives rise to an excessive monetary demand for goods and services, to excessive spending on the part of the public.

By means of the measures mentioned by the hon. the Prime Minister, the Government has tried to maintain control over all these problems. Now I want to ask the hon. the Leader of the Opposition: Which of the measures taken by the Prime Minister should not have been taken? Would you have had him increase the rate of interest more than he did? Would the Opposition have that? In view of the fact that the world did the same and is at present deeply concerned about that high rate-of-interest pattern, this Government dare not do that. Would the Opposition have that? They must tell us. Would they have us restrict credit even further? Can they tell us which governments of the past restricted credit to a greater extent than this Government? These are among the most severe measures ever taken.

The Opposition is now alleging that the Government is spending too much. The Government would gladly spend less. The Government would like to achieve that. But the spending trend and the expenditure of the Government are determined, guided and created to a large extent by the expansion of private economy. Private economy sets the pace, and if the Government did not incur that expenditure, it would give rise to serious bottle-necks in the infra-structure. Then some hon. members of the Opposition would have a great deal to say.

The Government has to incur such large expenditure, not only to adapt the infra-structure to the flow of private initiative, but also in order to create for this country an image of strength, to show the world that it cannot boycott us, and that if it wanted to boycott us, the process would be more injurious to itself than to us. Would the Opposition have us curtail the expenditure in respect of the security of our population and of our country? This Government answers that it is not prepated to do that, because the Government regards the security of the country as priority number one, as its primary task. The hon. the Prime Minister was quite justified in saying that he was still waiting for proposals of any substance as to how the Government could tackle the problem of domestic inflation with even more success than it has already achieved. There is another means the Government may employ to combat this problem, and that is the question of higher taxes. I should like to hear whether the Opposition is prepared to suggest anything in this regard, because it is actually the only substantial means that remains for combating inflation if it were to continue, if it showed further danger signs. I should like to hear from the Opposition whether they are prepared to suggest that taxes should be increased, because it would facilitate the task of the Government greatly if taxes were increased.

Mr. Speaker, the Government is aware of the danger of inflation. The Government is aware of the disadvantages it involves for pensioners, for salaried men, for workers, for the small man; it is aware of the dangers and the problems created by inflation as regards the gold-mining industry, because it has no control over the determination of the price of gold. I believe that the Government is prepared to take further measures, no matter how unpopular they may be, if it appeared that even more stringent measures were necessary in the field of fiscal policy, in order to combat inflation. But the Government is waiting in vain for the Opposition to offer suggestions of any substance with a view to combating that problem. Mr. Speaker, the image of South Africa, the image of the economy of our country, compares excellently with that of the rest of the world. Inflation, as the hon. the Prime Minister was justified in saying, is not a problem peculiar to South Africa. One of the countries to combat inflation most effectively is America, mainly because America is experiencing technological unemployment on such a large scale. But what has been experienced in America? Allow me to quote the following. They say that during the first few years after 1953 America succeeded in restricting inflation to an average figure of 1.5 per cent, “but last year the figure was nearly 4 per cent”. I am referring to the country that succeeded best in combating inflation, and yet the inflation figure in America was 4 per cent last year. I could name one country after another, and I could prove to you—as we proved in figures last year, because basically the position is unchanged—that South Africa is among the five foremost countries in the world as regards the effects of its measures to meet the problem of inflation. If we study all the pictures, if we consider all the figures, and if we read what the world abroad is writing about us, then the economic image of our country is not dilapidated or mutilated, as the United Party would suggest, but sound and strong and powerful, with one small black spot, i.e. inflation, of which the Government is aware and which this Government will fight with everything it has.

The speech that we have had from the hon. member for Florida was rather a mixed bag. He started off by painting a picture of South Africa, a picture of its strength, a picture of a country attracting funds from abroad, a picture of a country in which Great Britain had enormous investments, a picture of an expanding local economy—all those things which create inflation—and then he went on to discuss the question of inflation and asked us, a rather surprising question coming from that side of the House, whether we wanted immigrants and whether we wanted higher taxation? Sir, this question, “Do you want higher taxation?” is like the old question, “have you stopped beating your wife?” There is a lot more behind the question of raising taxation to beat inflation than the hon. member makes apparent. Perhaps he will realize that by the time I have finished what I have to say to the House.

Sir, if you critically examine the fiscal and the economic policies of (this Government over the past three years, then there are a number of factors which strike you very forcibly, and the first is how often the Government has been wrong in its evaluation of the economic position at a particular time; secondly, the constant changes which there have been in direction of policy; thirdly, the contradictions in thinking and in action, not only between one Government department and another but within a single department itself; and, fourthly, the inescapable fact that despite the steps which the Government has taken from time to time, they have so far completely failed to curb inflation.

This question of inflation seems to have reared its ugly head somewhere at the beginning of 1964. According to col. 1121 of Vol. 16 of Hansard, we had a statement by the then Minister of Finance in which he said—

This followed a warning which the then hon. Minister had given in a speech to the Insurance Institute of the Transvaal in November, 1963, when he said that in his opinion the time had come to take our foot off the accelerator and apply the brake gently. It is quite clear that until July, 1964, the Government was apparently prepared to rely on moral suasion to slow down the already over-heated economy, because it was not until July, 1964, the bank rate was raised to 4 per cent and then a further six months went by and the Government allowed the status quo to continue. It was not until December, 1964, that the bank rate was raised again, this time to 4½ per cent, and then we had another hiatus for three months, apart from appeals to the country, appeals which produced no action. Then in March, 1965, the Government tried again; the bank rate was raised again, this time to 5 per cent; the interest rate on longterm gilts was increased to 5½ per cent, and the minimum liquid asset ratio of the commercial banks was increased first of all to 4 per cent and subsequently to 10 per cent, and in the Budget of 1965 we, of course, had the surcharge on company tax and a loan levy was imposed. But it was obvious that inflation was not being halted, and in October, 1965, more measures were taken. The banks were told to ensure that in March, 1966, the level of their discounts, loans and advances were no higher than they were in March, 1965; interest rates were frozen and imports were further restricted. But the interesting thing is this, as my hon. Leader has already pointed out: During the period March, 1963, to July, 1966, the Government, through some of its most senior members, was constantly assuring the country that inflation was well under control. As I have said, my hon. Leader has given some instances; I can give the House a few more: In February, 1966, less than a year ago, we had this sort of unbounded optimism—

Of course, Sir, we know that these were pure illusions and just wishful thinking, but wishful thinking was being given full rein. The only thing that these statements achieved was the unfortunate effect of generating further optimism, if this was necessary, among a wide field of investors and thus adding to the fuel of our inflationary fire. The down-to-earth position, of course, at the end of 1965, was that there had been an increase in the gross domestic product of 8.6 per cent and we were running at an annual rate of inflation of roughly 4 per cent. It has been mentioned here this afternoon that one can accept an annual rate of 2 per cent. I think that figure is probably accepted internationally to-day. If we accept 2 per cent as an acceptable rate of inflation per annum, what was our position at the end of 1965? Not only had we not halted inflation but our rate of inflation was double the accepted safety margin; that was where you stood. The Government was talking about treading gently on the brakes; about seeing green lights; about turning points having arrived and about inflation being contained. It was only in July, 1966, that the Government finally seemed to realize that all was not well and demonstrated—this is the interesting thing —that many of the steps which it had taken in the past were completely wrong and ill-conceived, because what happened? The bank rate was again increased, this time to 6 per cent; the long-term gilt was again raised and a complete volte face took place in that to encourage personal savings, interest rates which had been pegged, were now unfrozen. We had told the Government ad nauseam that it was paradoxical to try to encourage savings by freezing interest rates; it did not make sense, but they did not listen to us, of course. Then suddenly import control, instead of once again being made more rigid, was relaxed. It is only fair to say that during this period we had had a balance of payments problem, but nevertheless the Government did not seem to realize that the tightening of import control was a direct and contributory factor in increasing inflationary pressures, particularly as the steps which the Government had taken to contain domestic demand at the time were quite ineffectual. Sir, it is interesting to read what the publication of the Bureau for Economic Research of the University of Stellenbosch has to say on this issue in their survey of contemporary economic conditions and prospects for 1967—

And, Sir, this is the important thing—

That was the picture. In July, 1966, we had a statement from the then hon. Minister of Finance indicating that at long last they had become aware of the real danger of the inflationary problem and that they were determined to stamp it out, and my hon. colleague has given the references. But the independent and inconsistent line taken by the now hon. Minister of Finance did much to destroy the purpose which his colleague the previous hon. the Minister of Finance, was endeavouring to achieve. On the one hand the Minister of Finance was trying to put a brake on things but the then Minister of Economic Affairs was saying to the country at large: Go ahead and expand. Now, Sir, we all have faith in South Africa and we have confidence in its future, but when you are endeavouring to establish the right psychological climate to ensure that the private sector will curtail its rate of expansion, you do not make speeches such as the Minister of Economic Affairs did on 25th August in this House when he said, and I quote from Hansard, Vol. 17, Col. 1423—

Now, what sticks in the minds of the public? What would stick in the mind of the hon. the Minister of Finance? And may I at this stage, before I get too confused between Finance and Economic Affairs, pay my compliments to the hon. the Minister on his new appointment and wish him every success. We will do our best to show him the right road. What sticks in the mind of the public after hearing a speech such as the one I have just read out? The sobering thought of a period of consolidation and stability or the glittering prospects of a period of 25 years of splendour and prosperity? Which would stick in the Minister’s mind? Obviously the 25 years of splendour and prosperity. We can only express the hope that the hon. the Minister, with his new responsibilities, will be a little more circumspect. Perhaps he will be well advised to leave the future to itself for the moment and to confine himself and the attention of the public to our present everyday problems. Because public reactions to the golden promises of the Minister were soon put beyond any shadow of doubt. They were put beyond any shadow of doubt in this prospect for 1967 by the Stellenbosch Bureau. What did it say? What it said was shattering. It said, firstly, that in 1966 there was an estimated increase in the gross national product of 9.5 per cent; for 1967 a further anticipated increase of 9.4 per cent; an annual rate of inflation for 1966-’67 of between 4 and 4½ per cent was expected and there would probably be an intensification of the upward pressure in prices in 1968; and there was an increase of approximately 10½ per cent in the gross domestic expenditure that was expected for 1967 after there had been a drop in 1966. The interesting fact is this, that this forecast was predicated not on a continued inflow of new capital but on a decline in our gold and foreign reserves for 1967 of R130 million. Now, here we have a clear and impartial and authoritative assessment of the Government’s success in handling inflation. What is the answer? The Government failed miserably. Because despite the pronouncements that the Government was determined to bring inflation to its knees, and despite the justifications we have had from time to time from the Government for different actions it has taken, the country at this stage was clearly poised for a further round of price increases, for a further rise in the cost of living, for a further eroding away of the value of the rand, for further burdens to be carried by the man in the street, the man who had had very few of the benefits of prosperity but most of the knocks of inflation. This was the situation. Even the Government could obviously not remain immune to the evidence that was placed before it. and as the Financial Mail said on 25th November under the heading “Now to destroy Wealth”—

And on 8th December we had the statement to which the hon. the Prime Minister referred this afternoon, which was issued by him, and it is a very interesting statement. It starts off by saying—

Then it goes on to deal with the increase in the cost of living—

Now, on 7th December, the day before the Prime Minister’s statement, a joint statement was issued by the then Minister of Finance and the then hon. Minister of Economic Affairs. I found this statement very gratifying because the first paragraph read: “The Government is determined to come back to the case of the persistent price increases in the country with all the power at its disposal.” It was interesting, because at last the two hon. Ministers appeared to be at one; they were going to take the same line, and I hope they will continue to do so. Let me say at once that we are in full agreement with the proposals made by the two Ministers. We think they were necessary and we are happy they were introduced. But our fear is that, as has so often happened in the past, they will be carried out in a half-hearted manner; we will have contradictory statements and the public will not be convinced, as it was not convinced in the past, that the. Government is at last really serious.

Let us look at some of these proposals. The first one is a restriction on expenditure. I am not impressed at all with the statement that the Government will do everything in its power to keep expenditure as low as possible. My hon. Leader and the hon. member for Constantia have already given cases which do not lead to any confidence on our part, examples of continually increasing expenditure. The Government is trying to do too much too quickly. It has been said, but it bears repeating, that we know of the problems of defence and we know of the possibility of sanctions. We subscribe to essential expenditure, but we pointed out last year, and we point out again this year, that wherever possible expenditure has to be curtailed and if it cannot be curtailed the period of expenditure must be stretched out. I want to refer again to a forecast at page 48 where it says: “The basic problem is simply that of choice, the question of reconciling multiple objectives with limited resources. If ambitions are not tempered to the realities of the situation in the short run, not only will the inflation be intensified but new demands on the infra-structure will be created.” It is clear enough and it is as simple as that. The Government has got to determine priorities. That is the only way it can operate. It has got to accept the incompatibility of self-sufficiency or even of improved services with stability. If the Government wants to demonstrate its intention to kill inflation once and for all, it has to take a stand which the public will understand. Justice must not only be done, but it must be seen to be done, and in economics it is very much the same. There are a few examples. I will give the hon. member for Florida two. Take oil drilling. I know it is a touchy subject in this House, but these things have to be raised. The position is too serious to skirt around them. We know that oil is the Achilles’ heel of South Africa and we know that we must protect ourselves in this regard. But if Press reports are correct, what is happening? The Government is to build a refinery at Sasolburg. It is also building surface and underground storage to store millions of tons of crude oil. It has also let contracts to explore the continental shelf. We know the possibilities of finding oil in the inland areas are unknown and yet the attitude is adopted that we have to go on drilling until such time as we make sure that there is oil or there is no oil. This does not make sense in the context of our present problems. I agree that we should go on drilling for oil inland but not while we are combating inflation. This is not the time to do it.

Nonsense.

There is the shipbuilding industry. In November last the Government announced that it was going to set up a large shipbuilding industry by imposing a duty of 20 per cent on imported vessels, plus a subsidy of 35 per cent on vessels of 6,000 tons or more built here. I want the Minister of Finance to tell the House and the country whether it is essential for our security that we should now go ahead as a matter of urgency to prepare ourselves to build ships of 30,000 tons. When investors see the Government encouraging this sort of thing, what do you expect them to do? Will they pull in their horns? They will certainly not do so. The Government has to realize that in many fields essential services have to be provided, but where services already exist the provision of better or improved services may have to be postponed.

Why does not Johannesburg stop building its skyways?

It may be that the hon. member is right. We know it will be very nice to dial directly from Cape Town to Johannesburg, but the question is whether the economy can afford it at the moment. That is the lesson the Government has to learn. In any case, I think the Minister of Posts and Telegraphs should first give everyone a telephone.

The second proposal is to sterilize excessive short-term funds and, as my leader has said, we welcome the new Treasury bonds and the coming availability of tax redemption certificates. But we are certainly not satisfied that the Government has done a very good job in withdrawing these funds from the market. In the Budget of 1966-’67 the Government announced increased rates of interest and greater tax-free benefits covering a large field of investments the public could make with the Government and the hon. the Minister of Finance also announced (Hansard vol. 17 col. 898) that “a special savings campaign will be launched later this year”.

All I want to say to the hon. the Minister is that if the savings campaign was launched it is the best kept secret since World War II because all I have seen about the special savings campaign is that on the old posters in the Post Offices advertising 4 per cent per annum on Post Office Savings Bank deposits, a change has been made either in pencil or in ink, changing the rate of interest to 4½ per cent. What is worse is that when you went into post offices up to two or three weeks ago they knew nothing about these “attractive facilities offered,” as the hon. the Minister of Finance called them in his speech last year. Our complaint against the Government is that even when they initiate schemes, the execution is so poor as to be absolutely unbelievable. It is time that they adopted some modern and dynamic methods to implement their policies.

A further feature is import control which has now once again been relaxed. This we welcome as it is something we have advised the Government to do for a long time because in the same way that you cannot expect savings to be increased when you freeze interest rates, so you cannot expect prices to fall when you prohibit external competition with the local market. One of the interesting things about these changes in import control is that a number of the items brought under import control in August, 1965, have now been removed. They are now back on the free-list. The hon. the Minister changes his mind more often than the proverbial woman. Mr. Speaker, there is one other matter I wish to raise. There have been productivity conferences and in the statement by the Prime Minister, he mentioned the question of productivity. This is what the hon. the Minister of Finance said at this productivity conference:

Mr. Speaker, the hon. the Minister could never have been more correct. It is certainly time that the Government discarded some of its old ideas. Productivity as was rightly said, depends on skilled manpower and skilled manpower only comes through training unskilled manpower. The greatest barrier to successfully combating inflation is the Government’s policy of refusing to allow unskilled non-Europeans to become skilled, of denying, as the hon. the Minister has said, every member of the community his opportunity and responsibility. If the hon. the Minister would only carry out that thought, all would be well but what do we get instead? We get from an hon. Deputy Minister of Bantu Administration and Education, who has had quite a lot to say in the past few minutes, a new crusade to remove the Bantu from the Western Cape on a 5 per cent formula.

Mr. Speaker, in many respects this afternoon’s debate is an important and also a unique debate. This side of the House has as yet not had any opportunity of discussing the two reasons for the debate being a unique one. In the first instance hon. members were privileged this afternoon to be able to listen to our hon. Prime Minister who replied here for the first time to the points raised by the hon. the Leader of the Opposition. I think it is fitting if, on this occasion, I state that we who elected him as our Prime Minister, in other words, this side of the House, and who are also proud of the fact that he is our Prime Minister, have listened to him on this occasion here this afternoon with great pleasure as well as with the necessary confidence, as we shall also do in future. We also have the opportunity this afternoon of conveying our congratulations to the hon. the Minister of Economic Affairs who will in future be the Minister of Finance. We wish to congratulate the hon. the Minister on this appointment. Unfortunately we cannot hold out to the hon. the Minister the prospect of having a very exciting task as Minister of Finance because it will be the hon. the Minister’s task, inter alia, to listen to this type of debate. Not only do we wish to congratulate him. we also want to wish him the strength to be able to fulfil his task with the necessary patience.

Mr. Speaker, this debate will be known as the telephone debate. Both the hon. the Leader of the Opposition as well as other hon. members who have thus far spoken, chopped and changed and one finds it quite surprising that a party which is aware of the fact that it is going to introduce a motion of no confidence and which is also aware that it has the privilege of choosing the subject and setting the tone, as well as being able to warn its members months in advance about the debate, should right at the outset, beginning with their leader, falter, and that in regard to the cost of telephone calls. That is why this debate will be known as the telephone debate. [Interjections.] It is true. The difference is only 1 cent. Hon. members have plenty of time; we are going to have another debate and they will have ample time to calculate the difference. If they do not know how to do so themselves they can ask someone else to try and determine what difference this 1 cent has made in the cost of living. If time allows I shall return to this point. I agree with the hon. member for Florida that because we were to listen to the debate first there was no time to collect all the statistics. Nor is it necessary.

Over the past few years all the possible statistics which should and could have been used, were used in these debates to indicate certain tendencies in the economy. It was done repeatedly and that is why it is not necessary to indicate all those tendencies again. There are new additions and those will be indicated when we again have to conduct an economic debate, but one important thing is this. Because we are not living on the moon but in the Republic of South Africa certain things are true. In regard to the economy of the country it is possible to adopt one of two attitudes. One can either adopt the attitude of a government which has to govern a state and keep the economy going, or one can adopt the attitude that it is better to have a retarded economy and think that if one must choose between two evils one would rather choose the evil on the one hand of having a retarded economy than choose the other evil which is to have an inflationary or faster economy. Mr. Speaker, if for certain reasons we have to choose between two opportunities, namely the opportunity of keeping South Africa strong under a retarded economy and the opportunity of keeping South Africa strong under a strong and rapidly developing economy, with its attendant dangers, then we of course choose the second. A few years ago this country saw what it can mean to have a retarded economy. How can this Opposition be ignorant of the role it played at that time in retarding this economy as it was retarded? Do you remember how it was said in the days before Sharpeville that there was no future in South Africa and how cold water was thrown on everything she wanted to do? Do you recall the difficulties, both in and outside the House, we experienced on that occasion in getting the economy going? In fact, it was for two years our task to win the confidence to get our economy into its stride again. However, it is not only economic laws but other important factors as well which determine such progress. The other important factor is the psychological factor, namely the condition and disposition of the entire country in having confidence enough to want to invest, to want to work and keep the economy going.

Sir, we know what it can mean. We know what it can mean in the outside world. That is why we say that the State has for very sound reasons boosted the economy to a tempo where it could move quickly enough to be able to accomplish certain things. As the hon. member for Florida said, it was done to make the economy as strong as possible in the event of any contingencies. Whether or not it is being done in this way, the test is that the second danger is not such a grave one, provided a few things happen. The first is that there should be control over the course of events. Hon. members on the opposite side have attacked us and talked about all kinds of trivialities, but the fact remains that the State has to such an extent retained control over the situation. The latest indication is the pointers of the last two months which prove that the economy is actually being brought within bounds. A further indication is the fact that South Africa has always been able to temper its economy, moving at this rapid rate, to a tempo lower than that of other comparable countries. This point was also made by the hon. the Prime Minister. The second condition which must be complied with in order to obviate the danger is that the competitive position of the Republic in regard to the outside world should not be prejudiced. It is a fact that the increase in prices in South Africa compares favourably with that of our trading partners. If the tempo there and here increases at the same rate it means that the gap will become more and more favourable for South Africa, which does not mean, however, that our economy should not be tempered. As far as comparable countries are concerned this matter is still under control.

Sir, in the third instance the danger is not as grave as hon. members on the opposite side allege, provided a third condition can be complied with. That is that the increase of prices should not take place more rapidly than the increase in income. As far as the increase in income is concerned there is a whole series of figures which indicate it, as well as the way in which the income of the salaried man is increasing. Even in the pay-sheet of the State the increase in income over the past few years was greater than the increase in prices. Over comparable periods, the increase in respect of income was 17.5 per cent while the increase in prices was 10.5 per cent. The same applied to those accruing incomes, i.e. people earning interest and dividends. The fact of the matter is that the increase in income in South Africa was able to carry the increase in prices. I want to imply that there was no danger even in this.

The hon. the Leader of the Opposition has raised quite a number of points. He said, inter alia, that the State is spending too rapidly. However, he did not state his attitude in regard to the spending of the private sector. The hon. member who has just resumed his seat said something else. He said there should be priorities. He wants to distribute priorities in South Africa. The hon. member also said that as far as these priorities were concerned we should not be spending any money at all in the search for oil. He said that it should not appear on the list of priorities. He also said that we should not invest in ships. I think, Sir, that it would be a good thing if we could settle this point in regard to the principle at this early stage in the Session. If there is a rapidly developing economy from which the motive force has to be taken, which sector should bear the responsibility of making a concession or a sacrifice? Must it be the State which is to spend less or. does the private sector also have a responsibility as far as spending less is concerned? I want to contend that the Government is responsible for maintaining the infrastructure which the hon. member for Florida also spoke about. It is the responsibility of the Government to determine the rate of movement of the State so that the State will be able to carry out its principal function. That is why I say that if there has to be any tempering it is the privilege and the prerogative of the State to carry out its programme first. The principle is also that it is the prerogative of the State to expect it to be the private sector which will be tempered. Why? For very important reasons. We are living in an era in which the Government has had to do a great many things over the past few years and do them simultaneously, all of which required tremendous capital sums. As I said at the outset, we are not living on the moon. We are living here. We have to maintain an infrastructure which has certain basic cornerstones. The first and most important is the infra-structure dealing with the policy implementation of the Minister of Bantu Administration. If hon. members mean that the Government is spending too much and that it should not implement its homeland policy or the attendant border area development policy, I can only say that hon. members on the opposite side must realize that this policy is an essential one in South Africa. It is a policy on which the future of the country depends. Mr. Oppenheimer can much rather build a few less factories than that the Government should temper that part of the policy implementation.

Sir, the hon. the Leader of the Opposition has really concentrated his attack against the Government and its conduct in regard to the maintenance of the economy. I now want to tell the hon. the Leader of the Opposition that over the past few years the State has, for its part, applied all the control measures it has at its disposal. In the first place the State has done everything in its power to obtain cooperation by means of what it calls “moral persuasion”—the moral influencing of public opinion—so as to try and modulate the economy. The State has obtained the co-operation of both the public and the private sectors. It has obtained the co-operation of the banks. It has tried through the banks to obtain control of the credit position as well as of rates of interest in South Africa. That it has obtained. Over and above that there is a very large sector, i.e. that which is called the grey market. The hon. the Leader of the Opposition himself spoke about the grey market. What is the grey market? The grey market is that part of the private sector which could not be submitted to discipline by means of the normal control measures on the part of the Government. In other words, which is not under the discipline of the Reserve Bank and the other associated bodies. Now we know that the grey market has hundreds of millions of rand at its disposal. They are people who with chains of different and large companies have millions at their disposal, lend it out amongst themselves, and are able, if they do not co-operate, to wreck a Government policy. We know the history well enough and we know that the grey market is that part of the industrial and commercial sector in regard to which this part of the House is apparently less to blame than the hon. the Leader of the Opposition and his people. They are important urbanites, leaders and directors of large companies. Now I want to ask whether the hon. the Leader of the Opposition and his people have not only the responsibility of blaming the Government for what happens, but also of using their influence on their friends in order to have them—if I may use the word—conform and co-operate with a State in order to gain control of a situation? Over the past few years—and for this I take it amiss of the hon. members on that side of the House—it was the Government which, for its part, established all control measures and which also obtained the co-operation on the part of the people which it has control. However, I doubt very strongly whether those friends of the hon. members on the opposite side have played their part and done their duty in getting the situation under control as it ought to be.

The hon. the Leader of the Opposition and hon. members on the opposite side made an important point here in regard to the mines. They began with the mines and indicated that mining is really very sensitive, and this is quite correct, to all forms of price increases. It is true that those price increases in particular which deal with labour are woven into and form part of the ultimate product. That is what the hon. the Prime Minister said; he made that important point. We are all aware of it. The point he made is that if a product is pegged for so many years one is astonished that the industry is still kept going. But the industry is kept going for various reasons. One important reason is that the technique of deeper excavations and faster operation and production also helped them along. In other words, they have in the meantime used their heads and where they have fallen short at one point they have made up the deficit in another way. But now the hon. member is making accusations. I want to ask the hon. the Leader of the Opposition to rise on another occasion in this debate and tell us a few things. He must tell us a few things in regard to the production factors in the gold-mining industry. Which of these production factors have in his opinion got out of hand and which of them should now be changed? Because mining costs include quite a number of things. In the first place they include labour. That is a very large item. Does the hon. Leader wish to adopt the attitude that it is the responsibility of the State to peg labour at all costs in such a way that mining, particularly the gold mines, has no increased labour costs? The second important factor is that of nutrition. Tens of thousands of Black people are employed in the mines. Those people are fed and the food is purchased from the farmers. The hon. Leader has complained about costs. Does the hon. the Leader of the Opposition want to say that, for the sake of maintaining the mines and the price of gold, the prices of agricultural products, which form part of its costs, should be pegged? The hon. member can tell us.

The hon. member can tell us whether he wants the cost factor of the massive quantity of wood produced by our timber farmers in our forests to be pegged so that it too will influence the ultimate price of gold favourably.

I also want to refer to the position in respect of steel. It is of no avail making an allegation here in regard to the prices which are incorporated in the production price of gold, and then not being specific and stating which one of these cost items should suffer.

That is why I say that it is irresponsible merely to make a statement. The fact of the matter is that we are sorry that the price of gold is not higher. For its part, South Africa has during the past year done everything in its power to promote a higher price of gold. The hon. the Minister of Finance has recently done so again. But, as the hon. the Prime Minister said, it does not lie in the hands of South Africa only. That is why it is a good thing that the industry could be kept going by means of the ingenuity of the people who were in charge, to make up for what was lacking in production with their ingenuity, otherwise things would have gone very badly with the mining industry.

The amendment of the hon. the Leader of the Opposition had three subdivisions, namely mining, agriculture and the fixed income group. He also spoke highly of the position of the fixed income group. What are the actual facts in regard to the incomes of everybody in South Africa? There are so many of the sectors which can be glanced at. What are the actual facts, as the position stands to-day? Those who earn their income through participation in trade and industry by means of shares—and you will agree with me here—have really had a very good time of it. The fact of the matter is that the profit increase over the last few years has risen by millions and at a tremendous annual rate. We cannot therefore differ on that score. It could perhaps have been other sections of the private sector. It could have been the labourers. Organized labour has over a hundred trade unions which have actual labour contracts. But what is the position here? All labour agreements in South Africa have a provision written into them that with the increase in the cost of living the price of labour will also increase. In other words they are protected. That is why we do not have strikes in South Africa. They are satisfied and do not agree with the hon. the Leader of the Opposition and his people on that side of the House.

A moment ago I also mentioned the salaried staff of the State. Their income increase was 7.5 per cent faster than the price increases in the same period. But apart from the salaried staff of the State there is also the salaried staff in the private sector. Do you know what our difficulty in this regard is? Our difficulty is that the prices of labour are played off one against the other and pushed up to such an extent that in many cases even unheard of prices are paid for labour. The general complaint is that there is really unfair competition in this respect. There are people, companies and businesses which lure labourers away from one another. There is of course no indication of people who are suffering hardships and who cannot make a living with what they earn. That is of course not so. I am thinking here, inter alia, of the Johannesburg City Council.

When we speak of professional people then we are dealing with the fact—a fact with which the State also has to contend—that particularly in the professions some or other company or undertaking is luring professional people away from other employers to such an extent that hostilities are aroused, and it is also the argument of the State that it cannot keep up.

In other words, if the hon. the Leader of the Opposition comes forward with an attack in regard to the fixed income group and makes it one part of his amendment, then I do not understand the hon. Leader. Surely it is not in any way consistent with the facts as they exist in our economy to-day. Surely that is not the case at all. But the hon. the Leader, and other members on his side as well, will have the opportunity of following up, of raising points and of refuting the statements which I have now made. But I do not believe the hon. Leader, or anybody on that side, is able to refute these statements.

I believe that in the early hours of this debate, judging from what has already been said here, we are once more going to hear the old story, namely an angling for possible votes in the hope that dissatisfaction can be created outside with what is said here. But, as the hon. the Prime Minister quite rightly said, if there are indications of dissatisfaction then they are not concerned with these arguments. Neither were they concerned with these arguments last year. That is why I believe we can approach the rest of this session with a great dea of confidence, particularly if we approach it with these kinds of arguments which we have heard here to-day in this House.

The hon. member for Soutpansberg who has just sat down tackled a wide field. It is not my intention to try to cover the same field. I think that we shall achieve more by concentrating on a particular aspect thereof, which is what I intend doing. The hon. member spoke about South Africa’s strong economy. We immediately say that we are delighted about that; we all want a strong economy. However, when we look for reasons for this strong economy there is one important factor which was not mentioned by the hon. member, namely the fact that we have more than 50 gold mines which are in production. The hon. member also said that the Government had succeeded in controlling costs. What I want to prove to him is precisely that the Government has not succeeded in controlling costs, especially in the particular industry to which I have just referred, namely the gold mining industry.

The charge levelled by my hon. Leader was that a critical situation was developing as far as our gold mining industry was concerned. He enlarged on that and indeed I shall do so too by saying that unless the Government intervenes immediately and in a dramatic fashion, this industry which has been a mainstay of our national economy, which has formed a basis for our national economy throughout the years, will be given such a crushing blow that it may have far-reaching consequences for the future of South Africa. I think that this is such an important matter that we should try to put it in its proper perspective, and in order to do so there are three aspects we have to examine. In the first place, we have to determine precisely what the role of the gold mining industry in our country is; in the second place, we have to determine what inflation is at present doing to this industry and how that is going to influence this industry’s future; and in the third place, we have to consider what can be done by the Government and by others in an attempt to control the situation.

Organized gold mining in this country started about 80 years ago. Initially it was on a small scale but it has grown into the biggest industry of its kind in the world to-day. At present the gold mining industry in South Africa is responsible for three quarters of the world’s gold production if we exclude Russia, and even if we include Russia it is estimated that it contributes at least two thirds of the world’s gold. That immediately presents an international yardstick and norm, but what does that mean in terms of our internal economy? It is calculated that this industry has produced 780 million ounces of gold since Its establishment up to the end of 1965, which represents a monetary value of R13,000 million. To this we must naturally add the additional contribution made by the uranium industry, which at present makes a contribution of approximately R850 million per annum. These are enormous amounts which will have a tremendous influence on the economic development of even a large and a powerful country; how much the more so in South Africa where we are still engaged in industrialization?

If we want to try and determine the role played by this industry in our country the question arises. “What becomes of this money, these enormous amounts, and who benefits from them?” I think at the moment we can put it as follows. In the first place there is the State, which derives revenue from payments in respect of mining leases and from direct taxation. During the past financial year the share received by the State amounted to approximately R127 million and it is anticipated, if the situation does not change, that the share which the State will receive will increase further by approximately R18 million per annum during the next number of years. This is merely direct revenue. Indirectly the State naturally receives even much more.

In the second place there are the share-holders. At present the share-holders receive more or less the same amount as the State. This comes to approximately R130 million per annum at present. But we proceed: These share-holders who run the risks and who make the investments, pay back to the State a large share of their income in the form of taxes, both personal tax and companies tax.

Then we come to the workers. At the moment the industry employs 44,000 Whites, which figure represents 6 per cent of our White, male, economically active section of the population. The industry also employs 375,000 non-Whites, which figure represents approximately 12 per cent of the economically active section of our male non-White group. Therefore the industry is an important source of employment, and the wages paid to these people amount to large sums. During the past year, as my Leader has pointed out, the wages of workers in this industry amounted to approximately R235 million.

Then there are secondary industries and other tertiary activities which can also subsist as a result of the gold mining industry. At the moment the purchases of our mining industry are in the region of R275 million per annum. Whereas only 25 per cent of these purchases were South African 20 years ago, South African manufactured articles represent 94 per cent of such purchases at present.

Then there is the most important role of the gold mining industry, namely that it is an earner of foreign exchange at a rate of more or less R8 million per annum at the present time. There are people who want to underestimate the value of this role and there are even people in influential positions who say that the gold mining industry is no longer important because it represents only 10 per cent of our national income. But that is a short-sighted approach. The gold mining industry is responsible for R800 million which we receive in the form of foreign reserves annually. It is always responsible for 40 per cent of our total exports and as an earner of foreign exchange the gold mining industry is twice as important as the agricultural industry and four times as important as the manufacturing industry.

But, Mr. Speaker, there is another aspect. Gold is a strategic product; there is a fixed market for gold; there is an unsaturated and to some extent an insatiable demand. Because of the position it occupies in the international economy, gold is not so vulnerable to international sanctions and boycotts. The position occupied and the role played by gold cannot readily be taken over by anything else. Let me put it as follows. At the moment we export elevators to South America and it is important that this should be done. One does not disparage this effort but South America may decide to-morrow that it wants to buy its elevators from some-one else or it may decide to manufacture its own. However, no-one in the world can manufacture his own gold. Hence the strategic role of gold and that is why it is so important that this gold mining industry, which has played such a tremendous role in our country, must be kept going.

To summarize, the gold mines assist on a large scale to fill our State coffers; they assist on a large scale to provide employment; they assist on a large scale in the purchase of locally manufactured articles, and they are the most important earners of foreign exchange. Mr. Speaker, we shall be making the biggest blunder in the history of our country if we underestimate the role played by gold in the economy of our country. As a matter of fact, I can think of only one blunder which will be bigger and that is to allow this important industry to be smothered…

We do not underestimate it.

… which is what is happening at present.

But now we come to the second point: What is happening at the moment? Indications have already been given of that, but I think that we should put it even more clearly so that the importance thereof may really be brought home. At the moment we know that operation costs are soaring because of inflation. Over the past 30 years costs have soared from R2 per ton to an average figure of R6 per ton for the entire industry. As a result of that there are 14 mines in the industry at present, which represent approximately 30 per cent of the total, which are either operating at a loss or are showing a profit of less than 50 cents per ton. At the moment the industry is kept going because there are approximately a half a dozen of super mines in South Africa, mines with a high ore value, and although they handle less than one fifth of the total tonnage, they produce more than one third of our total gold production. The gold mining industry is kept going by these high-grade mines.

The classic situation has already been set out, namely that we have a fixed selling price but that operation costs increase, and the industry is inevitably compelled to leave behind more and more gold. As my hon. Leader has indicated, approximately 8 million ounces of gold are left behind for every increase of 25 cents per ton in operation costs. What is the effect thereof? It means that over the past five years operation costs in the gold mining industry have increased by R1 per ton and as a result thereof potential gold to the value of R1,000 million has been left behind. However, the matter can be taken further. We have to make a projection to the past and if we do this on the same basis we may put it as follows. Since 1940, as a result of inflation, gold to the value of R4,000 million has been left behind in the soil, and the tragic situation here is that unless inflation is stopped immediately, a further R5,000 million’s worth of gold is going to remain exactly where it is, thousands of feet below the surface. And what is the effect of that? Inflation costs soared by 5 per cent in 1965 and increased by 6 per cent in the first half of 1966. What is the effect of this on the gold mining industry? It is going to decrease the life of the industry by a third. Because of this inflation we shall have to start paying off workers on a fairly large scale within ten years, and because of inflation, if it is not stopped, the gold mining industry which has been the mainstay of our country’s economy will, for all practical purposes, come to a standstill within 20 years.

What can one do about this situation? [Interjections.] There are people who in the first place do not realize the importance thereof. They indulge in wishful thinking. They say a miracle will happen to save the industry because that is what has happened before. It may happen but we doubt it. There are people who say that we will discover new goldfields. It may also happen; I wish it does happen, but what are the possibilities that it will happen? Over the past ten years the gold mining industry has spent R30 million on geological surveys and on exploration work, of which amount R20 million has been written off as absolutely unproductive. At the moment we know of two or three new mines which can be worked. The gold is there but it is sporadic and the ore value is too low. The important thing is that because of inflation it has become so expensive that it has virtually become impossible to develop new mines. Let me put it as follows. In the thirties it cost R2 per ton, to-day it costs, if one starts a new mine, R7 to R7.5 per ton in terms of operation costs. Thirty years ago R5 million was needed to bring a new mine to the stage of production. To-day it is 8 times more expensive and R40 million is needed to bring a mine to the first stage of production. Thirty years ago the investor expected a return of 6 per cent on his investment. To-day, because of the higher rates of interest, he expects 10 per cent. What is the effect of that? Thirty years ago one could start a mine if its ore value was 4.5 dwt., but to-day one cannot do so unless that value is 10 dwt. per ton. And where are we going to find these mines? At the moment we have 50 gold mines which are operating and merely a half a dozen of them have an ore value near 10 dwt. Therefore I think it is clear that the entire climate has changed. In the past it was easy to get people to invest money in this industry. At present the State must take real, positive measures to encourage the investor to invest his money in this direction.

There are people who say that we should go deeper and we know that there is gold which lies deeper but there are technical problems, which have not yet been overcome, connected with mining at 12,000 feet and deeper. In any event, the deeper we go, the higher costs soar. One has to supply more air, one’s power is more expensive and the machinery is much larger.

What do you suggest?

Order! It is very harassing to hear everyone ask, “What do you suggest?” Hon. members should give the hon. member a chance to make his speech.

The third situation which is often put to us is that the uranium industry should take the place of gold but let us examine that. The uranium industry, in its flourishing period, was only responsible for 25 per cent of the total gold production and at the moment it represents a meagre 5 per cent. We hope that the uranium market is going to develop further but precisely the same factors of inflation I have mentioned in connection with gold production naturally also apply to the uranium industry.

Then there are people who speak about an increase in the price of gold or devaluation of the American dollar. As far as this particular matter is concerned the effect of that is more or less the same. What is the possibility that there will be such an increase in the price of gold? No-one knows. We can only say that on a merely economic basis South Africa can make out a good case for the increase of the price of gold, which we of course must do. But what is going to happen in this respect depends on the approach of the Americans and in America the increase of the price of gold is not merely an economic matter. It is also a political issue. It is bound up with world confidence in the dollar and a series of other matters. I may be wrong, and I hope that I am wrong, but it is my humble opinion that the price of gold will not be increased in the near future. There is a further important point. Cost inflation is changing the mining industry in such a way that even if there should be a change in the price of gold and it is in fact increased, we shall ten to one not be able to benefit from it. It is like a sandwich. At the moment we are eating the cheese from the sandwich and all that is going to remain will be the crusts, and when an increase in the price does come some day, we shall not be able to benefit from it.

Then there is the further possibility of increasing the productivity of workers and here we come to a more fruitful field. The industry naturally is aware of the importance of increased productivity and is taking active steps to improve productivity. It realizes that in this case productivity can be increased by means of increased mechanization, by means of better organization and management and by means of the better utilization of human potential. What has happened in this respect? The improvements are worth mentioning. Over the past ten years the tonnage handled by White workers has been increased from 150 tons per month to 300 tons per month, and the tonnage handled by non-White workers has been increased from 22 to 30 tons. This means that if we did not have this increase in productivity we would have needed 50 per cent more White workers and 30 per cent more non-White workers at this stage to handle the tonnages which are handled at the moment. Improvements on a large scale have in fact taken place but when we compare our productivity index with those of other countries such as Sweden, for instance, and with the mining industry in Sweden, and even when we allow for a different geological pattern, we find that our productivity is not so high. Mr. Speaker, productivity is a subject on its own and I do not even want to attempt dealing with that now. I just want to make the following remarks. As long as we persevere in an approach in connection with work which is quite outdated we have no hope of coping with the matter. For instance, in our own mining industry at the moment at least three or four artisans. namely an electrician, a fitter an erector and probably also a mason, are required if a winch has to be moved from once place to another, and this is a job which can be done in many other places by one man.

That is not so.

Mr. Speaker, I want to say that as long as we continue imposing artificial limits on the full development of the abilities of all our workers, we shall have no hope either of coping with this matter. In this connection a tremendous responsibility rests not only on our organized groups of workers in this country but also on the State.

Finally we come to what the State can do. Here we are fully aware of what the State is already doing. We are, for instance, aware of the arrangement in terms of which Western Holdings and Vrystaat Geduld may develop the low ore value of Freddies. We are aware of a similar arrangement in terms of which President Brand may develop Saaiplaats and we are aware that this principle was extended recently as a result of which Vaal Reefs, which is an existing mine, will be allowed to develop a new mine which is not even in existence yet. These are active steps aimed at prolonging the life of the industry. They are to be welcomed from all sides. We are also aware of steps which are being taken in connection with the deduction of capital expenditure. We are aware of the assistance rendered to deep mines; and to pump out water. We are also aware of assistance being rendered by means of the provision of loans for covering losses to the extent of 10 per cent of revenue. [Interjections.] This assistance is important but it comes too late and it is not sufficient. Here we have a patient which is dying and the Government is trying to revive him with an aspro. This is what is happening at present.

There should be an entirely new approach to our gold mining industry. It is, from the nature of the case, as I have tried to indicate, important that the life of this industry should be prolonged for as long as possible and that the life of a mine should not be seen as a specific space of time. It should rather be seen as the quantity of gold we can mine. As soon as this principle is accepted, our entire approach to this specific problem changes. What is happening at the moment? The effect of inflation is being masked. We do not see it. The profits are increasing but why are they increasing? They are increasing for the very reason that inflation compels the mines to mine the rich ore and to leave all the other ore behind. Over the past five years, for instance, the total production of gold in this country has increased by 40 per cent but the tonnage handled has only been increased by 12 per cent. This is exactly what we have to avoid because, from the nature of the case, as I have tried to indicate, the essence of the principle involved here is to mine as much gold as possible. How can we do so? The mines should receive financial encouragement to mine this low-grade ore. It amounts to the payment of a subsidy. As soon as we say this, it is as if people shudder but a subsidy is not a new principle with us. As a matter of fact, over the past 60 or 70 years the gold mining industry has actually been subsidizing the manufacturing industry and it has done so according to the taxation formula.

Where ordinary companies are taxed at a rate of approximately 33 per cent gold mines are taxed up to as much as 50 per cent. In other words, in 1965, if gold mines had been taxed to the same extent as the ordinary companies they would have paid R60 million less in taxation than they did in fact pay. The question of paying a subsidy has already been accepted in the industry. At present there are a large number of mines in the industry which are in fact being subsidized by the Government and it costs the Government R4,000,000 per annum to do so. However, it is our argument that it is too little, because the gold production of these mines only amounts to 4 per cent of the total production. The approach should then much rather be that of Canada, for instance, where they subsidize the industry to the extent of 67 per cent of the production at a cost of R10,000 million per annum.

Consequently the entire approach to the taxation formula should be changed. The present formula may be traditional but it is no longer logical and it is no longer economically sound because it is based on profits and, as I have said, profits continue to increase. That is not the problem. A large quantity of gold, however, is left behind. What we have here is a wrong diagnosis and if we stick to it, the prognosis of the patient will be poor. The Government should rather arrange matters in such a way that all mines will be encouraged to mine low A-grade ore because if they can do so we shall be prolonging the life of the industry. I think we have reached the stage where the Government can in fact do so. In 1936 taxes from gold mines formed approximately 25 per cent of our total income tax. At present it is only more or less 10 per cent. We are always talking about productivity but when doing so we are usually thinking in terms of the workers. Of the utmost importance is the productivity of capital. What is at stake here? The possibility that the Government will have to surrender certain revenue derived from taxation. What, on the other hand, is the reward? It is gold to the value of R5,000 million which is there potentially and which must be mined and which is going to remain exactly where it is if that is not done. That is the situation with which the Government is faced. If they are not equal to the task, future generations will reproach us and them and will tell them that they have neglected our native soil, and at that stage they will be justified in pointing a reproving finger in terms of this motion to certain of the hon. members now occupying Cabinet benches.

The hon. member who has just sat down regaled us with a speech in which we found nothing new. The hon. member for Kensington will recall that I made a speech during the Budget debate last year on which he congratulated me because I too made a plea for extending the life of gold mines. On that occasion I also made a plea for what I termed a “stretch out” policy in connection with gold mines. The role played by the gold-mining industry in the economy of our country is, as we all will agree, very important. There is no need to tell us that across the floor of this House once again. We agree on that. However, when we are told that what the State derives from the mines are benefits only, the picture is presented in somewhat too favourable a light, because the hon. member should bear in mind that the State too has many investments to make when a gold mine is being established. The State has to provide for all the services—townships must be established, roads must be made and other facilities, such as those for water, must be created. Indirect costs are also incurred by the State in order to ensure that the gold mines will be able to produce and that they will be an asset for the country’s economy. However, Sir, as far as I am concerned inflation has almost become a spectre. To rattle the skeleton of inflation at the gold mines is something which I really cannot understand. What inflation means to me, in plain language, is that one must tighten one’s belt and must spend less. The problem in connection with the gold mines is in the first instance, as has already been said, that the price of gold has remained constant for the past 32 years. We cannot argue that away. The price was fixed in the thirties. The production costs of the mines have not remained constant. They have increased over the years. It has been possible, however, to cope with the increased production costs because improved methods of production were employed and because better methods were employed to win the gold from the ore. Sir, it does not help to argue. We can see what the Opposition is driving at. At the moment they are too embarrassed to mention it. The hon. member who has just spoken referred to it only in passing, namely the increase in the productivity of the mines. As I have said, productivity can be increased by means of mechanization. But, Sir, it can also be done by making more use of the cheaper Bantu labour which is available in our country. What they are trying to drive in here, is the thin end of the wedge.

If you continue in that way the Whites will have no work in 20 years’ time.

Should we continue according to the pattern proposed by the hon. member, the Whites will have no work within ten years. That is the essence of the case just made out by the hon. member. He asked what should be done. I waited in vain to learn what the Government should do. I heard nothing except that the Government should subsidize the gold mines. When any industry has to be subsidized to a large extent it no longer occupies its important place as the mainstay of the economy of the country.

Here we have a condition which cannot be coped with readily because we are dealing with increasing production costs. We are faced with the fact that the price of gold has not been increased. It is with gratitude that we should note the efforts which have already been made to increase the price of gold, such as the one recently made by the Minister of Economic Affairs when he visited Europe. Even if we should one day succeed in effecting an increase in the price of gold, it would not prove to be the end of our difficulties. We would still be faced with the other inherent problems which gold production entails. That is why the Government has adopted a certain course to assist marginal mines, namely to pump out water, and to apply certain auxiliary measures where consortiums have been formed, as the hon. member has said, so as to assist low-grade mines to produce. These are measures which have been taken to extend the life of the mines over a period. At this stage we cannot imagine that there is anything else which we can do about it apart from subsidizing the gold mines. In spite of the bogey conjured up of gold mines closing down, one may read in the financial reports of the various gold-mining companies every year that they are making one record-breaking profit after another. That is because the highgrade ore is being mined. If the gold-mining companies are really in earnest about stabilizing the gold-mining industry why do they not rather make smaller profits and mine more low-grade ore so as to prolong the life of the gold mines until such time as the price of gold may perhaps one day be increased? We must remember that when somebody invests in the gold mines it is his investment in the first place which reverts to him. He receives his dividends on the investment before the State comes into consideration for taxation on those mines. The gold-mining industry therefore also has its task and its duty. By means of this development in the production of the gold mines, the life of those gold mines can also be prolonged. That is why I do not know why we should lay the gold-mining industry with its problems at the door of this Government. The Opposition could make a much greater contribution if they pleaded with the International Monetary Fund for an increase in the price of gold and if they would lend a hand to break the hold which America has on international monetary politics. Then, and only then will they be rendering a service to the gold-mining industry and to this country.

Mr. Speaker, the hon. member who has just spoken has revealed an interesting new policy, namely the conversion of the mining industry into a charitable organization. His suggestion for prolonging the life of the mines is to stop making profits out of gold mining and to mine lower quality ore so as to keep the mines going longer. I see, Sir, that the hon. member has been taking lessons from the hon. the Minister of Posts and Telegraphs. I think that perhaps with a little more consultation between them we could perhaps go over to even more radical schemes for destroying the mining industry in South Africa, instead of trying to answer the reasoned, logical and constructive case put forward by the hon. member for Hillbrow, the hon. member who has just spoken has shown once again the cringing fear of this Government, the fear of taking any steps in which any risk is involved or in which any danger may be present for the so-called protected rights of voters who send this Government and its members to power. They are not interested in the industry or in South Africa. They are interested in trying to uphold the fear complex upon which their political future rests.

Do you mean the mineworkers?

Yes, the exploitation of fear not only among the mineworkers, but also…

Do you want us to sacrifice them?

Sir, here we have an interesting point of view from the hon. the Minister. The hon. the Minister suggests that any attempt to increase productivity would be to sacrifice the workers. What hope is there of dealing with the problems of inflation and the problems of our economy, which require greater productivity, if any attempt to improve productivity is going to be branded immediately as a sacrifice of the workers? I want to suggest that it is this Government which is sacrificing the workers. We have heard in the debate so far from this side of the House, from the hon. Leader of the Opposition and other speakers, about the malady, the disease, which is attacking our economy to-day, and we have heard from the last speaker on this side of the House about the effect of that disease on one of its victims. The disease is inflation, and the victim in the one case so far dealt with is the mining industry.

Now, I want to deal with another victim, of this malady of inflation—a victim who cannot fight back, a victim whom I believe is being sacrificed by this Government, and that is the ordinary working man of South Africa and the pensioners of South Africa. I want to deal in particular with the effect of the present situation on the housing needs of the people of this country, about which we have had so many statistics quoted in globular figures of amounts spent. But what matters is not what a clever political speech you can make or what you can prove with a lot of statistics. What matters is whether there are roofs over the heads of the people of South Africa. I suggest that we are heading in this country for a crisis the consequences of which are so far-reaching for the future of South Africa, so far-reaching that we dare not in the interests of the future of our country continue to close our eyes to the reality of that problem.

We have heard from the hon. the Minister of Bantu Administration and Development impassioned pleas for republican babies. I must say that he received a response, because I believe that there were Transkeian quins and Siamese twins. But for the White people of South Africa, the White youth of South Africa, as much as they would like to comply, it is getting almost impossible to-day for the average young couple to establish a home and to bring up a family under decent conditions. With interest rates having increased on houses from 6 to 8½ per cent, an increase of 42 per cent in the rate of interest on housing loans, the restrictions that have been placed on loan money, the non-availability of funds, and with the spiralling costs of building which is part of the inflation spiral, it is becoming impossible, it is almost impossible if not altogether impossible, for the average young couple to build or buy a home for themselves.

The costs are coming down now, and you should know it.

The hon. the Minister says that the costs are coming down. I want to see those costs coming down, to which the Minister has referred. I challenge him to deny that his Department has in Durban at this moment flats available for which it cannot find tenants because the rent is from R65 to R80 per month for single and two-bedroomed flats. Is that coming down, is that the sort of rental

You were talking about the costs of building.

I said that the cost of building a home is out of the reach of the average young couple in South Africa. It is prohibitive. What happens to-day is that your average young couple has to seek a home in a flat. In order to pay the rental of that flat both husband and wife have to work; they both have to go out to work. A nation is not built in that way, Mr. Speaker, unless you are going to condemn those children to be put into nursery schools or brought up by non-White nurses. Is that what the Government wants? Does it want the children of South Africa to be brought up for the greater part of their waking lives by non-White nurses, while the mother and the father have to go to work? The hon. the Minister knows that it is true; the hon. the Prime Minister knows that it is true. If one talks to any young couple to-day and asks them what their biggest problem is, they will tell you, “We cannot afford to establish a home and start a family.” Here we have a government pretending to stand for the strengthening of the White population of South Africa, pretending to stand for building up a strong White people, and yet the very core, the very basis from which a strong White people can spring is being undermined and destroyed. Young couples have to wait until the breadwinner has been promoted to a level which has lost them probably five or ten years during which, in the normal course, and if housing had been available, he and his wife could have started their family. This ground is ground which we can never recover. If one has a drought, it does damage to the country and to the farmer, but ultimately when it rains that damage is wiped out. Any other sort of catastrophe can usually be mended or repaired or restored, but the years which are lost in which children are not being born are years which we can never recover at all. And so I charge this Government with utter neglect in the field to which we should at this stage be paying the greatest possible attention.

The Government have quoted impressive figures of what they are doing in the field of housing. Let us look at those figures. I want to accept immediately that in the field on non-White housing, when one looks at the cold statistics, the picture is quite impressive. The figures that I have from the Minister’s own Department are that over 170,000 homes have been provided for the non-White people in the last five years. But let us look at what the White population has received in that time, and these are the young children of whom I am talking.

In the last five years the Housing Commission schemes have provided the magnificent total of 3,124 houses, while local authorities and loans have accounted for another 9,000 odd houses, i.e. a total of 12,000 houses in five years, provided both by local authorities and by the Government, both economic and sub-economic. I have the figures of the Minister’s own Department here in summary form, roneoed and distributed by his Department, from which I have taken these figures. 12,000 Houses in five years gives one an average of 2,400 houses per year. That is not even a fraction of the immigrants who are coming into South Africa, let alone the natural growth of our own population. This is the reality of what the Government is doing in this field.

But when one looks at the 170,000 houses for non-Whites one finds that those in fact are largely not new houses, but they are there to house people who have been shifted from point A to point B in terms of ideological policy. In other words, it is merely replacing a large percentage of the existing housing, in many cases slums, and that is a good thing, but in many cases perfectly good housing, merely shifting bodies from A to B. A perfect example of that is in Cape Town, in this city, where normally a subsidy of R1½ million per year is paid to the local authority from national housing funds. Of the approximately 1,500 to 2,000 houses built therewith, 60 per cent of the houses are allocated for new housing and 40 per cent for removals, i.e. where people have been moved under Group Areas legislation or for the building of roads or for one or other reason. But in 1967 there is to be no subsidy at all, and 100 per cent of the housing which is to become available is going to be for removals and 0 per cent to provide new houses.

I want to refer to my own city, the city of Durban, where in the last three years, according to information received as a result of questions put to the hon. the Minister, a total of 834 houses have been provided for White persons. When we analyse those houses we find that 156 of them cost over R10,000 each, while 56 of them cost over R16,000 each. Is this the sort of housing which is going to help the lower-income and middle-income groups who are so desperately short of housing today? The Minister smiles. I will challenge him to tell this House, and the country, who is living in some of those R16,000 houses. They are not the lower-income groups, and the Minister knows it. I say, Sir, that R16,000 houses are not the sort of houses which it should be the duty of this Department to provide for the people of South Africa.

I have a letter here from the Minister’s predecessor under reference number B.17/5 and dated 30.9.1964 in which he accused Durban of delaying housing and blaming the Durban city council. The letter reads— ‘‘… referred back to the Corporation as the high cost of the buildings as proposed by the Corporation would have resulted in too high rentals—up to R56 per month—which would have defeated the aim to provide accommodation for the lower-income groups.” In other words, when Durban wants to provide housing up to a maximum of R65 per month rental, the Minister’s Department rejects the scheme. But now, where Durban is accused of not complying with the purpose of the provision of housing because the rental is R65 per month, I challenge the Minister to deny that his own departmental houses and flats—not those of the Durban Corporation—are being let for R80 per month.

Not Housing Commission premises.

The flats the Department of Community Development built in Durban. These are what I am referring to.

Which is something quite different. You cannot compare the two.

This split personality is not getting us anywhere. What I am talking about is the Minister of Community Development who is responsible for housing in South Africa and the sort of housing which his Department is building. I have the figures here, figures given in reply to a question of 23.8. 1966, a few months ago. The question asked was how many houses were sold or let by the Minister’s Department in Durban in each of the past three years. His Department is responsible, Mr. Speaker. These are the figures which were given: R6,000-R8,000—91; R8,000–R10,000—189; R10,000-R12,000—118; and so on up to R16,000 and over. These are premises bought or built by the Minister’s Department. But when the Durban Corporation wants to let houses for R65 per month, that is exorbitant. But it is all right for the Department of Community Development, for the Minister’s own Department to do it. That is then a different matter. What is the difference, Mr. Speaker, between a house and a house? When a person is looking for housing, then the housing which is available is this housing. These are the flats that are being built; these are the flats that are offered to people.

They are not the only ones.

They are the ones available to people who go and ask for housing at the moment. People who want housing at a lower price are simply told, “Sorry, we have nothing.” The Department tries to help them, but I charge the Government at the very top, the Minister, of establishing a policy which is preventing the people from getting the housing in the price range in which they should be getting it. The Minister’s own figures do not agree. I do not know whether these figures are supposed to be accurate or not, but on the 12th August last year I asked for the number of houses let and sold and the number of flats let and sold in Durban, and the total given was 834. Two weeks later, on the 23rd August, that is in the same month, I asked the question in a different form, for a different break-down, and I was then told about a total of 930 houses. But when it came to the number of houses in the different price categories the figures suddenly became 1,250. Either these figures are not accurate or the Minister is sitting on houses which he is not using.

Or you do not know the difference between the various accounts.

The question asked of the Minister was how many houses had been let or sold by his department, and the other question was how many houses had been provided for White persons by his department each year. These are exactly the same figures, the exact same groups, the same department, the same houses, but when you come to analyse the figures you obtain a very different picture. We have houses of R16,000, and yet the chairman of the National Housing Commission, Mr. Van der Walt, said recently at the annual congress of building workers—

And yet this Government, which is offering R16,000 houses, has for its assisted housing a maximum ceiling, a means test of R300.

Those R16,000 houses are not Housing Commission houses, they are Community Development Board houses for the resettlement of people displaced.

Ah, Mr. Speaker, now we are getting this information. The R16,000 one was bought, but does one build resettlement houses in that price group?

Of course.

So we now get the admission that the money which this Government has been bragging about as being spent on the housing of people is being used to house people who they themselves are forcibly removing from one place to another. [Interjections.]

The local authority in Durban especially is not making available building sites for these people.

I have cuttings here which read “Housing chaos threatens as plans plummet”. “70,000 new houses for Durban”— “90,000 homes wanted”. But when it comes to figures, when I ask the Minister what houses have been provided, not what are his plans and pretty prospects, but what has he provided, the total is 800 houses in Durban in five years. In the whole of South Africa 12,000 houses in five years. And yet the Minister himself accepts that 90,000 homes are wanted, that 70,000 will be built in Durban, and so on and so forth. But when one looks at the figures, when one sees what has been done, then the cold, hard fact is that 800 homes have been provided for Whites in the city of Durban. When we look at the other group that is suffering, namely the aged, then we get an even more tragic picture. We find that in the whole of South Africa 2,692 aged Whites have been established in homes; 658 Coloureds, and 100 Bantu.

Now, I want to quote to the Minister some words which struck me very forcibly the other day. These are that, “suffering is a mystery, but the unsolved problems of hunger and lack of proper housing are a disgrace”. I say to the Minister that “disgrace” is far too mild a word to use in connection with the housing of the aged of South Africa. A survey has recently been done by the University of Natal, commissioned by the City Council, a survey of 1,581 aged people taken at random. It was found that 106 were short of food, 15 per cent were short of clothing, 90 per cent never had an outing, 90 per cent lived on pensions of under R40 per month, 40 per cent were the frail aged. And yet the Government, with all its talking, with all the money which it brags of having spent, has only been able to provide in the whole of South Africa—not built itself, but through subsidy—at a cost of R700 per unit for 2,600 people. I say that whatever figures we like to throw across the floor of the House at each other, whatever bragging we like to do about how wonderful we are as a government, what matters for the future of South Africa is that we should have houses for our people which they can afford. If our Government does not provide those houses then we have ourselves to blame if the future generations, upon whom our survival depends, are so restricted in number that we will rue the day that we bragged about figures without making sure that the roofs were over the heads of the young people who wanted to start families.

I have quotations here—I have not the time to deal with them—from authority after authority desperately concerned about the position. This is not a question of just spending money: this is a question of Government policy. The Rents Act, as it is now applied, is there to protect tenants, but the effect of it is to strangle investment of private capital in housing. The Minister knows very well that building plans passed have dropped to some 70 per cent. He knows that people are not going to invest their money in housing. It is no use the Minister shaking his head and shrugging his shoulders.

That is not because of rent control.

Of course it is because of rent control. The people were investing money in housing, but immediately rent control was extended to uncontrolled buildings, scheme after scheme was cancelled. The Minister cannot deny it.

A drop in the percentage occurred before there was even talk of extending rent control, and you know it.

I dispute that statement, Mr. Speaker. I refute it entirely. The drop came in August-September last year, on the 4th September last year, after the Minister had made his announcement. There was then a drop to some 70 per cent in plans passed; it dropped 44 per cent compared with the previous year. The value of plans approved for buildings to house people fell from R121 million to R77 million. The date of the report I am referring to covered the previous five months. The Minister announced in June that he was going to take steps, the first announcement that he would take steps.

I did not announce it in June. I announced it in August.

This is typical of the Government, afterwards to argue as to who is to blame… [Interjections.] The Minister will argue whose fault it is. Whenever he made the statement he cannot escape the fact, namely that housing plans have dropped, and will continue to drop, as long as the present position pertains in rent control. People are not prepared to invest when their investment is controlled entirely by Government whims. The Minister has to take immediate steps to see that we do not find ourselves a homeless people.

We will have lots of this yet in the months ahead. We will have blame cast on other people, blame cast on the municipalities, blame cast on the building societies, but the blame rests squarely on this Government and its incompetence in providing housing for the people.

Mr. Speaker, the part played by the hon. the Opposition in this debate is following a very strange pattern. We find that the hon. member for Hillbrow started off and, speaking in an eloquent way, wanted to drag the gold-mining industry into the debate and wanted to give us a discourse on difficulties being experienced in the gold-mining industry. Then, instead of the hon. the Opposition continuing to deal with the gold-mining industry, they suddenly drop the subject as if it were a hot potato, and the hon. member for Durban (Point) starts talking about housing. Why has the gold-mining industry been dragged into this debate to-day? What is the part the hon. Opposition wants to play in it? Are they really so concerned about the gold-mining industry, or are there dark political motives behind the speeches which they are making in this House? [Interjections.] I want to say this to the hon. member to-day, that the very reason why the gold-mining industry has been dragged in here to-day and why the hon. member for Hillbrow was told to speak in this debate is that there is a dispute between the workers and the gold-mining industry. Because there is that dispute between the workers and the Chamber of Mines the Opposition wants to hoist its flag to-day and present the Government as the ogre to be blamed for the fact that the mining industry cannot pay more, because the Government is draining away all their profits through taxation. That is why the gold-mining industry is being dragged into this debate. The Opposition saw the political implications of that, but ran away from the subject so quickly because this side of the House was cornering them. The Opposition would not even afford the hon. the Minister of Mines an opportunity of replying to them, but this side of the House will not allow the Opposition to get away from that. Sir, I say the Opposition is running away from this whole matter. Let us say this to the hon. member for Hillbrow to-day, that the pleas he made in this House this afternoon have already been made by members on this side of the House in the past, and this Government realizes what an important part the gold-mining industry plays in our economic life. This Government realizes what an important part it has always played, and this Government will see to it that it does not come to ruin.