on behalf of the Chairman, presented the Sixth Report of the Standing Select Committee on Transport Affairs, relative to the Prevention and Combating of Pollution of the Sea by Oil Amendment Bill [No 75—85 (GA)], as follows:

G C DU PLESSIS,

p Chairman.

Committee Rooms

Parliament

26 April 1985.

Bill to be read a second time.

announced that a vacancy had occurred in the representation of the electoral division of Bethlehem, owing to the death on 26 April 1985 of Dr the hon C V van der Merwe, DMS.

Mr Speaker, I move without notice:

Dr Nak van der Merwe was born on 19 July 1920 in Fauresmith, where he matriculated in 1936. After his school education he obtained a B Sc degree and a teaching diploma at the University of the Free State, after which he was engaged in the teaching profession for two years. Between 1945 and 1950 he qualified as a medical practitioner at the University of Pretoria. During this time he was chairman of the Students’ Council, as well as a founder member and first Unionwide president of the Afrikaanse Studentebond.

On 4 December 1948 he married Miss Maudie le Roux, and three sons and a daughter were born of the marriage.

After completing his housemanship at the National Hospital in Bloemfontein he practised medicine in Bloemfontein until 1966.

His parliamentary career commenced on 30 March 1966 with his election as member of the House of Assembly for the Fauresmith electoral division. His parliamentary career was interrupted in December 1979 when he was appointed Administrator of the Orange Free State. In October 1980 he resumed his parliamentary career as Minister of Environment Affairs. In August 1982 he became Minister of Health and Welfare. With the commencement of the new Constitution in September 1984 he was appointed Chairman of the Ministers’ Council of the House of Assembly and Minister of Health Services and Welfare.

Dr Van der Merwe was one of the senior members of this House and also one of our senior colleagues in the Cabinet. We came to know him as a person with a wide general knowledge and, added to that, a quality few of us have, that of wisdom. In the meetings and in the debates in this House he distinguished himself not only through his knowledge of the matter at hand, but also through the way in which he presented it. His general knowledge, sense of humour and his ability to associate with people made him loved and respected by friend and foe alike.

Dr Van der Merwe was indeed a human person. As far as his people and their interests were concerned, nothing was too trivial to elicit his interest and involvement. He never gave himself out to be important. Consequently it was easy for him to identify with the weal and woe of everyone around him.

He and his wife together were a well-loved couple. In the almost 20 years that they were active in politics and in public life, they became well-loved, not only in their constituencies in the Orange Free State, but wherever they came into contact with people. Their involvement in public affairs was a quality which was revealed from an early stage in their lives. It was never a seeking after honour for themselves and to further their own self-interest, but a sincere concern for and involvement in the weal and woe and welfare of their fellow human beings and compatriots.

†Nak van der Merwe was motivated by a deep and tender love for all his fellow countrymen of all communities. This love, I believe, was reciprocated by all of them, regardless of their political convictions and persuasions. He will be remembered by all in South Africa whose interests he served so faithfully and so unselfishly in his long and distinguished career.

*We convey our sympathy to Maudie and their children. We pay homage to his memory.

Mr Speaker, on behalf of the hon members of the Official Opposition, I would like to say that we identify ourselves with the motion of condolence which the hon the Minister of Constitutional Development and Planning has moved on the death of his colleague in the Cabinet and our colleague in this House.

I think we all remember Nak van der Merwe as one of the personalities of this House, a man with a distinctive style and distinctive personal qualities. In the main he was a fighter. He enjoyed the rough-and-tumble of party politics and of the fight that is carried on across the House. He was a man who believed and who fought for what he believed in, but when the fight was over he held no ill-will of a personal nature against those people who had been his adversaries across the floor.

Typical of his ability to fight back, was the fact that he came back to this House after a serious illness last year and still contributed to both the work of the Cabinet and of this House. We will also remember him as a man with interesting human qualities. His sense of humour—sometimes as earthy as the Free State which he was proud to represent—was one of his most outstanding characteristics. I believe one saw in him as a human being perhaps representing in this House the best qualities of character of the Orange Free State.

Together with all other hon members of this House we mourn his passing, and we should like to extend our condolences to his widow and his children.

Mr Speaker, on behalf of the Conservative Party we wish to associate ourselves wholeheartedly with the motion of condolence that has been moved here, as well as with the sentiments that have already been expressed.

I remember the late Dr Nak van der Merwe since 1966, particularly from the days when we travelled together every day from Acacia Park to Parliament on the same bus. I remember in particular our normal association—man to man; person to person. Those are things which, when I think back upon those years, evoke pleasant memories.

It is of course true—and lately this was clearly noticeable to us—that he was a sick man. There is no doubt that we all felt sorry for him. Unfortunately there was nothing anyone could do about it. Nevertheless we remain grateful for what he did for South Africa. On behalf of the Conservative Party we consequently convey in this way our profound sympathy to his wife, his family and all who were close to him.

Mr Speaker, we in the NRP should like to associate ourselves with the motion and also with the words of condolence that have been expressed here. Like the hon member for Sunnyside, I also remember Dr Van der Merwe—Nak, as we all knew him—in the same circumstances he mentioned—at the bus stop in Acacia Park, often on a cold winter’s morning, always smiling and joking and always with a laugh. It was his sense of humour, I think, which made of him such a special person in this House.

When he was Deputy Speaker and Chairman of Committees, he not only brought honour and dignity to that high office but also never failed to have his little joke or laugh. His sense of humour was always shining through his outward sternness. I think all of us in this House will agree that he was a man with very few—if any—enemies; a man we all respected; a man who played a respected part in and who made an excellent contribution to government and to the spirit of government in South Africa.

We will miss him, and we wish to extend—together with all hon members of this House—our condolences to his widow and to his family.

Question agreed to unanimously, all the members standing.

Mr Chairman, I ask for the privilege of the half-hour.

It is something of a pleasant surprise today to be able to speak in this debate—particularly in comparison with the same debate last year—without having to contend with yet another increase in GST announced prior to the discussion of this Vote. I do hope that in future such surprises will indeed be more common. It would of course have been an even more pleasant surprise if the hon the Minister had spoken first announcing a reduction in GST. Maybe, however, that will indeed happen some day. Who knows?

On behalf of hon members of this party—particularly those of us involved in financial matters including a number of hon members who are not able to be here today—I should like to express our gratitude to the officials of the Department of Finance at many levels for the courtesy and the co-operation they have shown us during the course of this year. I should like them to know that we greatly appreciate it and I think it is to their credit that these relationships continue on such a healthy basis.

This is the first year in which we have had a Standing Committee on Finance and this has been alluded to during the main Budget Debate. New opportunities exist of which some have been explored. There is obviously going to be a period of settling down in which we shall have to find out exactly what that committee should be doing and how it can best make a contribution to the financial welfare of the country.

One point I would like to make is that I think we need to look at the question of the availability of the evidence before that committee. In due course this is going to become available in a printed form to all hon members. There are obviously logistical problems but I think it is a pity that the discussion of many Votes is already taking place in the various Houses of Parliament without hon members having had the benefit of reading the evidence given by officials on those Budget Votes. If they had been able to do so, in some instances at least, I am sure it would both cut down unnecessary debate or questions during debate, and help to raise the level of understanding and debating on many Votes. I hope a way is going to be found in the future to overcome that problem.

The only other aspect in this regard that I wish to refer to concerns certain remarks made by the hon the Minister during the course of his reply to the Second Reading debate. I believe the hon the Minister was unfair in those remarks to my colleague, the hon member for Yeoville. I wish to quote just certain excerpts of what he said in that regard to remind hon members that a number of things he said were rather harsh.

First of all, he urged him “not to subject members of the department to what is virtually an interrogation or a cross-examination”. Secondly, he accepted that it was only “on policy matters” that he had a problem. He also then accepted that it was “difficult to distinguish between fact and opinion” in financial affairs if in nothing else. He also said the hon member for Yeoville should be “careful not to go about it in the way that he did.” Then the hon the Minister said that he had used quotations very much out of context.

Sir, the hon the Minister was not there. In the process of making those remarks he did not quote one example to substantiate what he meant in terms of the allegations he was making. I believe his criticisms were unjustified. The Standing Committee on Finance is not a teaparty for “ja-broers” but is supposed to examine the Budget as thoroughly as possible. To that extent probing questions must be expected. I think the hon the Minister will also agree that officials are quite at liberty to intimate that certain matters are matters of policy and that they are therefore not able to answer a particular question. In many instances they actually do that. I believe it is unfair to suggest that they are obliged to answer all questions, even if they sometimes impinge on policy and the official is embarrassed in having to reply to them.

I also believe if the hon the Minister is seriously concerned about aspects of the functioning of the standing committee and is not just wanting to intimidate or muzzle the committee or its chairman that the place to do so is not across the floor of the House, particularly if he does not illustrate in detail what he is talking about.

During the Second Reading debate the hon the Minister’s time like everybody else’s was limited. There were a number of unanswered questions in that debate. I do not plan to repeat them all but I think the hon the Minister will know that there are many. I must say that I should like to compliment the hon the Minister on one particular aspect and that is that he did not devote half of his reply to the debate to making quotations from comments of numerous financial commentators or family members who had written to him to tell him how wonderful he was. [Interjections.] I think it is a rather fruitless exercise to conduct the whole financial debate on the level of one group of people making a series of quotations against the Minister, and the Minister replying merely with a series of quotations in favour of himself. I think that was a step forward. Of course, in budget debates, finance is often neglected, but I hope we can put some of those matters right today and concentrate more specifically on financial matters.

In many respects there is as regards many aspects of finance and economics little disagreement over desirable goals such as positive real growth, full employment, low inflation and a healthy balance of payments. The argument starts when one discusses the means necessary to achieve those goals and the trade-offs that are often necessary to do so. I would like to look at some key areas which are interrelated. In doing so, I would like to contrast the PFP approach to that of the Government to illustrate why we believe that the policies followed by the Government have landed us in the economic morass in which we find ourselves, and why we will not get out or stay out of that morass unless the policies are changed. I plan mainly to cover broad policy while my colleagues who will follow me will go into more detail on specific issues.

First and foremost, the objective of economic policy must be to raise the standards of living of all the people in this country. In his budget speech the hon the Minister said: “The South African economy has the potential for rapid and sustainable growth. The Government is committed to the realization of that potential.” The PFP economic policy document says the following:

This is an overriding failure of Government economic policy. We have not had the “rapid and sustained growth” that the hon the Minister talked about. Real gross domestic product per capita—that is the average standard of living of South Africans—is lower today than it was five years ago, and is lower even than it was ten years ago when the gold price was R108 per ounce compared with R630 per ounce today. There can be no greater indictment of the Government’s economic policies than that.

What is the PFP’s approach in this regard? Firstly, before wealth can be consumed or redistributed it must be created. Policies should, therefore, be directed at the encouragement of wealth creation by the individual. This entails policies for economic growth in excess of population growth. Secondly, political freedom is an essential ingredient for the operation of a just economic system. There must be true equality of opportunity for all citizens, including that of acquiring and owning property, so that they may enter the economic system on an equal footing. Thirdly, a market system should operate to achieve the goals of productivity and efficiency, but it should also do so within the constraints of a social conscience.

Within these parameters I will give nine specific examples of what we mean. Firstly, free the economy and the individuals working in it from unnecessary Government interference such as limitations on labour mobility, some provisions of the Physical Planning Act, the Group Areas Act and so on, which put ceilings on the development of people. Secondly, promote productivity by improving education and training, reducing red tape, eliminating waste and improving the quality of life of Black workers. One will not get First World productivity from a worker condemned to live in Third World poverty and discomfort. Thirdly, Government expenditure should be properly controlled and reduced. Wasteful duplication must be ended. Expensive and inefficient industrial decentralization should be scrapped. South Africa is grossly overgoverned. Between 1975 and 1984 the number of central Government employees increased by 45% in contrast to the 6% increase in the private sector.

Mainly in education.

That happens to be my next sentence. Does the hon member have a copy of my speech? Black teachers may account for most of those, but certainly not for all, by any means. This trend in things other than education must be reversed because this country cannot afford it.

Fourthly, savings must be encouraged by dampening inflationary expectations and reducing marginal tax rates.

Fifthly, privatization must be investigated further; not only of parastatals and whole Government departments, but also of specific functions within existing structures.

Sixthly, foreign investment must be encouraged to play a vital role in the growth of our economy in the way that it did in the first 30 years after the Second World War.

Domestic political reform must take place rapidly so that, inter alia, our exporters do not have to sell into hostile markets where the products are only accepted if they are so much better than the product of anybody else that the buyer can hardly refuse them, and so as to thwart disinvestment campaigns against this country.

Tax burdens have become intolerable and must be reduced so that entrepreneurs and the industrious are encouraged to work harder. And confidence must be restored so that the President of the South African Foundation is not obliged to report at his annual general meeting that a common internal perception of South Africa—

These are the problem areas that the PFP would tackle to get the economy moving—problems that we would handle very differently from the way the Government has done over the past decade.

The second economic problem to which I want to refer is that of inflation. During the Budget Debate the hon member for Edenvale said:

The hon the Minister made a point of agreeing with him. However, despite repeated assurances from the Government that the fight against inflation enjoys a high priority, it has been rampant for more than a decade. A rand of 1975 is worth less than 30c today. The hon the Minister has identified inflation as public enemy no 1. We welcome this but we believe that his approach is not broad enough and places too much emphasis on interest rates alone.

The PFP would give more attention, firstly, to controlling the money supply and setting targets. I know this is envisaged in due course but it should have been done years ago. We have to do that because one of the key elements is to reduce inflationary expectations and put some credibility into the fight against inflation. In this regard I think that targets for inflation are both desirable and necessary in our country.

Secondly, we would give more attention to the encouraging of productivity in every possible way, as I have illustrated earlier in my speech.

Thirdly, we would set an example by keeping administered price increases well below the rate of inflation. I am pleased to say that for once we had an exception to the rule yesterday when the maize price increased by less than the inflation rate.

One must ask: Why does the Government pay so much attention to salaries and wages and yet so little to prices? It makes no sense. What also makes no good sense is the way general sales tax has been increased yet again. I should like to make a couple of points in this regard.

Firstly it is inflationary, and so conflicts with the top priority given to fighting inflation.

Secondly, spreading the tax burden is all very well, but we should firstly be spreading the wealth, income and opportunity more evenly in our society. The narrow tax base is a direct result of the skew distribution of wealth and opportunity in this country.

Thirdly, it is particularly unwise to increase GST in the middle of a recession when there are millions of unemployed and others living below the breadline. As Mr Mervyn King, executive chairman of Kirsh Trading said:

The foodstuffs exempt from GST are too limited and many are not accessible to the poorest people.

I wish to call on the hon the Minister today to exempt all food and prescribed medicines from GST. It has been said: “If my neighbour goes to bed hungry, I will not be able to sleep.” I appeal to the hon the Minister to grant this relief at this time of acute economic hardship. Twelve per cent more food can make an appreciable difference to a hungry family. In a household of nine it can provide an extra plate of food at every mealtime. It amounts to R1,20 on R10 of food purchases, and that is not to be sneezed at.

Of course there are many who can survive without food being exempt from GST, but they are paying plenty of tax anyway. Of course there are luxury foods such as caviar—this is always mentioned—which deserve to be taxed, but they make up a very small percentage of the food sold and, in any event, we would be quite happy for luxury foods to be taxed if there were a practical way to identify them in some way.

Finally, a third critical factor is the recognition that economic and political policies are interdependent. They cannot be divorced from each other. Poverty and unemployment have a direct bearing on urban unrest. Prof Jan Lombard of the University of Pretoria said:

Apartheid is crippling our economy and the ordinary people of all races of this country are being made to pay for it. We can no longer afford apartheid, neither politically nor economically, and the sooner the Government realizes that fact the better.

The economic system that the PFP proposes, which I have outlined today, can only flourish in a free and democratic society. We therefore believe that the economic reform that we propose must go hand in hand with real political reform in order to achieve the objectives that have been stated.

Mr Chairman, it was with a sense of shock that we heard of the death of our beloved and respected leader of the NP in the Orange Free State. The late Dr Van der Merwe was not only beloved and respected, but also had special gifts. His talent for leadership, his modesty, his loyalty, his sense of humour were characteristic of this great son of the Free State. We honour his memory. Our sincere condolences go to his wife, his children and the members of his family. We pray that God will give them strength and consolation.

The main purpose of the Budget is to combat inflation. During the course of years millions of words have been written and said about inflation, the causes of and the solutions to it. General and popular statements such as the one mentioned by the hon member for Cape Town Gardens, that inflation is being fueled, are well known. I quote a few: Too much money pursuing too few goods. By keeping goods from the market artificially and in this way creating a scarcity of goods. By letting the money supply grow too quickly. Sometimes inflation is imported. Excessive Government spending. Too low productivity. I can continue in this way to quote reasons for the high inflation rate.

All these statements are true and contribute to inflation, but even they are not comprehensive. There are other factors that also contribute. I think that sometimes we should examine our own consciences, and that is why I want to stress a few other characteristics of society.

Inflation is also caused by greed, convenience and self-indulgence. Greed because traders want to become too rich. Convenience and self-indulgence because we think we cannot get along one more day without goods or services and because we can obtain these so quickly and so conveniently. Greed is one of the causes of inflation, and self-indulgence fuels it further. Convenience and self-indulgence are nothing but pretty words for laziness. I am afraid that we are no longer prepared to earn anything by hard work.

Monopolies are one of the greatest offenders in the process of inflation, and here I include various private, public and even semi-government institutions. It is true that certain monopolies came into being by providing good and imperative services, but when a monopoly reaches the stage where it increases its prices unnecessarily, everyone suffers.

When cartels come into being by way of voluntary agreement by independent business undertakings in order to limit their competitive activities by means of production, prices and distribution, they have the same effect as a monopoly. A monopoly in such cartels is one of the greatest aberrations in our economy and is nothing other than an image of the greed of society and of our time.

We live, too, in a society which does not care how we spend our money and at what prices. We simply do not realize that times have changed and that we must keep up with them. Times do not change only politically, but also economically, socially and financially.

There are people who believe that an increase in salaries will solve all problems. Perhaps that is the easiest way, but it causes more problems than it resolves. To meet additional expenses, incomes have to be raised. Increases in salaries are always followed by an increase in the cost of the product or the service, and so a vicious circle comes into being. It is an illusion and it does not work, not for long at any rate. We must take cognizance of this fact. This problem can only be resolved if one works harder and spends with discretion and forethought.

One of the most important contributory factors to inflation is the easy obtainability of credit by the private sector. Here I want to refer in particular to credit cards. The uncontrolled credit card system is a further important cause of inflation. A credit card gives a false illusion of wealth. It is a fact that people spend more easily with a credit card than with hard cash. Normally no proper control or statements are kept, and before the person realizes it, it is too late and purchases that he could not really afford have been made.

When the purpose of a credit card is to facilitate the expenditure of a company and to control it more effectively, it is understandable, and I find no fault with that. I am afraid, however, that most credit cards are abused by the weakness of the individual because the temptation is usually too great. Millions and millions of rands are owed by people who have bought goods they did not need, and even at prices they could not afford. Instead of spending with discretion and forethought and making purchases only within their means, some people become quite reckless and even irresponsible with credit cards.

The alluring and well orchestrated advertisements for credit cards, especially by banks, are one of the most important reasons for even conservative, thrifty people to be influenced and persuaded to become extravagant people. Note the way in which credit cards are advertised. They are aimed mainly at the greed, the convenience and the self-indulgence of the individual.

Hon members are aware of the number of unwanted credit cards that are sent to them continually. This scourge is, of course, increasing with the number of credit cards a person can obtain. In this way an American succeeded in setting a world record by obtaining credit to the value of $82 million on 180 credit cards. Someone else was not capable of setting a similar world record in respect of credit, but he set a world record by obtaining a record number of 812 credit cards.

Someone—I think it was Langenhoven—advised a consumer on occasion not to buy what he did not need, but only that without which he could not manage. By not making use of credit cards, but buying only what one needs at the lowest prices using cash, everyone will be better off.

If we want to crack down on inflation, it would be a good thing to pay attention to the well known reasons for high inflation and to combat it in this way. We must also search our own hearts, however, and try to build up a society in which greed, convenience and self-indulgence no longer reign supreme.

Mr Chairman, I have said in the past that shock after shock has visited the country under the NP government. Only this morning we heard again how the farmers have been hit. When the hon member for Lichtenburg said recently that the Government had withdrawn its hand from the farmers, there was quite a bit of reaction.

The farmers make more money … [Interjections.]

The hon member for Hercules says the farmers make a lot of money. We are taking cognizance of that. [Interjections.]

We heard this morning that the maize price was pegged on last year’s price whereas the consumer has to pay 10% more. This is happening in spite of the fact that the price of fertilizer has risen by 20% and the fuel price has soared. Nevertheless it is said that the Government looks after the farmers. It appears that the Government could be intending to destroy the maize farmers in this country. We take strong exception to that and the hon the Minister is certainly involved in it too. [Interjections.]

I want to return, however, to what the hon the Minister said during the debate on the Public Accountants’ and Auditors’ Amendment Bill. On that occasion he told a blatant untruth. What did he say? I quote him (Hansard: Assembly, vol 10, col 3448):

I say once again that I was present at that meeting. If the chairman of that standing committee should say I was not there, it is an absolute untruth. I no longer trust him. I apologized by letter on Wednesday, and now I insist that he sign my apology, for I can no longer rely on his word.

What else did the hon the Minister say in this connection? He said he would apologize to me if I could submit written evidence. When an hon member in this House gives an explanation, however, it is customary for his word to be accepted. What is the hon the Minister’s reply to this? (Hansard: vol 10, col 3448):

If the hon the Minister is being surreptitious and doing something else, he must accept that I do not do the same thing. I was doing positive and good work, but I think he is doing other things. I know that in previous years the hon the Minister was indeed busy with something else. I continue to quote the hon the Minister (Hansard: vol 10, col 3449):

What was the second meeting about? By rights I should have suggested here this morning that the hon the Minister’s salary be decreased by R77 999. I should have done that because then we would have saved the country quite a bit.

Feel free to do so!

As far as the first meeting is concerned, I have documents here with me to confirm my point of view. I wrote a letter on 16 January which has been quoted here. I also telephoned the Secretary. Still the hon the Minister says it is not true. Here is the slip of paper which indicates that I sent the letter by registered post.

When?

On 14 January.

What was the date of the meeting you could not attend?

16 January. It was the first meeting.

The letter could not have been delivered in Cape Town within two days.

I only received the notice on the Saturday at 12h55.

The second meeting was held on 8 February. Here are the minutes and also the names of the members who were present. Eleven members were present, and Jan van Zyl was amongst them. Yet the chairman of that standing committee says it is not true.

What is the date?

8 February. It is the second meeting.

During the third meeting on the Wednesday I told the chairman that I could not attend on the Friday. On that day the Police were discussed, something that has nothing whatsoever to do with the standing committee dealing with the Auditors’ Act. He is telling a blatant untruth here, however, and his word is being accepted. One can no longer accept the hon member for Smithfield’s word.

Order! I must point out to the hon member that the use of the word “blatant” is regarded as unparliamentary. The hon member must therefore withdraw that word in respect of both remarks.

I withdraw it, Mr Chairman. The hon member should have been aware of the fact, however, that I was present at that meeting because my name appears in the minutes. He signs the minutes, after all.

8 February?

8 February.

You were not there. I know, because I was there.

I was not there on 15 February.

We missed you a great deal.

It was the meeting about the SA Police Special Account Bill where consensus was not reached. If I had been there, perhaps consensus would have been reached. [Interjections.]

I now want to discuss another matter with the hon the Minister, viz the secret funds. I raised objections the other day about this secret fund of R95 million which appears in the Budget again this year. I then made the statement—and I have the proof—that previously the NP used R68 497,35 for NP propaganda documents.

From secret funds?

It came from the secret fund for the Information Service of South Africa.

Are you not ashamed of making such a fool of yourself?

Sir, this hon Minister is making a fool of himself. This money came from the department. It was public money.

It was money that was openly voted by this House.

We did not vote money in this House for NP propaganda documents.

Is the NP’s name on them?

The Government said they were State documents. When are they State documents and when NP documents? They are State documents as soon as the Government implements a law of this House of Assembly. If the Government now spreads the fact that this new dispensation has been approved and that dispensation has been put into effect in terms of a Parliamentary Act, the Government is entitled to spend the money. Previously it was not a Parliamentary Act, however, and the Government had no right to spend the taxpayers’ money on these documents.

If it is true that the Government can vote money for documents of this nature, surely it can also vote money to pay the NP’s organizers, their offices, their postage etc. What is the difference then? This was NP policy, not Government policy. If the hon the Minister does not know the difference between the NP and the Government, I find it no wonder that South Africa is in the pitiful financial and economic condition we are experiencing at present. I want the hon the Minister to tell me when something is NP policy and when it is Government policy.

The hon the Minister is quite right in saying that he must and can vote money to make Government policy known.

Thank you very much.

Government policy is the policy approved by this Parliament. The Cabinet is the Executive Authority of this Parliament. It carries out the laws of this Parliament. The Government is not there and is not paid, however, to carry out NP propaganda. The hon the Minister is there in a dual capacity. He must collect money to make propaganda in public as we have done all these years. He may not, however, take the State’s and the taxpayers’ money to publish NP propagandist pieces or to see if he can persuade people to accept this system. For what other purposes is the hon the Minister going to take money for the NP?

As far as this secret fund is concerned, R95 million is a great deal of money and I want to request that each party, whether by means of its leader or its spokeman on financial matters, will be able to hear and see what that money is spent on and that it takes place under oath.

The answer is no.

Because perhaps we will see that the hon the Minister is spending money on NP propaganda. If one takes an oath—and I am prepared to do so at any time—the hon the Minister must know that he will not be able to spend money on NP propagandist pieces. Indeed, the hon the Minister said no, but I make the request once again. It is R95 million that is being spent. If it is in South Africa’s interest, I shall be the first one to say that it is fit and proper and there are things which can perhaps be added. If it provides more business for the country, we shall support it too, but we must see that that money is spent correctly. It is not right, however, to spend R95 million if only the hon the Minister and one or two other people in the relevant department know about it.

Mr Chairman, I know the hon member has a vendetta against me and the hon the Minister. I looked at his unrevised speech. In it he said the hon the Chief Whip had let him know at the beginning of December that he had to be here on 15 January. Now he comes with the story that he only received the letter on 12 January.

Read that letter.

I did not interrupt the hon member. He must give me a chance now. The hon member said he had received a letter from the Chief Whip of Parliament at the beginning of December in which he was informed that we were to meet on 15 January. He therefore had more than enough time and should not have waited until 12 January to excuse himself. He has said himself that he sent a registered letter only on the 14th. We sat on the 16th. How he can now say that I received his apology, is beyond me.

Mr Chairman, may I ask the hon member a question?

No, Sir. In the unrevised copy of his speech he said that he had addressed the letter to the department. Interestingly enough, in Hansard it says he addressed it to Parliament. Now I ask him to whom he addressed it. Certainly not to me! I made further enquiries and we turned everything upside down at the department, because I worked according to the unrevised copy. The department and secretariat also say that as far as they know, they did not receive the telephone call he mentioned. They can also find no trace of the letter. I do not know where the letter ended up.

Mr Chairman, may I ask the hon member a question?

No, the hon member must listen a bit first. He can ask questions later. In addition he said himself just now that he was not present on 15 February either.

That was the third meeting.

Yes, but that does not matter. He did not attend two of the six meetings, and he did not apologize at all. I am quite justified, therefore, if I tell my Minister that the hon member did not apologize twice, not so? [Interjections.] I think it is all very clear. He has accused and reproached me and said he does not trust me. I think it was childish to send this letter to me across the floor of the House with the request that I sign it as proof that I have received it. He is welcome to do so. It has always been customary to apologize. Some people telephone and others send a note. I have never experienced problems with other people, but he is free to do as he pleases.

Let me conclude with this. I also experience problems—the hon member is looking for trouble—with the hon member within the committee. Do hon members know that he was not prepared to sit next to a Coloured? He asked the hon member for Umbilo to exchange places. He is looking for trouble.

That is a disgrace! [Interjections.]

In the time I still have at my disposal, I should like to refer to an article in the Farmer’s Weekly of 19 April 1985. I quote:

What are the facts, however? The writer is referring to the Auditor-General’s report, but what does the Land Bank’s annual report look like? Now I am dealing with the 1983 annual report. The total long-term loans to farmers amounted to more than R1 706 million. The total short-term loans amounted to more than R3 161 million. It is a total of more than R5 000 million for loans to our farmers. Loans to staff, as he calls them, amount to R20,5 million. If one calculates that pro rata, the loans to staff make up 0,00000042% of the total debt.

In 1983 for example, 8 126 long-term loans to the value of R744 million and 2 298 short-term loans to the value of R62 million were granted. That is a total of 10 424 loans to the value of R806 million. Although these loans to the staff are very clearly indicated under par 5 as staff housing, this writer conceals the fact. Indeed, he puts it erroneously. He continues: “There is nothing to stop you being a part-time farmer.” Provision for subsidized housing loans for staff is nothing new. All banks and building societies, all institutions, give this to their staff. I want to quote a last sentence:

That is not true any more either. This writer ought to know that perks tax has been instituted. I want to appeal to the Farmer’s Weekly to see that such absurdities and malicious stories are not sent out into the world. I do not think it does the magazine or the Land Bank credit.

Mr Chairman, it is a good thing that this debate on the Finance Vote is taking place on the eve of the Newton Park by-election. Apart from this Government’s disgraceful record in the field of race relations, its disgraceful record of economic mismanagement is such that it deserves a resounding rejection at the polls on Wednesday.

Consider the record. I should like to refer to two key areas of economic policy of which the voters need to take account and which have affected the standard of living of every White South African, and, in fact, of all South Africans. Inflation is now running at up to 16%. Ask the average housewife how she is affected by inflation. Take a simple basket of household commodities such as sugar, eggs, milk, bread and margarine. In 1975 a 2kg packet of white sugar cost 39c while today it costs over R1,70. Large eggs then cost 38c while today they cost over R1,28. These are yesterday’s supermarket prices; one pays more at most places. Milk was then 20c while today it is 72c. White bread was 16c and is now 58c.

What was your salary then?

Yellow margarine was 21c and is now 69c. The cost of this small basket of essential household commodities has thus increased by an average of 350%, and salaries have certainly not increased to the same extent over the last ten years. This has happened at a time when other major Western governments have brought inflation under control.

And the unemployment there?

Most of them have brought inflation down to less than 5% and we have a higher unemployment than some of the countries that have brought their inflation rate down. We can have a whole debate about that subject.

The second area of mismanagement I want to focus on is the punitive level of taxation this Government has instituted which has dealt a hammer-blow to the average man in the street. The money thus obtained has been used on wasteful Government spending. In 1970 a married man, with two children, earning R8 000 per year was taxed at an average rate of 10,8%, and in those days there was no GST to take a further slice from his pay. Today, because of inflation, the same man must earn four times that salary just to stand still. At the same time, because of bracket creep and GST, his average tax rate has now risen to over 30%. That same man, having stood still on income, has had an average tax increase from 10,8% to over 30%. From that fact alone it is quite clear that this Government is soaking the individual taxpayer. In 1980 the Government raised R2 billion from individual taxpayers. In the current tax year, 1985-86, this will increase more than fourfold to R8,6 billion. In 1970 individuals contributed 22,1% to total revenue.

How much?

According to the Statistical/Economic Review, they contributed 22,1%. Today individuals contribute 29,5%, and that is apart from GST. Revenue from GST amounts to 23,3% and the vast bulk of GST is paid by the man in the street. This means that the total revenue to be collected in the current year from individuals and from GST amounts to 52,8% of total revenue.

Let us now consider general sales tax. When it was introduced some years ago, it was motivated by this Government on the principle that it was meant to lighten the load on the average man in the street. It was meant to shift the burden of tax from direct taxation to indirect taxation. What, however, has happened? What has happened is that instead of its having been shifted, the burden on individuals has actually been greatly increased by GST. It is now a heavier burden than it was before the advent of GST. On top of this, GST has simply added to the load. GST has added to the pool of money that this Government wastes on its ideological schemes. In 1980 when GST was 4%, it raised R1,65 billion. Today, only four and a bit years later, GST stands at 12%, and the Government is proposing to rake off over R7 billion from this source. Although Government revenue from GST has literally rocketed in recent years, direct tax on individuals has not been adjusted to compensate for these dramatic increases.

This Government has led the country to the stage where South Africans are now among the most highly taxed individuals in the world. I have some statistical evidence to back this assertion. Hon members are no doubt aware of the OECD, the Organization for Economic Co-operation and Development, which is based in Paris and to which most of the leading countries of the West belong and to which they submit statistics. I have here with me today a publication entitled The 1982 tax benefit position of a typical worker in OECD countries. The statistics here reflect the tax paid as a percentage of gross earnings by a typical, average production worker in a one-earner family with two children in each of the member countries of the OECD. The point I wish to make from this chart—it appears on page 24 of this report—is that only two of the member countries of the OECD apply an effective tax rate of over 30% on these individuals. They are the two renowned “super tax countries”, Sweden and Denmark. New Zealand, Finland and the United Kingdom are shown as applying a tax rate of 20%, or slightly higher, and Australia and Norway are shown on the chart to exceed 15%. After that are listed the countries applying a tax rate of below 15%. In descending order, they are the USA, Ireland, Belgium, Italy, the Netherlands, Canada, Germany, Austria, Switzerland, Japan, Spain, Greece, Portugal, Luxemburg and France. Moreover, most of these OECD countries are renowned for their advanced social benefit systems which we in South Africa do not enjoy.

It is quite clear from this whole package of statistics—these and the other statistics on taxation that I mentioned—that this Government is taxing the average man in the street to a standstill. [Interjections.] It is taxing away the enterprise incentive of the average man and of businesses. Present indications are extremely bleak for individuals and businesses as far as taxation is concerned. In the past year alone this Government has hammered businesses with a barrage of at least 10 retrogressive tax steps, to wit, curtailing manufacturing lease allowances; restricting manufacturing initial and investment allowances; proposing to abolish manufacturing investment allowances; proposing to put restriction on mine taxation; imposing a third provisional tax payment on companies; abolishing the LIFO method of stock valuation; increasing sales tax to 12%; increasing the company tax rate to 50%; elevating the once low fringe benefit tax to penal levels; and announcing that the new local authority taxes that are to be paid, are to be composed of a service levy based on salaries and wages paid by businesses, and an establishment levy which will be charged on GST or on occupied floor space. We do not even know at what level that is going to be.

The taxation policies of this Government increasingly seem to be designed to encourage the most dynamic elements of our society—be they individuals or business enterprises—to undertake less, to take more leisure instead of to work more and to avoid risks associated with investment, all of which are counter-productive.

I want to make one final point. The concern of the PFP in respect of these matters is not merely related to by-election politics. It is not merely motivated by the fact that a by-election is a good opportunity of telling the Government what we think of them. Our concern goes very much deeper than that. Economic and ideological mismanagement is the root cause of South Africa’s problems. We cannot restore the economy of this country to health as long as this Government spends money like a drunken sailor while taxing the ordinary man to a standstill, all in order to finance their own ideological schemes. [Time expired.]

Mr Chairman, in the Cape Provincial Administration the hon member for Constantia and the hon member for Cape Town Gardens were known as the “terrible twins”. They broached the same theme here today, namely that the ordinary, the average South African was worse off on the whole than was the case five years ago.

But that is certainly so!

One cannot regard the financial situation in the short term. Have those hon members ever compared their own situation today with that of 10, 15 or 20 years ago? Have they ever equated the current financial position of the average South African with that of a few decades ago? I walked around Newton Park personally; I was there last week and I found the tracks of those two hon members. In Newton Park there is hardly a residence which does not have a double garage—those people certainly live well. [Interjections.]

One of our greatest problems today is that many of our people have simply become accustomed to luxury articles which they cannot afford; they live above their means. I have great sympathy with the many people who are struggling but I believe it is not at all fair to lay people’s difficulties solely at the Government’s door when the matter in question is that we are worse off in the short term than a few years ago.

It is not only in the short term. You should know that.

Mr Chairman, I further wish to associate myself with a statement made here by the hon member for Smithfield, namely his argument concerning credit cards.

I naturally do not wish for a single moment to attempt to discount credit cards and their practical value. I said previously in this House, however, that a credit card was manna from heaven to the irresponsible consumer. I cannot understand how people can permit themselves to be so grossly misled by the easy credit which they are offered in this way.

In the light of this I should once more like to make an earnest appeal to the hon the Minister and the Department of Finance. I believe the sooner we can acquire a joint network, in which all credit cards can be accommodated, the better. At present there is an effort to involve all financial institutions—all banks and building societies, together with the Post Office—in one central system but there are perpetual hitches. Some financial institutions have now gone ahead and established their own small joint network. I wish to appeal to the hon the Minister to make a real effort to determine whether this situation cannot be resolved.

In addition I wish to draw specific attention today to the situation of South Africa’s banks. I want to do this in the light of three factors, the first of which is the levy of 0,25% on deposits at banks during 1984 which the hon the Minister instituted in his Budget speech. The second of these is the envisaged new Banks Act which will soon come up for discussion in the Standing Committee on Finance. The third of these is the general image of our banks in South Africa.

In his Budget speech the hon the Minister made it very clear why this levy was being placed on banks; it is that over the past few years they have had a considerable degree of immunity to tax, chiefly in consequence of provisions as regards leases, sales with reservatory conditions, etc. It was felt that under the present difficult circumstances in the country banks should also contribute their share.

South Africa has six banking groups with total deposits to the value of approximately R35 billion—a little more than our total budget per annum—and capital of about R2,5 billion with a return in the region of 20%. South African banks thought that a levy at this stage would have a very adverse effect on them and urgent representations were directed at the hon the Minister and the department. They put forward quite a number of arguments I find interesting and should like to deal with briefly here.

The first argument was that the banks did not, in fact, appropriate most of these tax benefits which they received but passed them on to the public and the private sector. Secondly, the banks thought that one could not merely tax their deposits by means of this levy but that it should also be applied generally as regards building societies. The third argument was that it was rather unfair to work on month-end figures regarding deposits because these figures were always higher and this was now being done in respect of something of the past with the result that it was difficult to put right. The banks were concerned that the levy would injure them seriously as regards their capital base. They were also worried about its effect on their dividends unless they were simply to pass on that levy or its effect to the public. In brief those were the representations directed at the Ministry by the banks.

In the second instance I wish to refer to the influence of the Banks Act and its amendment which is shortly to be tabled. The new Banks Act will most probably require that banks should enlarge their capital base considerably; the banking sector expects that it will have to double its capital over the next five years and from the nature of the case this will have a real effect on it if it has to pay this R100 million levy now.

In the third instance I want to say something about the image of banking in South Africa. I think the most important image our banks should project outwards—internally and overseas—is one of stability and security. That is why banks should be prepared at all times to project that image to the outside world and they ought to be able to write off bad debts and that type of thing without its having any effect on their situation. Nowadays we argue in this House that disinvestment should not take place in South Africa in consequence of political circumstances. I also wish to argue, however, that it is even less permissible that disinvestment be appealed for on the basis that South Africa and its financial institutions are not a good risk. I think this is very important.

I should like to say that there is very great appreciation for the way in which the hon the Minister and the department listened to representations from the banks and for the fact that they did something about it. I do not wish to anticipate facts but it is already general knowledge that the hon the Minister has approved it that this levy can now be regarded as an expense. In the second instance, payment can take place in the form of two instalments over a period and in the case of the largest banks it will, actually, be able to take place over two fiscal years. In the third instance, and I should like to obtain a decisive answer from the Minister on this—there is a possibility that intergroup deposits will not be included in the calculation of total deposits. There are, in fact, six banking groups but there are many more banks with many subsidiaries and the intergroup situation complicates this. In the fourth instance the impact of the levy on capital structures of the banks will be taken into account when future capital requirements become operative and we thank the hon the Minister heartily for this. I think the hon the Minister dealt with and reacted to representations in a very realistic manner.

In closing I should like to enquire of the hon the Minister how the levy, as it has been adjusted, is to be collected and how banks will be able to establish precisely what their additional obligation to the Exchequer will be. I assume it will be written into one of our Revenue Acts or another.

In banking there is an advertisement which runs “Who should we thank?” and it is very clear to me that the answer in this case should be the hon the Minister of Finance!

Mr Chairman, listening to hon members of the Official Opposition I must say that I have been very encouraged because, firstly, their main thrust has been their concern about inflation. Hon members will know that this is something that I too am very concerned about. In fact, I am one of those who believe that we will never have real economic growth in this country if we do not defeat inflation. It is the evil of our economy.

I want to refer to what the hon member for Constantia and also the hon member for Cape Town Gardens had to say. I want to deal with the hon member for Constantia first. He referred to taxation. I learnt a long time ago that anybody can quote statistics, and that it is better to look into the background of things so that one can make a really wise assessment or correctly judge the situation. I want to quote from the SA Reserve Bank Quarterly Bulletin of March 1985. When one studies personal income and expenditure, one will find that the average person in 1977 paid 8,7% of his total income in direct taxation. In 1978 this went up to 8,9%. In 1979 it dropped to 7,7%, in 1980 it dropped further to 6,6%, in 1981 it went up to 7,5%, in 1982 it rose to close to what it was in 1977, namely 8,6%, in 1983 it went up to 9,3% and in 1984 it reached a high of 11,2%. Over that period the percentage paid in direct taxation sagged during the boom years of 1980-81 and hit a peak last year during the recession. I want to put it to the hon member that he must not just look at this direct taxation because during this period we all know there was a tremendous growth in tax-free fringe benefits. During that period many employees got housing subsidies, motorcars paid for by the company, holidays at the coast or overseas etc. I am one of those who believe that tax-free fringe benefits put South African income earners on one of the biggest and most extravagant spending booms that this nation has ever seen. This has been a major contribution to inflation because most of this money was spend on luxuries, as this is basically what a lot of these tax-free fringe benefits are. Housing today has been priced out of all reasonable bounds.

Subsidies.

Subsidies was a major contributing factor to this, but who did this? The private sector was the first to embark on giving their employees housing subsidies. As the hon member for Cape Town Gardens pointed out, the Government followed, but the Government has tried to correct this and we must give the hon the Minister credit for it.

I want to deal with the speech of the hon member for Cape Town Gardens. He made a very constructive speech because, if one studies it, one finds that he has listed certain actions people can take in improving our economy. In this regard he has primarily hit the Government, which it is his job to do, but I want to ask him whether the Government is not doing something about trying to reduce its interference in the private sector. There are many things the Government, through the hon the Minister of Finance and the hon the Minister of Trade and Industry, is trying to do to prevent that interference. But we must ask why it is that the Government so often interferes in business? To a large extent it is due to people in the private sector coming to the Government and asking it please to do something for them or please to protect them. This is something we in South Africa have to understand. If we want a free enterprise economy, if we want freedom from Government interference, the private sector must learn to stand on its own. It must be prepared to meet competition and must be prepared to produce.

The hon member says we must promote growth by proper education and training. Is that not what the Government is trying to do with its massive increase in expenditure on education this year?

He went further to say that savings must be encouraged. I agree with the hon member—I am going to speak on savings later on. This is a very important factor in controlling inflation in South Africa.

He said that privatization must be investigated further. Are the relevant Ministers not doing this?

The hon member said that domestic reform must take place in order to encourage exports and so on. I want to ask the hon member for Cape Town Gardens whether the State President is not the greatest reforming political leader South Africa has seen in possibly 30 or 40 years?

There has only been one party in power for 30 years.

Well, that is right; but he is reforming our political life though, isn’t he? One must judge the leadership as it exists today, and if it is doing the right thing, one must support it.

You are still trying to get back to 1948 … [Interjections.]

No, we are talking about this Budget, and these hon Ministers are trying to do what is right for South Africa. I submit to the hon member that it is not only the Government that has to correct the situation; it is also the individual, the businessman and the entrepreneur who have to do so. I believe that the hon the Minister of Finance, as well as the State President, has given the lead. That is why we have the tight money supply that we have today. Interest rates have risen now to where investors are earning a real return on their money invested.

After tax?

Well, relative to the investment, yes, he is. Previously, with inflation running at 12%, and earning 8% or 9% on money invested, one was actually losing 4% on one’s investment, forgetting about tax for the moment. Today, however, one can invest at 20% and 21% while inflation is running at 15% to 16%. The hon the Minister, by his tight money supply measures and high interest rates, has encouraged people to save. Talking about saving …

[Inaudible.]

… let us look at what the public has done since 1977. The hon member for Constantia talked about the rise in taxation. In 1977 the average income earner—one will find it on that same page—invested 12,8% of his disposable income; that is, his income after tax had been deducted. That represented R2 864 million. Last year, however, his savings were reduced to 3,3% of his disposable income which totalled R1 962 million. Had the average South African saved at the 1977 rate, which was 12,8% of his net salary after tax, he would have saved R7 620 million, which is nearly R5 500 million more to invest in industry or in wealth-creating and job creating investments. I believe that this is one of the essential problems that we have had to experience in recent years. We have not been saving. The average income earner has not been saving the amount of money he should do in order to fuel the investment needs of South Africa.

Instead, easy credit, which the hon member for Paarl and the hon member for Smith-field have referred to, mentioning credit cards, has put South Africans on a spending binge during the past two or three years. This has resulted in too little money going into job-creating and wealth-creating investments. This is something the public of South Africa must realize if they want to lick inflation. They have their contribution to make.

In the few minutes I still have at my disposal, I want to speak about the private entrepreneurs. They also have to make a contribution to the problem we are facing. One has to look at productivity. The hon member for Cape Town Gardens mentioned productivity and he talked about salaries.

[Inaudible.]

Yes, the hon member talked about the wages of what he called the impoverished people. However, let us have a look at what has happened to non-White wages during the past seven years. Looking at an index of which the base in 1975 was 100, non-White wages in all sectors except that of agriculture, rose from 128 to 317 during the period from 1977 to 1983. Salaries of Whites went up from 119 to 269 on the index, whereas the consumer price index went up to just over 290. In other words the net income of non-White employees increased far more than the CPI did whereas the net income of Whites just about kept pace.

The point I want to make to the hon member in connection with the fight against inflation is that business today has to make a contribution to fighting inflation. It is too easy just to put up wages. One has to have a commensurate increase in productivity. I believe a lot of our business managers are not doing this; they just take the easy way out and increase wages instead of improving management and production methods. [Time expired.]

Mr Chairman, during the course of my speech I shall come back to one or two points raised by the hon member for Amanzimtoti, especially those on Government interference in the economy.

To the extent that the hon the Minister of Finance is involved in the determining of the maize price, I must tell him that unlike the hon member for Sunnyside, we do approve of the action that has been taken as regards this price. As far as the consumer is concerned the 10% increase is unfortunate, but had we been in his shoes we would under the circumstances probably have done the same. We think that the hon the Minister and the Government in doing this have for once acted in the interests of the broader public rather than in the sectional interest of the farming community. I am sure that the farming community in time will realize that it is also in their interests. I must make one remark, however. I have been advised to stay away from rugby matches in the next few months. I should like to suggest that the hon the Minister stay away from “landboukon-gresse” in the next few years!

A few of the speakers today mentioned the question of inflation in South Africa. Expectations from most commentators are that inflation is to run at some 16% this year. I need not remind hon members that we have had double-digit inflation over the past 10 years in South Africa.

I should like to direct some of my remarks today at the role which administered prices have played with regard to inflation. It is common knowledge that items which are subject to administered prices make up some 30% of the consumer price index. Just to get some idea of the extent of this, let us look at the parastatals. We find that air fares, electricity, railway tariffs, the control boards, particularly the Maize and Wheat Control Boards, are the worst offenders, as are the price-controlled industries such as sugar, petrol, coal and steel. In all these sectors price increases have been far ahead of the increase in the CPI.

It is all very well to complain about administered prices but what are the fundamental objections to administering prices in the way which we do? The first point is that administered prices are totally unresponsive to market forces. They are often set independent of any market forces, and this completely cancels out the function of the price mechanism. It is this mechanism which allocates resources to the manufacture of products as we would have in a free enterprise economy. This is one of the reasons why we have had agricultural surpluses in South Africa and around the world.

The other fundamental objection to administered prices is that they are usually based on some concept of production costs. I do not want to enter into an economic argument in this regard but production costs are no economic basis at all for setting prices.

As we have complained about administered prices, we may be asked what we in the PFP would do about these prices. Firstly, where it is absolutely essential, we would make sure that any price increase in this field would be kept at or below the inflation rate. I think the Government has undertaken to do this as far as possible, and we shall watch them over the next year in this regard.

Secondly, we would withdraw as far as possible from setting any prices because there are so many fields where the Government does interfere and does set prices where it is actually not necessary at all. One example is the maize price. Why do we set the maize price? Could we not let it operate on a floor price system? The hon the Minister of Agricultural Economics could say that the maize price he announced yesterday would be the floor price from now on.

Let us look at oil. We are all pleased that oil prices are going to be allowed to fluctuate on a more regular basis but why cannot there be competition among oil companies? Oil prices could then be allowed to fluctuate depending on the costs of procurement and on changes in the actual exchange rate.

A third step we would take would be to have a very serious look at privatization. I know privatization is the buzzword these days and we do not necessarily believe in privatization as the rule. There are very clear tests that can be applied to decide if an industry can be successfully privatized or not. There are, for example, many services that yield benefits or result in costs which cannot be recovered through the market mechanism; in other words, they cannot be charged and the costs cannot be recovered. The market does not establish a price for these services. A situation where the social benefits or costs exceed the private benefits or costs is clearly a case for Government intervention. However, there are many State and parastatal industries where this is not the case. The market establishes clear prices and these can be looked at with a view to privatization.

What are the advantages of privatization? First of all it brings money into the State coffers. This is desirable. Secondly it will shrink the size of Government and this will reduce many of the criticisms which are levelled at the Government. We hear of armies of public servants. It will shrink the overall size of Government. In addition to that it provides an extra tax base which is not the case at present.

The most important advantage of privatization is that it increases efficiency because it provides the ultimate incentive. If one privatizes an industry the people involved in it can go broke and that is the ultimate incentive to improve efficiency.

I would like to issue a word of warning in regard to privatization and that is on the question of monopolies. We see no advantage in changing a State monopoly to a private monopoly. To prevent this from happening we need to start to deregulate a number of industries and allow competition to develop. An example of this would be the SATS; we could allow competition to start developing as we deregulate.

Bearing in mind the few provisos I have mentioned, there are numerous areas where we could privatize. I will mention just a few of these in the short time still at my disposal. Some people estimate that the privatization of SATS could result in a market capitalization of some R10 billion. That would make them easily the biggest company on the Johannesburg Stock Exchange. Then there is Sasol the part privatization of which has been very successful. Why cannot we go the whole hog as far as Sasol is concerned? There are numerous other examples: Escom, posts and telecommunications, TV, radio and forestry. Even at municipal level there are other areas where we could successfully privatize, for example refuse removal, sewage contracts etc.

In conclusion, I know that the Government has mentioned privatization as possible policy. We would be very interested to hear during the course of the debate today to what extent they are going to proceed with it or look further into it.

Mr Chairman, I shall return later to what the hon member for Pietermaritzburg South said. He spoke on inflation and referred particularly to controlled products. The influence of other participating partners in establishing prices and the role they play in the market should also be taken into account. There are certainly other components involved which play a major role in determining prices. The hon member for Constantia made the same mistake of placing the rise in the rate of inflation squarely on the Government’s shoulders. There are other factors which influence inflation, however, and we should not overlook them. The responsibility rests on everyone to attempt to decrease the inflation rate.

I wish to confine myself chiefly to a specific subject. In opening I wish to point out that we older people had the pleasant custom of a thorough house cleaning—as we used to refer to it in those days—before every major event. They cleaned the house from top to bottom. Before Christmas or when important guests or relatives were due to pay a visit it was usually an opportunity for house cleaning. Before planting, when there is not so much work on the farm, it was also an opportunity for cleaning the house a little.

Spring cleaning.

Yes, “spring cleaning” as the hon member so rightly says. It was a time of great activity when jobs had to be done which were normally left undone. In other words, it was a time for making provision and preparations. People were therefore never caught unawares when unexpected guests turned up. They were even prepared for an unexpected event or illness.

Although it sometimes appeared unnecessary, there was a specific method in this process of cleaning or preparation. It is the same with our national economy. If we do not make early and timeous use of opportunities to tidy up thoroughly, we cannot expect that there will be proper order. This also applies to our economic activities. Just as the old people used quiet periods to tidy up, to clean and make preparations, in the same way there are many opportunities in the economic levelling-off period to reflect, plan and get matters in order.

Firstly there is time for reflection. Where did matters go wrong? What are the causes of this levelling off? I do not wish to dwell on causes today but what has to be accepted is that there are always cyclical fluctuations in an active economy. We know that an upswing phase will necessarily be followed by a downswing. If we should therefore seek the reasons for a levelling off, we should look for them in the given fact that a levelling off will occur.

Encouragement to permit the occurrence of the causes determines the intensity of the levelling-off phase. Excessive spending at the inception of such a period, for example, can lead to a deepening of that levelling off. Inadequate saving can have the same result. In the second quarter of 1984 the ratio of gross national saving to the GNP, for instance, was as low as 20,50% against the average of 25% in 1983. In the fourth quarter, however, there was an increase to 25,50%. I believe we should regard this as encouraging.

The fact is that this tendency to saving influenced cyclical movements. It is possibly true that there are external factors which are conducive to such levelling off and about which little can be done. I am thinking inter alia of the drought, the weakening of the rand rate, etc. Nevertheless it is important to remember that cyclical movements are going to take place and that economically active participants should be prepared for them. If a predictable decline in economic activity is going to take place, the possibility of recovery is just as obvious.

The intensity of the upswing can also be influenced to a great degree by specific action. I wish to pause briefly at two such actions.

The first is the availability of effectively trained manpower. The first reaction in a retrogressing economy is to cut back—economies are effected on current expenditure, capital projects and labour. These economies have a resultant influence on the establishment position of an undertaking—the first reaction among most employers is to retrench staff. This may be of short-term benefit to the specific undertaking, but in the long term it has a negative influence on the economy as a whole. In this respect I wish to associate myself with the President of the Afrikaanse Handelsinstituut, Mr Leon Bartel, who warned recently in the paper Die Ekonoom of February 1985 against indiscriminate retrenchment and that this time should be used for training. I quote him:

First-rate training to make highly skilled manpower available when the economy requires it will have to become a high priority among employers and entrepreneurs. We shall simply have to see to it that such trained persons are made available to be able to meet the demands of the time.

In closing, I wish to refer to the increase in productivity for dealing with the upswing phase. Harder work and more work can easily degenerate into the type of cliché or slogan used only in case of emergency. It cannot succeed if this call for harder work is directed only at the employee. The employer certainly has an important role to play in this framework—working conditions can and must be improved if we expect the employee to be more productive. The employer should ask himself whether his employee’s place of work, office and facilities are of such a nature that maximum work can be produced. An employee is not a machine to be activated by the mere depression of a button.

I wonder increasingly to what extent male clothing in South Africa, specifically that of white-collar workers, has an effect on the working potential of such employees. I really do not know whether it is always advantageous to work locked up in an office, half strangled by a tie around one’s neck and in the superfluity of a suit of clothes. Scorching summer days in South Africa demand that we examine this fashion fad again if we expect maximum production from the employee. There is the pleasant example of the doctor in his neat white safari suit who, I believe, is worthy of his profession in those circumstances but still looks inclined for work.

With this I once again wish to emphasize the responsibility of the employer in increasing productivity. [Time expired.]

Mr Chairman, the hon member for Gezina said we must use this depression for self-analysis. However, that is not enough unless it is followed by repentance and a genuine determination to reform. That party sitting in Government is going to be judged in the future not only for its deeds but for its failure to pay attention to the advice which has come from these benches for many, many years.

We have warned against discrimination and, in particular, we have warned against the Population Registration Act, the Reservation of Separate Amenities Act, the Group Areas Act, the Prohibition of Political Interference Act, aspects of the Immorality Act and the Prohibition of Mixed Marriages Act. After years of tragedy, the latter two are about to go. There are signs that the Prohibition of Political Interference Act will follow. As Herman Giliomee has indicated: Remove the balance and we will have travelled backwards in the Nationalist Party’s time machine to where we were when Smuts left.

This party has railed against the refusal to grant freehold title to Blacks. How much damage has been done to the social order by the refusal to do that simple thing? Now we gather that that may also happen. How many times have members of this party spoken against influx control, and said that urbanization was the solution, not the problem? Now it is being looked at.

The hon member for Houghton has been warning and talking overseas against disinvestment for years, long before anybody on that side was even aware of the term. Now, like the china shop bull, they are trying to do something about it, but it is too late and they are doing it very ham-handedly. This party is being far more effective in that campaign than the NP, not because it is good for Whites but because the disinvestment campaign, we believe, is bad for both Black and White.

We have warned that citizenship is the Blacks’ most treasured possession, but the immoral tampering with it by that party has done immeasurable damage. That is also now—after immense harm has been done—being attended to, we understand, for some Blacks. Then there is the farce of our sports policy. What harm has been done to our image overseas? How have we embarrassed our sports administrators and our sportsmen with our ridiculous “manewales” in that respect?

There are things that the Government must come to terms with, and this party can spell them out: Stop the unilateral design of phony constitutional structures for other people. They will never be accepted, and those people who work within those structures are totally discredited. Negotiate with the real leaders, the leaders of the people’s choice. It is not for us to choose the captain of the opposite team, however much we may dislike him. Do not leave communication with Black resistance to the Security Forces. Too much bad blood lies between them. Study what our leader has said about the replacement of our conscript army with an allrace volunteer professional army. The present system is unfair to White youths, racially divisive and inefficient. We cannot afford the disruption to the economy. This is not a sinister communist plot. The best armies in the world have a strong professional backbone.

What are the realities of our political economy, because this Government must come to terms with them? In 35 years’ time there will still be 5,5 million Whites, but 70 million Blacks. We are one country, not many. One cannot create other countries into which to sweep one’s political embarrassments. It is nonsense to do away with discrimination but retain first, second and third class citizenships. It cannot work. Everybody must have the same vote, but the power of that vote and its consequences must be circumscribed by built-in checks and safety mechanisms to prevent domination of one group by another. It is in the interests of all groups in this country that domination should be prevented.

For there to be peaceful change, we must have a strong and growing economy. To have such an economy, we must never lose sight of one concept, a concept that seems completely foreign to the hon members on that side, and that is the concept of competitiveness. All economic analysis points to the importance to South Africa of the export of manufactured goods. How the devil is one going to export those goods if they are not competitive? How is one even going to sell one’s own goods locally against foreign goods if one has so impaired the competitiveness of one’s industry that it cannot shape against the industry of other nations?

Consequently, we must stop talking about free enterprise while indulging in gross interference. The Dutch have a wonderful way of putting it. They say: What he builds with his hands, he knocks over with his backside. I cannot imagine a better description of the Government’s performance than that little phrase.

The cost of the strategy for the decentralization of industry, is immense. The decentralization scheme cannot be underestimated in its total domination of the South African economy. If one looks at the money allocated to it for the coming year, one sees that expenditure on it has increased from the R209 million allocated last year to R520 million. This is, however, the State President’s hobby-horse, so nobody tampers with it. Even in a stringent budget, it gets the money that it requires.

There are many things wrong with this policy. First of all, it is designed by politicians to achieve political goals. That intrinsically means that it is probably unsound economically. It is running seriously out of control. This is evident from the fact that the allocation for it was overspent by 60% in the last financial year and nobody has the foggiest idea what has been achieved by the policy, nor even at what cost. Nobody has even bothered to forecast the State’s forward commitments on the obligations it has already assumed.

The exploitation of benefits under the policy has received wide publicity and my advice to the State President is to distance himself from that policy as quickly as possible, because, if I have ever seen a can of worms developing, this is it.

The decentralization programme has just been reviewed by the Standing Select Committee on Finance. The chairman, Mr Simkin, has said that failure to budget for the decentralization policy was dangerous and could prove very expensive. The committee had serious misgivings about the policy. That had actually better be considered very carefully, because a lot of mud is going to fly into somebody’s face soon. The committee did not, however, touch on the real danger of this policy, which is the effect the distortion created by such a policy is going to have on the competitiveness of South African industry.

To illustrate the type of distortion that arises from this policy, let us consider the position of a factory in Port Elizabeth which is supplying a manufactured article. Some foreigner comes into the country and has knowledge of how to produce that same article. He approaches the Decentralization Board and establishes himself in one of the decentralized areas where he gets maximum benefits. Out of R35 million, he puts in R3 million of equity. All the rest is structured so that it is supplied and subsidized by the South African taxpayer. Any loan moneys he puts in are also subsidized by the South African taxpayer. So one has an existing facility, which has been paid for and which is employing labour in Port Elizabeth, becoming idle because, with the incentives provided for the new plant, the old plant can no longer compete.

That has a number of serious effects. Firstly, it destroys the tax base from where the money comes to subsidize the new plant. The new plant is more modern than the old. It employs half the amount of labour. It takes skilled labour from the old plant, which has now closed, down, and dismisses the balance of the people and ends up employing half the number of people the original plant employed. That is a sad story, but it happens to be a true one. [Time expired.]

Mr Chairman, it appears to me the hon member for Walmer was actually making his Third Reading speech here. I do not know whether he said much with direct bearing on the hon the Minister’s Vote. He referred to political circumstances and the policy of this party and said specifically the State President’s policy was a can of worms if one really examined it. He seems to me to be so fond of worms that he sees them long after they have been thrown out. He referred to the Prohibition of Mixed Marriages Act and section 16 of the Immorality Act and he delivered a tirade on the idea that we should really negotiate. These are all matters on which the Government has already decided, however, and has declared itself prepared to do.

I wish to associate myself more with the speech of the hon member for Pietermaritzburg South—I think he made a good speech. It was not opposed to Government policy, but actually a reinforcement of matters the hon the Minister, in fact, stated as objectives in the debate, namely privatization, denationalization and other matters mentioned by the hon member.

In the same connection I wish to refer to the series of articles by Dr Wassenaar which appeared in Die Burger in the middle of this month. I am referring specifically to the article which appeared on Wednesday, 10 April, under the caption: “Monopolieë Blaas Inflasie Aan”. When Dr Wassenaar speaks of monopolies, he is dealing only with State monopolies, which to me is where he falls short in his approach. One should remember, however, that he is from the stable of a conglomerate, namely that of Sanlam, and can actually only peer out from within the stable through a small window. He does not succeed in peering inwards and also examining the precise consequences of the concentration of power in these large conglomerates. I am not referring specifically to the Sanlam Group as there are many more. Neither do I wish to go into the matter of names, as I do not consider that important. Dr Wassenaar comes to the conclusion that it is the involvement of State monopolies and the State with its State expenditure which are helping to fan inflation. This certainly plays a part and that is why new steps have been instituted—the hon the Minister has introduced a reasonably severe Budget.

To refute the argument of Government monopolies, Dr Wassenaar comes with that of free competition. Nevertheless he proceeds immediately to say in his article that we should beware of using anti-trust to effect free competition because anti-trust has not actually had the noteworthy consequences which it envisaged and has in addition caused further bureaucracy which this legislation has had to apply and monitor. In my own mind I have a number of questions to put on this and I think we should start expressing them more frequently.

The argument that the existence of conglomerates—this concentration of power—has no distorting effect on our economy simply cannot be raised. If one is speaking of privatization and denationalization, I agree—and he does state this in his article—one cannot merely sell them off. It does not help merely to transfer them from the public to the private sector and allow them to continue with the monopoly. The idea is perhaps to introduce competition—and that is something which may be investigated during the enquiry which is now being carried out. Nevertheless we should guard against these monopolies being purchased by conglomerates because there is no one outside the conglomerates able to do so. [Interjections.]

The hon member for Pietermaritzburg South stated inter alia that we should devote attention to the possible sale of Sasol and Escom. I cannot understand how those undertakings can be sold without falling under the very control of those large conglomerates. When one notes the extent of their actual power—the eight top companies control 80% of share capital on the Exchange—the question arises where in the world one would find a country permitting such a thing. Nowhere in the Western world will a single country permit such a concentration of power in the private sector. It definitely does not create competition and, if free enterprise is the purpose of a system, the logical argument behind it—its philosophy—is that it should not alone create prosperity and distribute it but also make entrepreneurship really possible. People from the ranks of those groups of concentrated power usually argue that the individual can purchase shares; that he can acquire prosperity by speculating in shares. True entrepreneurship, however, then lies in the hands of the limited number of people in control of those large conglomerates.

It naturally follows that in consequence of such a situation they attain a position of enormous power in which they form strong pressure groups and in which they can often bully the Government. The dilemma therefore lies in the fact that they can practise their politics from this situation.

High Government expenditure is most certainly a cause of inflation but the Government has taken steps in limiting the wage bill. When we think that between 70% and 75% of our economy consists of salary and wage bills, it is clear that this is the sphere to which attention should really be paid. Otherwise stated: If we do not apply wage discipline in this country, we cannot succeed. Over the past few years the productivity of labour has risen by between 1% and 2% per annum whereas the wage bill has risen by between 10% and 12% per annum. This just cannot continue.

As regards the announcement concerning the maize price, I believe a worthwhile step has been taken here. I believe it can also assist in turn in further limiting the wage bill by the limitation of the price.

We shall have to guard against prices controlled by the Government continuing a further incline. I do not believe, however, that this alone can really control inflation. Neither can we apply external discipline by way of throwing open our trade because in so doing we shall only lose. I think Dr Wassenaar also referred to it that in the recent past we had actually thrown open our traffic at a time when all other countries were protecting their industries. If the private sector is not going to contribute from its side, inflation is not going to be curbed.

The private sector will have to review its wage bill and in particular begin concentrating increasingly on discussions and negotiation with a view to the general interest and being able to deal with these matters. We know it is naturally very difficult to handle the demands of trade unions in the process. Obviously not only the worker is involved, but also management, control and ownership of the enterprise. When one expects wage demands to be moderated, the private sector itself should also moderate its demands or expectations of profit; it should deliberately reduce its prices by also lowering its profits and making its contribution in that manner.

I wish to express a last thought on this entire question of the concentration of power. In our system we actually deal with the policy of competition in terms of the Maintenance and Promotion of Competition Act. The definition of “competition” in the relevant legislation requires our attention, however. The point of departure of the Competition Board in the application of the policy is that the purpose is not to prevent concentrations of power but that the policy followed is explicitly and specifically not prejudiced against size and that only concentrations of power against the public interest may expect action against them. The datum point is therefore one directed at the conduct in the market and not at the structure of an undertaking.

I wish to contend that it is impossible merely to monitor conduct in the market in a single monopoly—also with regard to its own organization. I therefore wish to argue earnestly that, if we want to contribute to curbing inflation, we shall have to pay attention to these huge conglomerates—on the basis of their structure as well—so that we can split them up and once again bring about effective competition in commerce.

Mr Chairman, I want to react to a few of the speeches hon members have made, but before I do so, I just want to explain a matter in regard to the division of work between my hon colleague, the Deputy Minister of Finance, and myself. It so happens that large parts of the administration of the department are delegated to my hon colleague by way of official delegation, and that he is dealing with these matters with full powers of disposal. That is why I want to put it in this way to hon members that when the hon the Deputy Minister replies to certain statements made by hon members, he may do so with the authority of a formal delegation and with full executive power. We therefore do not share full responsibility in regard to the total spectrum of our activities. There is a vertical separation in the performance of certain tasks, otherwise it would have been impossible to discharge those responsibilities in any case.

This brings me to a word of thanks I should like to convey to the hon the Deputy Minister in the presence of hon members of this House. I can say that the hon the Deputy Minister joined the Ministry of Finance, caught the ball and handled it as if he had been doing it for years. I want to thank him for the way in which he copes with his duties, and I want to congratulate him on the exceptionally effective and skilful way in which he has fulfilled his duties that were delegated to him from the first day. It is truly a great encouragement to see with how much confidence and skill he is managing his part of the portfolio.

It is appropriate, too, that we express a sincere word of thanks, together with that of the hon member for Cape Town Gardens, to our officials. I have stated previously in this House, and I am saying it again with much gratitude, that I received a wonderful inheritance in the form of some of the most excellent officials one could hope for the day I took over this very difficult portfolio. I want to thank them for one thing and that is that in our department there is no such thing as working hours. If one asks one’s private secretary to get hold of a certain official in the evening—sometimes at six, six-thirty or even later, one finds that he is still in his office. That is the attitude with which this department’s top structure and all the officials, but particularly the top structure and particularly those who are down here with us, do their work. We can only take cognizance of this with deep gratitude.

†I want to respond very briefly to some of the points raised by the hon member for Cape Town Gardens. The hon member said that I had been unfair at the time of the Second Reading debate when I referred to the use that the hon member for Yeoville had made of certain of the quotations from the minutes of the proceedings of the Standing Committee on Finance. The hon member for Cape Town Gardens said that I had not quoted a single example to substantiate my comments. Let me say without any fear of contradiction, Sir, that the officials in the Department of Finance can stand probing questions and that they are prepared to take them. However, they are surely not obliged—and they understand this—to answer all questions. I want to ask the hon member these questions: Why should it be necessary for the chairman or other members of the standing committee or for their officials to evaluate a question? Should courtesy not begin at home? Should hon members of Parliament not know that they should not abuse that particular situation?

It is not abused.

No, I argue that it is being abused when an official is confronted with a politically loaded question if the whole purpose of the exercise is to obtain facts. As far as the top officials of the Department of Finance are concerned, they are prepared and will in future be prepared to openly discuss and reveal any kind of formal information that is required of them by way of a question. However, I think it is incumbent on members of Parliament who are supposed to be responsible people to evaluate their questions beforehand and to make sure that they do not embarrass officials to the extent that someone else has to intervene to defend them. If hon members who are members of the Standing Committee on Finance wanted to obtain answers to questions relating to policy issues and the political brief of the Government—and this was the other part of my argument on the occasion of that debate—why did they not call me or the Deputy Minister who are political functionaries and who are charged with the responsibility of the policy approach?

I want to refer to two of these quotations and I want hon members to follow this very carefully and to evaluate it for themselves. The hon member for Yeoville asked:

Mr Wronsley, the Secretary to the Treasury, replied …

Are you objecting to that question?

No, I am just quoting the context. Mr Wronsley said:

Dr De Loor, the Director-General, then followed on and said:

Now the part quoted by the hon member for Yeoville follows:

This is the end of the part quoted by the hon member for Yeoville. However, Dr De Loor continued, and this is the perspective I believe was lost by selecting that part to quote across the floor, as follows:

The hon member for Yeoville then asked:

There is no question in my mind that this statement of the hon member was conveyed on the occasion of his quoting that particular remark. He said it here in a follow-up question, but that was not quoted across the floor. He then continued:

Dr De Loor replied, and this is the important part:

How do they do it? By extending certain programmes and by cancelling certain of their projects. If that is the instruction, they can do it. Dr De Loor continued:

My argument simply is that the arbitrary part of the determination of the budgetary expenditure was the very last exercise, as explicitly stated by the Director-General …

[Inaudible.]

… after … allow me to complete my sentence, please … after the whole exercise had been revised quite a number of times. I quote a second example…

Quote the hon member for Yeoville’s actual Hansard—his preface before the quote. Put it in that context.

I am talking about the perceptions of the whole thing.

No, not the perceptions—what he said.

Let us look at a second quotation. The inference was absolutely clear in this particular quotation that “Government policy” meant the so-called ideological expenditure which is so often quoted from the Opposition benches.

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

Give me just a moment. Let me complete this point also. Dr De Loor said:

Government policy, as far as the budget is concerned, covers every possible amount that is voted by this Parliament eventually as part of the overall budget. Government policy is not only to be interpreted as those policy measures designed specifically to give expression to the Government’s policy of separate development and everything that goes with it. My argument simply is that I do not believe that we should use this kind of quotation in any House of Parliament if that quotation has the possibility of not being interpreted in its full context. The hon member for Cape Town Gardens may ask his question now.

Mr Chairman, may I ask the hon the Minister whether it is not correct—and I have the unedited Hansard here—that before quoting what Dr De Loor had said, which the hon the Minister objected to, the hon member for Yeoville said the following:

He specifically said “the last cuts”, not the beginning. I wanted to quote from the evidence to illustrate that point. I would like to ask the hon the Minister, in the light of that, whether he will not accept that that is a justified context in which it was put in a speech? I would also like to ask the hon the Minister to tell us which of the questions he actually objected to. He told us that he objected to this quote, but which question does he actually object to?

Mr Chairman, I did not study the evidence with a view to finding questions to which I objected.

You said you had objected to the question?

In other words, I cannot quote a specific example to give the hon member now. [Interjections.] The only thing I am objecting to is that quotations are used which are of great concern as far as the interpretations attached to them, are concerned since this originates from the officials. [Interjections.] Let me relate this to a previous occasion, not long ago, when the Secretary to the Treasury appeared as a member of a panel before a meeting in Johannesburg which was supposed to be a closed meeting. On that occasion too he used the words “Government policy”. We should all remember very clearly the uproar that the interpretation of that particular phrase caused particularly in the English newspaper the Rand Daily Mail in Johannesburg, inferring that Government policy in that respect only covered so-called ideological expenditure.

[Inaudible.]

If the hon member wants to ask a question, why does he not stand up and ask it? He is free to do so.

Mr Chairman, may I ask the hon the Minister whether he is distinguishing between political policy on the one hand and fiscal and monetary policy on the other hand. Is it not proper for that committee to question officials on monetary and fiscal policy?

Members of that standing committee are completely at liberty to ask questions on monetary and fiscal policy measures. Certainly also in the arena of questions we do approach a point when that particular question also relates to political aspects. This happens when it comes to priorities. I may point out that it is a priority of the Government to fund decentralization. It is a priority of the Government to fund other aspects of its policy.

Influx control, for example?

Influx control is still being financed. I do not say it is a priority but to the extent that it exists, we regard it as of sufficient priority to vote money for it. That is the grey area where I believe that courtesy should in fact begin at home.

Give an example.

But I gave an example when I said that I believed the Director-General had been quoted out of context and that that had cast a certain shadow on the area in which he had to move in order to answer that particular question. I do not think it will serve any purpose to continue discussing this particular aspect. [Interjections.]

Order!

I want to repeat what I said at the Second Reading: It will be a sad day if officials have to take legal counsel with them when they appear before standing committees.

Give an example.

I gave two examples, and they gave rise to a certain feeling of dissatisfaction among my officials. I was compelled to raise the issue here in Parliament.

I want to refer to a number of the nine points raised by the hon member for Cape Town Gardens. I do not think that we are in disagreement insofar as those points are concerned. At the moment we are investigating ways to free our economy from unnecessary regulatory measures. We are also doing our utmost to promote productivity through education and training. Did we not vote for the first time in the history of South Africa the massive amount in excess of R500 billion for the purpose of education and training?

The hon member also made the point that the number of officials in the Public Service had grown by 40%. When the hon member Dr Vilonel by way of interjection reminded him that most of them were Black teachers, he said that the rest still constituted a considerable percentage.

Yes.

The hon member agrees. What are the facts? During the period 1973 to 1983 the number of posts increased by 110 000. The greater proportion, namely 61 000 of this number, were teachers’ posts. The average growth of the Public Service during the period 1973 to 1983 was 7,7% and of this 4,2% was in respect of education for non-Whites. This leaves an average growth of 3,5% for the Public Service during a period of 10 years.

And the private sector?

I do not know what the percentage for the private sector is.

Six per cent in total.

It is not relevant because in this country the public servants do not have only an administrative task as the public servants have in many other countries, even many other comparable countries. In our country public servants are also charged with the responsibility of development. They find themselves in all parts of South Africa busy with in-service training of Black officials in the self-governing national states and the independent states. They find themselves involved in all kinds of projects. A large number of them are involved in project control. I do not think it is fair to say that when a Public Service which is charged with all these responsibilities has grown by 3,5% over a period of 10 years, it has an inordinate growth rate. I think we owe it to our public servants to stop that argument.

I do not want to refer to privatization and related topics. This will be handled by my hon colleague.

I want to refer to a point that the hon member for Cape Town Gardens made, where he said that in our fight against inflation we are concentrating too much on interest rates. However, that is not all. It is only part of the overall package.

I said: “Too much” not “totally”.

Yes, certainly, but even as interest rates stand now, in many respects and on many days they are still not high enough.

I have said before in this House that in the early days of our revised monetary policy there was no question that if we had allowed market forces to determine the interest rates, the prime rate would have jumped from 25% to 30% and higher.

At the beginning of this year we had an expert team from the IMF here and their evaluation—it was an informal, preliminary, verbal evaluation; we are waiting for the written report—was that if we had made one mistake in the revision of our monetary policy last year it was that we had supported, in other words held down, the interest rate at a prime of 25%. Therefore, even if we had concentrated to a much greater degree, we would still have been on a sound basis as far as monetary policy was concerned.

The hon member said we were doing too little about prices. If the hon member was referring to administered prices I agree with him and over a period of time the answer is Yes—we are doing something about them. He must certainly see a determination to bring them down. I take it that he was not referring to prices prevailing in the market in terms of other consumer goods.

No, you gave leadership on wages and salaries but not on prices except for yesterday.

Thank you. I think that is a compliment to us and I accept it thus. [Interjections.]

The hon member argued one point which I could not understand. He said our narrow tax base was caused by skew opportunities. That is an arguable point for another occasion. I drew the conclusion that he was arguing in favour of a much broader tax base, that he was in favour of it. Is the hon member then in favour of a narrow tax base?

It was not in that context. [Interjections.]

The hon member said it was not in that context. I could not understand why the hon member argued for a narrowing of the tax base as far as GST is concerned. There is no way in which we shall be able to extend dramatically the number of foodstuff items that are completely excluded from GST. If we do that, we shall be giving away more than we can afford. The hon member must remember that in the process of granting these exemptions last year, we lost a revenue potential of R1 billion. That was given back to the taxpayer. [Interjections.] I agree with the hon member.

I also wanted to say that we cannot exempt medicine. It is simply impossible to define it properly and the fiscal considerations are another aspect of the problem.

What about prescribed medicine?

No. Most people are in any case members of medical aid associations. We undertook a proper study of the matter and I will furnish the hon member with a proper reply which we send to the many people who write to us on this matter.

It is also not possible to identify what is a luxury food item and what is not. [Interjections.] I am glad the hon member supports us in that because a few years ago it was not the standpoint of his party.

If we should ever try to distinguish between what is a luxury food item and what is not, there will not be a single ox yielding fillet or steak. Everything will then be exempted from GST.

*I thank the hon member for Smithfield for his two contributions. I think he made a few very interesting points in the responsible speech which he made. I gladly support his standpoint that our people should spend judiciously. This afternoon, during the second round, I shall say something about credit cards in reply; I have just received very interesting information in this regard, with reference to an investigation that was instituted.

With reference to the contribution made by the hon member for Sunnyside, I just want to tell him that all that is relevant about the attendance of the standing committee are these two matters: Firstly the hon member was absent from two meetings without the chairman knowing about it.

That is untrue!

The hon member says it is untrue. However, I am not prepared to accept that it is untrue. I accept that the hon member for Smithfield subsequently instituted a proper investigation. The hon member for Sunnyside did not attend two meetings, while the chairman did not even know that he was going to be absent. That is all that is important.

There is a second question I wish to put to the hon member across the floor of this House. Did he ask the hon member for Umbilo to change places with him or not?

I will be back this afternoon. [Interjections.]

The seats in the Standing Committee on Finance are arranged alphabetically. The hon member then ended up next to one of the hon members of the House of Representatives. The hon member then asked the hon member for Umbilo to change places with him. The only inference we can draw, therefore, is that the hon member for Sunnyside preferred not to sit next to an hon member of the House of Representatives in a meeting of a standing committee. The hon member will have enough time this afternoon to explain to us what was wrong with the seat which he wanted to swap the hon member for Umbilo for.

You people are going to get hurt this afternoon, my friend! [Interjections.]

We in this House have known the hon member for Sunnyside for a long time. I do not mean to be insulting but I think it is true to say that we have not really been impressed by the hon member over the years. What he says is recorded in Hansard, however, and then his party’s propagandists claim that what he said here remained unchallenged because the Government could not give him an answer. They forget, though, that one reaches a stage at which one cannot, or does not wish to, reply to such a lot of foolishness. What he says is nevertheless recorded in Hansard. It then stands there, unqualified, as a standpoint the Government was unable to reject.

There is one more thing I want to say to the hon member for Sunnyside: For an hon member of that party, and in particular that hon member, to ask to be be privy to the spending of secret funds in this country, one of the most sensitive matters one can imagine, is the height of temerity. With the CP’s record as an irresponsible political party, and in view of the political distortions which they blazon abroad, we dare not risk it. [Interjections.] I have a pamphlet here which the CP is at present distributing and which confirms my standpoint that it would be an extremely irresponsible government which would make that hon member or any of his party privy to anything which is sensitive to the Government. In fact, we are not even prepared to consider it. He can announce that, too, in one of his pamphlets.

I thank the hon member for Smithfield for rectifying this matter of the absence of the hon member for Sunnyside. I am also very thankful for an important point which he raised on the correction of a report in the Farmers’ Weekly. I think it is essential that we do it in this way.

†The hon member for Constantia compared the total revenue collected from individuals at that stage with that that is being collected at present. However, in doing so he forgot one basic point. He did not discount the fundamental growth in the income of a number of taxpayers in South Africa. He tried to create the impression that we increase4 our revenue over that period by a substantial amount by simply increasing the tax rate. That is fundamentally incorrect.

*I thank the hon member for Paarl for his interesting contribution. I shall say something about credit cards later. As far as the banks are concerned and precisely how this is going to work, I was informed yesterday morning at our top executive meeting that an agreement will be reached between the department and the bankers on how best to deal with that, 25%, or whether to do this in some other way. We are not interested in the, 25% as such. We are only interested in the aggregate amount and when the legislation is being discussed, we shall deal with it.

†I should now like to react to the hon member for Amanzimtoti. I want to thank him for the most efficient way in which he responded to certain remarks made by two hon members of the Official Opposition.

A very telling point raised by the hon member, a point which, I believe, is new in the thinking of our department, is the fact that at the very same time when the income tax percentage was increased, people were enjoying a considerably higher standard of living and of real income as a result of the fringe benefits that exploded at that time. I thank him for that contribution. I think it is a very salient point.

The second point that he made is also very important. Over all these years that we have had an uncomfortably and in some respects dangerously high inflation rate we have also had a commensurate—and even more than that—increase in the remuneration of people. It is true what the hon member said by way of interjection that that relates to the people who have jobs. I should therefore like the hon member to give us, at some time or other this session, his view on the question of minimum wages. I have enough information to hand to be able to say that had it not been for the high level of minimum wages, many more people would have been employed and the unemployment figure would have been different. I am pretty sure that if there could have been a different kind of negotiation not subject to the minimum wage requirement, we would have had more people in proper employment at this juncture. This is the view of many of the industrialists who have come to my office. I thank the hon member for indicating that at least those people who did have jobs could maintain or even improve their standard of living. We must also take into account, however, the growth in the number of employed people.

I fully support the point of the hon member that we must have a commensurate increase in productivity before we grant salary increases. Let me just remind hon members in this House that in the United States an agreement was reached, I think two years ago, between unions and their employers that they could have a wage increase but calculated on the basis of half the inflation rate plus the percentage of their increase in productivity. That, Sir, is responsible unionism. If we can instil that degree of responsibility into the unions of this country and if we can reach that kind of agreement we can make a substantial contribution towards eventually killing, as the hon member correctly said, our public enemy number one.

Mr Chairman, I think I shall stop there and continue at a later stage.

Mr Chairman, I do not want to enter into the dispute between the hon the Minister and the hon member for Cape Town Gardens relating to the remarks made by the hon member for Yeoville. I am sure the hon member for Cape Town Gardens will be coming back to that later today, and the hon member for Yeoville is quite capable of defending himself at a later stage. I am sure that he too will find an appropriate occasion to come back to the matter.

I must direct just one or two remarks at the CP in view of the allegations which have been made today. I have observed this party for some time in this House now and I feel sorry for them. In the broadest context of the word they are Africans, as we all are, but the more I consider them, the more it becomes apparent that they are total misfits in the context of Africa and that they really have no future in our society. In fact, all they do is to bedevil relationships in our society.

I wish to react to one or two things which the hon member for Randburg said. We also share some of his concern about the degree of industrial concentration which is taking place in this country. In the past we have made a plea that the Competition Board should be given greater powers to look into this, but I will take it no further.

Most speakers in this House today have emphasized the need for growth because in South Africa it is only growth that is going to create the jobs we require and, therefore, if we fail to grow and fail to create these jobs, this can only lead to increased instability in the future. We in the PFP, and most other members in this House, have a commitment to a free enterprise system. This is because we believe that the free enterprise system is the only vehicle through which we can achieve the growth which we need and generate the jobs which we are going to require in this country in the future. I know of no other successful system anywhere.

It is the task of all of us in the House to ensure that the free enterprise system operates and flourishes in South Africa. It is the task of all of us to convince others of the merits of this system. Unfortunately, it is true that a vast proportion of our population in South Africa do not share the same commitment to the free enterprise system that we do. I do not have time to go into it today but this has been borne out by a number of surveys. The reason for this is very apparent. For too long it has only been the Whites who have been free to engage in enterprise. It is small wonder then that people who have not been included have seen free enterprise, capitalism and apartheid and discrimination as being one and the same thing. There are plenty of studies which the hon the Deputy Minister can look at which actually prove this.

When we look at the reasons why this should be the case and what has brought this about, I can quote a few examples here for the benefit of the House today. When we look at section 10 of the Blacks (Urban Areas) Consolidation Act which regulates who can live in Black areas and who can move in or out of Black areas, we see that this is probably the most important impediment in the way of Blacks being able to sell their labour where they can in fact obtain the best terms for it. Other sections of the Act also impede the development of Blacks in urban areas. Section 42 of the Act regulates the entry of business into Black areas, but it is Black areas which lack many of the facilities we have in White areas, it is Black areas which lack entrepreneurial skills and it is Black areas which lack capital. Section 6 of this Act deals with the acquisition of land by Blacks; in other words, Blacks may not become involved in any form of township development or anything like that in their particular areas.

We can go on to other Acts as well. Section 19 of the Group Areas Act stipulates where Blacks may trade. Many Black artisans and businessmen are severely curtailed as to where they may open businesses and, more often than not, they may not open businesses in what is economically the best place to do so. Is it any wonder therefore that when we look at our free enterprise system we see that there is a large proportion of our population who are not at all sold on the merits of the free enterprise system because they see that it is only the Whites who are actually free to engage in it.

Going a bit further there are many small businesses and this does not apply specifically to Blacks; it applies to many small businesses—which have immeasurable problems in other spheres. There are, for example, so many licensing regulations that put insurmountable difficulties in the way of a person opening a small business. Many of these licensing regulations are implemented by local authorities and ordinances, but they have conditions relating to language, premises, lighting, ventilation, health, size etc. This makes matters extremely difficult. When we look at other regulations, for example, industrial council agreements with regard to minimum wages—and I am not making a plea here today that we should scrap minimum wages; it is the means whereby people get into business and it is the means whereby they get onto the labour market—it is clear that these regulations certainly need to be looked at again. Perhaps they can be applied to businesses under a certain size. I see the hon member Dr Vilonel agrees with me.

I agree.

There are also many regulations with regard to the Factories Act which apply particularly to smaller businesses, for example, conditions such as working hours and a whole series of others.

Business suspended at 12h45 and resumed at 14h15.

Afternoon Sitting

Mr Chairman, before we adjourned for lunch, I was busy pointing out to the House that various laws we have in this country like the Group Areas Act and the Blacks (Urban Areas) Consolidation Act in fact make it more difficult for Black people to participate in and enjoy the fruits and benefits of the free enterprise system. I quoted a few examples. I do not, however, want to go into this any further because the hon the Minister should be very aware of what these laws and regulations are. I think that they are covered very well in, for example, the National Manpower Commission’s Report, No 1 of 1984, and also the President’s Council’s Report, also No 1 of 1984.

In the minute or so left to me I should like to make an appeal to the Minister—and I am not doing so specifically for the sake of the PFP. If we really want to preserve the free enterprise system in this country, a system we all believe in, we must make it as easy as possible for all to enjoy the fruits of this system. Everybody must be able to engage in free enterprise as freely as anybody else. If we do not do this, as surely as night follows day we are going to destroy the very system in which we believe. I should like to make an appeal to the Minister to do everything in his power to look at all legislation that prevents Blacks from entering the free enterprise system or makes it difficult for them to enter it. I appeal to him to do everything in his power to try to amend or eliminate laws and regulations of this nature.

Mr Chairman, the hon member for Sunnyside is not present at the moment. I wish to put two simple questions and possibly the hon Chief Whip of the CP will be able to respond to them. The first question I wished to put to the hon member for Sunnyside was whether my information was correct that he had been a member of the Select Committee on Public Accounts from 1967. Hon members of the CP can go into this but I believe it is the case. The second question I wished to put to the hon member was whether there were any secret funds not subject to auditing.

That is his secret.

He is conveying absolute confusion to the voters out there with that secret he carries about with him. To assist him in this regard, as a backbencher I merely wish to refer him to the Exchequer and Audit Act in which all these secret funds are referred to. I took the trouble of looking up only one of the Acts concerned so that I could hold it up to the hon member for Sunnyside. I am referring to Act No 56 of 1978, the Secret Services Account Act. Section 3 of this reads as follows:

You see, Sir, what tactics this hon member and his party are pursuing. They are trying to implant the idea in voters out there that there is inadequate control in respect of the financial administration of the Government.

They are half-truths.

Yes, this forms part of the half-truth and I think it a shame.

I think the hon member for Sunnyside indicated that he would return to the debate later today. When he does so, I believe he owes the Auditor-General an apology. In his speech this morning he made the statement that money was supposedly channelled inter alia from this secret fund to the NP. That is an absolute untruth! Public accountability is involved here. As regards that hon member and his party, I shall leave the matter there. I only hope the facts will also be spread amongst the voters out there so that they will be informed of the untruths and distortions with which that party comes up. The voters will settle with it at the ballot-box.

The Exchequer and Audit Act provides for the appointment of an Auditor-General and the necessary personnel to assist him in the performance of his duties. This therefore forms the basis of the financial administration of the Public Service which regulates it. The duties and powers of the Auditor-General are to audit all the accounts of the various Government Departments, Transport Services, Post and Telecommunications, agricultural control boards, development boards and Statutory Institutions to determine that (Act 66 of 1975, section 42(9):

• (a) all reasonable precautions have been taken to safeguard the proper collection of moneys … and that the laws relating thereto have been duly observed;
• (b) all reasonable precautions have been taken in connection with the receipt, custody and issue of, and accounting for, stores, equipment, stamps and securities;
• (c) all payments are made in accordance with the appropriate authority and supported by adequate vouchers or other proof of payment.

It is the duty of the Auditor-General to report to Parliament on all these accounts. According to Act 66 of 1975, section 47,

he shall draw attention to—

• (a) every case in which it appears to him that a grant has been exceeded or has been utilized for a purpose other than …

That is what I said and the hon member can respond to that at a later stage:

[Interjections.] I am not sure whether we should spend so much time on this now. [Interjections.] The hon member will receive an opportunity later to respond to this. I cannot help it if hon members are not punctual. [Interjections.]

Order! There are too many members who want to help the hon member for Newcastle.

I asked earlier and I now ask the hon member again whether he had not been a member of the Select Committee on Public Accounts from 1967.1 ask him now: Is this correct?

1967?

Yes, since 1967.

I served on it for years. [Interjections.]

It is so many years ago that the hon member can no longer recall it. [Interjections.] I wish to ask him whether there are any secret funds of which this hon member is aware which are not subject to auditing by the Auditor-General. Is there one?

Yes, they are subject.

If that is the case, why did the hon member get rid of so much hot air here and insinuate that money from secret funds was used for the NP propaganda document?

What about the pamphlets?

The hon member did not hear a while back but it is as well that he has responded to this. If he is to speak—I said this a few minutes ago and I repeat it—I wish to suggest that he owes the Auditor-General an apology. He implied with his statement that the Auditor-General was not doing his work; that is what he implied by that. He should consider at a more opportune moment what he attempted to impress upon the voters. But that is enough about the hon member.

As I was saying, the second aspect of the Auditor-General’s task is that he shall draw attention to—

• (b) the utilization of money for a service which in his opinion is wasteful or not conducive to the best interests of the State…;
• (c) the use or custody of equipment and stores in a manner which is or may be detrimental to the State …;
• (d) any other matter which he considers should in the public interest be brought to the notice of Parliament ….

That includes funds which, according to that hon member, are supposedly used by the NP for propaganda. The Auditor-General’s report on the audited Government accounts is tabled annually in Parliament. For various reasons, inter alia the extent of the legislative programme, the Auditor-General’s report is referred to the Standing Committee on Public Accounts. The Standing Committee on Public Accounts consists, like all the other standing committees, of members of the various political parties from all three Houses of Parliament. [Interjections.] It is also an acknowledged principle that public accounts are a national and not a party-political matter. Until 1913 it was customary for the Minister of Finance to act as the chairman of the select committee. This practice was discontinued although the Minister stayed on as an ordinary member until 1939. In some countries it is even customary to appoint the chairman of the committee from opposition parties and so guarantee objectivity. [Interjections.]

In South Africa there are also examples of members of opposition parties becoming chairmen of this committee. In this way Mr J W Jagger, a member of the opposition, was the chairman from 1914 to 1920 while Sir William McIntosh, also a member of the opposition, acted as chairman of this committee during 1925.

The principal duty of the committee is to investigate irregular financial transactions, as pointed out in the report of the Auditor-General, and to report on them to the three Houses of Parliament. Investigations of the committee chiefly provide the opportunity of evaluating the regularity and efficiency—or the reverse—of the financial administration in the light of evidence from accountable officials. Upon completing its investigations the committee reports to Parliament as regards its findings.

The value of the Standing Committee on Public Accounts is based on the fact that public functionaries can be called to account for reported financial irregularities. Those people know that the committee has to report to Parliament, with all the possible consequences this can hold for them. This committee is actually one of the main—if not the main—instruments by which elected representatives are furnished with the opportunity of accounting to the voters for the ways in which they spend public money.

On behalf of hon members on this side of the House I wish to express our confidence in the hon Minister of Finance as well as in the financial control exercised by the Government and the measures made possible by that control.

Mr Chairman, I should like first of all to respond to a couple of points raised by the hon the Minister, particularly in relation to the Standing Committee on Finance. I will be very brief because I do not believe there is any point in conducting an endless discussion in this connection. I do feel though that the hon the Minister was overreacting to this issue. In his Budget Speech he used phrases such as “subjecting people to interrogation and cross-examination”. Yet there was no specific example of a question to which he objected.

I should like to make one comment on this whole issue of policy matters and facts. When one asks a question—I am talking about questions in general—one is not always certain whether the reply to that question is going to reflect a fact or a policy decision. I want to mention just one example that occurred in the committee earlier this week. I do not believe it is a controversial example. We had representatives of a certain organization—not a State department—giving evidence, and we asked—I put the question to them—why certain money reflected in their balance sheet had not been spent. It could have been for any number of reasons. They could have said they had not been able to get building bricks or that plans had not been approved or anything else. They merely replied, however, that it was a policy matter not to have spent the money at that time. That is why I believe—and the hon the Minister will also concede—that there are often occasions upon which, until one receives a reply, one does not know whether it was a policy decision or whether there was some other reason why something did or did not happen.

Then, to respond to the question of the narrow tax base, I want to say that the point I was making was that constant reference is made to the fact that as far as individual taxation in South Africa is concerned we have a very narrow tax base. That is a fact. It is also a fact, I believe, that most people would prefer it if that tax base was broader. The point I was making, however, was that one could not jettison equity and economic justice in the process. One cannot merely say that because the tax base is narrow one has to broaden it irrespective of the consequences. The solution to those problems is not to bleed the poor of this country irrespective of what race they belong to.

On the question of GST I must say I fail to understand why the hon the Minister thinks there is any problem of definition in relation to prescribed medicines. I would think that medicines supplied by way of prescription are very clearly defined and could not be more specifically defined.

This leads me to a broader point arising from this, and to certain aspects raised by other hon members opposite. This is what I believe to be—and we are talking in economic terms today—the tunnel vision of many hon members opposite. When they talk about South Africa or its economic problems it sometimes happens that they trap themselves into talking only about the problems or the situation of White people in this country, or alternatively, sometimes only about the First World sectors of our economy. For example, the hon the Minister himself said that most people belonged to medical aid schemes.

I want to be quite frank. I do not have figures at my disposal but I would be very surprised, when one looks at the population of South Africa of 25 million to 30 million, if the majority of people either belonged to medical aid schemes or were dependants of people who belonged to medical aid schemes. While this may apply to White employees, I do not think that that kind of statement will apply in general.

I can also mention a second example of this sort. The hon member for Paarl disputed the question of lower living standards. I mentioned that the average standard of living was actually lower today than it was five or ten years ago, and he said that one could not just take a short period of time like that. How long does he want to take? Does he want to take a hundred years into consideration? Sir, I think it is quite reasonable to expect of a government, if it has run an economy well, to bring about an improved average standard of living within five to ten years.

The hon member for Paarl made a very revealing remark. He said that when he was in Newton Park virtually everyone he saw had double garages. Again, Sir, I think this shows tunnel vision, and I say this not in a personal sense in relation to the hon member for Paarl, but it is the “fat cat” approach of this Government. [Interjections.] It just seems to have lost touch with reality and what the problems are that people of all races in lower income groups are facing. Certainly there are White people—and people of all races—who live beyond their means. Certain housing standards have got out of line but I can assure the hon member for Paarl that many of the houses I saw in Newton Park did not have double garages. There are many other people who do not have garages at all; many do not have brick houses in this country and many certainly do not have cars to put in those garages. [Interjections.] It is that “fat cat” alienation which I believe is a syndrome; I do not just use it in a swearword sense. However, it is an alienation from the problems that people experience on a day to day basis. [Interjections.]

Another example of this kind of tunnel vision is the response to the points I raised on reducing Government interference in the economy and the need to improve productivity. Both the hon members for Gezina and Amanzimtoti referred to aspects in this regard. What they said was not irrelevant. The points they made in many cases were valid but it is once again a case of this tunnel vision where they look at a small part of the problem, like productivity in the workplace. However, they see the trees but not the wood. They do not look at the whole environment that is affecting productivity; they do not look at the laws and the basic structures that are causing problems. One is going to get the big gains by making changes in those areas. The whole structure needs to be changed.

I should like to come to a couple of other points raised by the hon member for Amanzimtoti because I must say, Sir, he does attempt to address some of the points that have been made and he himself also raises certain points. While there are few that I may agree with, at least one can react to them. He talked a lot about the Government moving and I think he spoke about the Government moving in the right direction on various matters that I raised. I believe he suffers from many misconceptions. For example, he talked of the fact that there were now real returns on savings. When I asked him what about tax, he said: “No, well, forget about tax.” I am sure many people, including myself, would love to be able to forget about tax but in reality that is not possible. If the hon member is looking for a reason as to why earners of income are not saving, he need only look at inflation and the negative returns on savings to see why it is happening. He again looked only at the sector that has work, and the hon the Minister referred to this himself. He talked about average incomes being up without referring to the size of the households, the number of unemployed and the fact that per capita income is down. He referred, I think, to the money supply and said that the Government was now working at getting this under control. The most recent figures show that M2 stood at 25% and Ml at 33% as of February this year.

Reform at a snail’s pace is not good enough. We dare not continue to measure progress in South Africa by the speed at which we are getting back to where we were 37 years ago.

Mr Chairman, as a Free State member of the House I wish to say that today is a very sad day for all of us. We have lost a leader we shall have great difficulty in replacing and our hearts go out to the family of the late Dr Nak van der Merwe.

To get to the debate on finance, I should like to say a few words arising from what the hon member for Cape Town Gardens said. He spoke of tunnel vision, to which the hon member for Kuruman added we did not pay any attention to the poor of our country.

Nor to the farmers.

It is very pleasant to work with people who use their mouths in preference to their brains because then one does not have to pay much attention to them. I am sure when the hon member for Cape Town Gardens was speaking about the poor and the hon member for Kuruman said we did not pay attention to the poor, they had two different sectors of the population in mind. If one looks at the percentage of Whites who do not have motor-cars, it will not even reach 10%.

What about pensioners?

The hon member should not speak about pensioners because most of them do not run cars as they are afraid of driving on account of physical defects.

The hon member spoke in a derogatory vein of Government intervention in the economy which is a reasonably hackneyed subject by now. If something goes wrong, it is in consequence of Government intervention in the economy; we had an excellent example of this a while ago in the agricultural industry. At the national dairy congress in Bloemfontein members of the dairy organization of the SA Agricultural Union decided almost unanimously that a certain scheme should be put into operation for dairy farmers. When the scheme became operative, important people in the industry said the Government was intervening in it unnecessarily. It was not the Government which was intervening as farmers had specifically requested this. I hope the hon member will agree with me that, if the Government does not sometimes intervene in the economy, it will become decreasingly accessible.

I should like to refer to immediate problems arising as a result of the fixing of the maize price which was done yesterday. As regards the fixing of a maize price and development of financial aid to farmers, the person responsible is the State President and the hon the Minister of Finance by delegation so I hope I shall be permitted to speak on this matter.

Last Monday in the Agriculture debate I said I had no doubt that we as farmers would emerge from the drought having stood the test and that we would have to apply the drought in building a better future for ourselves. If one examines this, one has to ask what one should do to bring it about. I think we have to address three aspects, namely obtaining optimal production, production prices and marketing methods and then provision of credit as well.

I should like to limit myself to the middle factor, namely production prices and marketing methods. If we make a detailed examination of marketing, there are two institutions the importance of which towers above the rest—the co-operative movement and the Maize Board. I should like to turn to the Maize Board today. The value of the Maize Board cannot be overestimated; not only does this Board have to see that the right quantity of maize is at the right place at the right time, but it also has to do market research and development. In addition it has to develop an export market, etc.

Furthermore it has a duty to act as a liaison officer between the farmer—that is to say the producer—the Government and the consumer to explain problem situations existing for the producer to these other interested parties. If it succeeds in this, its work results in better prices to the farmer.

I should like to point to an example of this type of fact which perhaps deserves mention and may bring about an interreaction of understanding between the various parties. When the new producer and consumer price of maize was announced, a shocked member of one of the consumer organizations said that the increase of 10% in the producer price of maize had greatly shocked the consumer market. It sounds as if the maize industry is once again being held responsible for an increase in the price of maize as far as the consumer is concerned. I can tell that institution the industry truly had nothing to do with this increase. It is the one matter of which the industry is innocent, namely the increase in the consumer price of maize.

On examination we see the difference between the producer and consumer price of maize is taken up entirely in compensation for storage and handling costs of maize for domestic use. In the past the Government fully guaranteed these storage and handling costs as far as domestic consumption of maize was concerned but this year there has been a movement away from this scheme and the Government drastically curtailed its subsidizing of this item to only about R100 million while the remainder has to be made good from this difference between the producer and the consumer price of maize. A part of the difference—R40 million—is naturally being applied in terms of the Jacobs report.

Viewed like this, one can say an increase of 10% is a bargain to the consumer because, if one looks at what has happened to the maize producer, one finds he has suffered a price loss of 15% in real terms this year.

One would therefore be able to say at this stage that maize farmers have been totally ruined. But then other factors come to light again, factors in the sense that the price of maize has risen by 42% over the past two years and that means a real increase of 13,5%. On the other hand, the price of wheat has declined by 13% in real terms over the same period. If one examines this further, one finds that prices of all agricultural products have fallen by 8% in real terms over this period. More perspective regarding this problem is now beginning to emerge which we will have to bear in mind.

It will naturally be contrary to the farmers’ best interest as well as that of the country if we do not examine what has happened to farmers’ input costs. If we look at these, we find that even in real terms there has been an enormous increase here as regards farming products.

I feel what is essential in this difficult time is for people to find one another. When times are bad, it is always easier for people to do this. This is the obvious time for people to get together. All branches of the industry and all institutions involved should do this so that we can attempt to work out a formula for resolving this matter. [Time expired.]

Mr Chairman, the suggestion of the hon member for Heilbron that the reason why pensioners do not drive motorcars is to a very large degree that they are nervous on the roads, is something with which I think most them will disagree.

We in South Africa are suffering our own private depression. Our trading partners have experienced a considerable revival—the USA has even had a boom. The value of our rand has dropped from 132 US cents to 32 US cents in six years. Our inflation rate is 16% whereas that of our trading partners averages between 2% and 5%. We have not even achieved much more than half the growth rate that was envisaged by the economic development programme. Is it any wonder, therefore, that someone who is an objective observer like Dr A Wassenaar should say:

You will notice that I have not included the current unemployment figure in these symptoms. I have done so deleberately because I believe that whereas unemployment is a major long-term problem, the present unemployment is the result of a cold-blooded acceptance by the Government that mass unemployment was going to take place as a result of its financial actions. The unrest that would go with it, and the likelihood that force would be necessary to control that unrest, I believe were all foreseen and accepted by senior Government members. When judging this Government’s performance the electorate in Newton Park must bear that fact significantly in mind. The Government mismanaged the economy until it was in a most serious mess. Worse still, it did not recognize the condition it was in, and then, for short-term reasons at the time of the referendum, it embarked on short-term actions which made the serious mess absolutely irreparable without the type of dire action that has been taken recently.

Faced with a serious balance of payments problem and the prospect of runaway inflation, the only remedy that the Government had was to induce a recession. Interest rates were moved to penal rates and a financial ice age gripped the business community. The Government cynically decided that the voteless must carry the burden of rectification. Our poor have no security net like the poor in the Western nations have. The Government left the poor, Black and White, to bear the burden of measures made necessary by its own gross excesses over many years.

In the Port Elizabeth/Uitenhage region, the community is singled out for special Government treatment. It is used to the cyclical nature of the motor trade. It can live with those ups and downs. However, even when represented by six Nationalist members of Parliament the Government took the area completely for granted. Its public representatives are more interested in ingratiating themselves with the NP hierarchy by not treading on the toes of the senior members than in fighting for their own area.

In any case they carried no clout whatever in the ranks of that party. We see the result, for example, in the disastrous decision to make Saldanha Bay the ore-exporting port and not promote the St Croix scheme which was far more practical. We see it in the establishment of ADE at Atlantis rather than in Port Elizabeth where the rest of the motor trade should logically be established and where glomeration advantages would have been available. If the Government had any interest in the region at all, would it not have decentralized at least some regional offices or works to that area?

If any further proof of the Government’s attitude to the Port Elizabeth/Uitenhage area was needed, it was to be found in early 1982 when the new incentives under the decentralization scheme were introduced which virtually excluded Port Elizabeth from those incentives. Vastly improved incentives were offered industrialists for the establishment of locations all round the country, but not at Port Elizabeth/Uitenhage. Only recently and in the light of the Newton Park by-election has an improved package of incentives been offered to Port Elizabeth, but it still does not compare with other incentives and neither does it have the tax-free wage incentive which is available to Pietermaritzburg, East London, Bloemfontein and Atlantis. The results are plain to see and if the Newton Park electorate is not influenced by them, I will be most surprised.

There is unemployment which in the Black townships runs at between 25% and 30%, and there is no social security for those people who are out of work. There is no significant Government emergency measure to create work or income for them. The result is frustration, anger and unrest.

A police force has to try to keep control and, when things go wrong, guess who will be left carrying the blame? It will not be the Government but the police force.

The town, battling to keep industry in competition with other towns, is faced with the adverse publicity now of incidents like the Langa shootings.

Let us consider the record of the NP members of Parliament from that area. The hon member for Algoa has declared he is not in favour of a uniform steel price. Does he want his town always to be at a disadvantage against other industrial towns? Does he also believe there should not be a uniform power price? Does he think industrialists from that area should be allowed to import steel in competition to Iscor? If not, why not? These questions should all be answered.

The hon member for Algoa has declared that Port Elizabeth has been treated handsomely by the Government under the decentralization scheme. That is either total ignorance or he is just trying to curry favour with the people who make decisions in his party.

While we are about it, let us consider the statement of the hon the Minister of Constitutional Development and Planning. He said the economy of Port Elizabeth grew by 17% per annum in the 1970’s and that the area’s industrial growth had not lagged behind the rest of the country. Consider the following figures. In 1972 the output of Port Elizabeth’s manufacturing sector was 6,6% below what it had been in 1970. By contrast, in the same period, the country’s manufacturing output rose by 14,2%. The growth rate of Port Elizabeth for the following three years was 7,2% per annum behind that of the rest of the country.

The reason for analysing these figures is not to say that somebody is wrong but to point to the fact that decisions which affect the lives and wellbeing of hundreds of thousands of people seem to be made without the correct factual information which one would expect anybody would require before making such far-reaching decisions.

South Africa is suffering the effects of gross Government mismanagement of the economy. The cause of the mismanagement is a political policy that allocates resources to achieve ideological goals rather than channeling those funds into areas where they could be used productively to create wealth.

There are many lessons that can be learnt from the Port Elizabeth situation, and people should study it because in microcosm one sees many of the problems that South Africa is going to face down the road. Firstly, we have a highly industrialized society that is largely dependent on the capital and expertise of multi-national companies. Secondly, we have a rapidly growing Black population which is discriminated against materially and politically. Thirdly, there is high unemployment and the frustration and anger that go with it, as well as the futile use of force to try to restrain that anger. [Time expired.]

Mr Chairman, at the outset I should like to express a word of thanks to the hon the Minister of Finance for his kind words addressed to me personally at the beginning of this debate. I should also like to reciprocate those remarks. It is a great pleasure and a privilege to work with the hon the Minister and also with the very talented staff of the ministry.

It is a strange experience for us today to conduct this debate without the hon member for Yeoville. It is indeed like Hamlet without the Prince of Denmark. We certainly miss him in this debate. I understand that he is overseas at present and I wish him a safe return.

I should now like to respond to a few remarks that hon members have made. The first point has a bearing on the whole question of the tax base. We have the curious situation that hon members on the opposite side of the House suggest that we must exclude prescribed medicines and basic foodstuffs from GST. I shall deal with all those exclusions in a moment. Then we have a complaint about a number of write-offs that individual companies could make. I think ten such write offs for companies were mentioned. It is maintained that this is wrong and that therefore the Government is the enemy of the private sector and is seeking the ruin of individual companies. We also have the complaint that our tax rates are too high. The hon member for Constantia pointed out how highly we are taxed in South Africa.

Do you disagree?

I do not disagree. Fundamentally, the reason is to be found in the fact that the tax base is too narrow. There are many cases of tax leakage. Many distortions have crept into the tax system. Anyone who has run a group of companies would know how true this is. In one company it is not possible to do anything while in another company it is possible to have mammoth tax write-offs. We all know that there are large groups in South Africa that, in fact, pay very little or no tax because they can take advantage of the system.

It seems to me therefore that it is absolutely imperative for us to broaden the tax base and to reduce taxes. If we do not broaden the tax base—of course, we can do other things—and get back to the starting-point, we will be getting nowhere. That is one of the fundamental reasons for the appointment of the Margo Commission and also in order to get some form of equity back into the system. There are major anomalies in that some people can achieve major write-offs while others cannot.

I should like to deal with a few of those anomalies by way of example. In fact, hon members on that side of the House have created the argument for me. The question of medicine is a good example. The hon member for Pietermaritzburg South and also the hon member for Cape Town Gardens said that we should exempt prescribed medicines. However, the fact is that such an exemption would not necessarily assist the poor. The really poor people very often do not pay for medical attention because they attend clinics and public hospitals where the cost of treatment is very low. Very often the medicines are free as well.

I think the hon members were distorting or misunderstood what the hon the Minister said in regard to the middle income group. Most people in this group are members of medical aid funds. Furthermore, where people in the lower and middle income groups are not members of medical aid funds, their medicines are tax-deductible to such an extent that in practice they pay very little.

If there is a special plea on behalf of very poor people, the fact is that these people very often go to a chemist and buy patent medicines, unless they are very seriously ill, of course. Therefore, if we were to respond to the hon members’ suggestion that only prescribed medicines should be tax-deductible, we would not be helping the very people whom they want to help. One would either have to make all medicines tax-deductible or none at all. There are many arguments that one could raise on that basis.

There is another fundamental problem. We really must get back to a system whereby we take the limited resources that we have available in our country to help those people who can identify themselves and whom the State can identify as being poor. It is a problem that we have with the bread price. It is a problem that we have with tax write-offs against subsidies in the building society movement. It is a problem that we have throughout our society. We must get back to a system whereby we can apportion that money, which is very limited, to the social and developmental problems that we have in our country which are enormous. We have to try to concentrate that money on those sectors of society that really need the help.

Let me give another example—which flows from one of the arguments raised by hon members on that side of the House. As regards basic foodstuffs, the fact of the matter is that some foods were excluded when GST was increased from 7% to 10%. We know that that was done to try to keep the total food basket at roughly the same price that it had been prior to that increase in GST. We have now had an increase of another 2% in GST and we see that there are distortions developing. Again we have the problem that the very people who really need to be helped we are very often not helping because the poor man—the hon the Minister has said this on numerous occasions in private conversation and he may also have said it in public—does not buy fresh meat on a large scale. The man who does not have a refrigerator buys canned fish or canned food because he cannot store fresh produce. So one is helping people who do not require help.

However, if we were to exclude only certain foodstuffs there would be a loss of revenue of something like R357 million per annum. I just want to give a few examples to hon members of the loss of revenue if we were to exclude a few other basic foodstuffs: Canned fish, a loss of R16 million per annum; canned fruit, R15 million; canned meat, R27 million; condensed milk, R21 million; cooking oil, R40 million; sugar, R51 million; and so one can go on. Just on a few basic food items one would lose something like R357 million in revenue.

Obviously I do not know what Mr Justice Margo and his commission will say but my own view, for what it is worth, is that there may be a strong case to be made out for not having any exclusions at all and using the extra revenue that one raises in that way to help people who really need to be helped as to reduce the rate. It is wrong to spread assistance so thinly over a society that includes large sections of the population that do not need any assistance at all.

The hon member for Constantia as well as the hon member for Cape Town Gardens, if I remember correctly, took a figure of taxation of some years ago and one of taxation today and argued that the individual taxpayer was paying so much more in South Africa today. The truth is, Sir, that when we look at the increase in the number of taxpayers between 1974 and 1984 we find that among the Whites, Coloureds and Indians there were 18,6% more taxpayers, and among the Blacks there were 9,1% more taxpayers. So we are dealing with an increase of something like 40% in the number of taxpayers. That is borne out by the statistics of the Department of Inland Revenue which show that in 1985, 2,3 million income tax forms were issued, showing a growth of 5% over the previous year. That was only in one year. So that argument which the hon member was using is a fallacious argument.

What about the gross percentage increase?

That is true. We all know it is true that the fiscal drag, bracket-creeping, has caught up with people and that a number of people are paying a great deal more tax than they paid before.

What about the fringe benefits that they get away with?

That is true. The hon the Minister mentioned that people got away with fringe benefits. What is also true, is that with the change in the tax scale to R60 000, anybody earning under R75 000 a year in South Africa is better off than he was before in terms of the amount of personal income tax he has to pay. I can give the hon member some figures from the Commissioner’s office. [Interjections.] On an income of R7 000 a year one has a reduction in tax of R152 over the past year. On an income of over R10 000 a year the reduction is R80, from 7,22% to 6,42%. On an income of over R16 000 a year, it is down on last year from 12,9% to 11,6% or R216. I am not pretending that personal taxpayers are not too highly taxed and that there are not inequities and distortions in our tax system. We recognize that, and that is one of the reasons why the Government decided to appoint the Margo Commission in the first place and why the Government is looking de novo at the whole tax base. However, the wild statements that the hon member has been making on this subject are simply not true.

While I am on the subject of the Commissioner’s office, I should like to pay tribute to the Commissioner and his staff. When one looks at the enormous job that they have and at the fact that there are only something like 6 424 people in that department and they are collecting something like R25 000 million tax a year, one sees that the scale of their work has increased enormously. The personnel have not increased proportionally and they are doing a very fine job. We are also all extremely grateful for the fact that they have voluntarily agreed to work an extra half-hour every day without any overtime pay, and we thank the staff of the Department of Inland Revenue for this.

An hon member mentioned the question of price control, and I want to say price control is a bad thing as far as we are concerned. It has not always meant that we have seen a drop in prices when we removed price control. Very often when we removed price control prices have gone up. Nevertheless, in principle we believe in doing away with price control where at all possible. In fact, we did away with price control on fertilizer on 1 January 1984. We did away with price control on rock-phosphate on 1 January 1985, and on 1 May 1985 we shall do away with price control on cans for the canning industry. Furthermore, hon members will remember that we have in fact done away with price control on a variety of products such as glass.

Several hon members, and particularly the hon member for Cape Town Gardens, spoke about the whole question of privatization, problems in regard to regulations in our country and problems causing obstructions to people who wish to enter our economy. The hon member for Walmer also made several remarks in that regard. I want to say that those hon members are preaching to the converted and there is no disagreement between ourselves on these issues. The fact is that, the Government is looking into the departments themselves at the moment. The State has commissioned and asked for several studies to be done. Some of them have been mentioned, for instance the Reynders Commission which is currently being implemented throughout the country. We also have the fact that the President’s Council is currently looking into the whole question of deregulation and the question of licensing as an obstruction to people entering the economy. We know that the Department of Constitutional Development and Planning is addressing the whole problem of CBD’s. Certain announcements in that regard have already been made, and other things are going to happen in September this year. We know that there is no question about the fact that we are overregulated in this country, and the Government realizes that. The Government is very aware of that and is in fact taking steps to reduce the amount of regulation that exists in our country.

Now I just want to turn to something the hon member for Walmer had to say. He again came here today with a Newton Park speech. I would say to him, first of all, that it would have been more appropriate had he made that speech in Newton Park. If, however, he insists on making it here again—I say “again” because we have already heard it several times—it would have been more appropriate had he made it in the discussion on the Vote of the Minister of Trade and Industry. Having said that, let me say that I do not think everything the hon member said concerning decentralization was wrong. The fact of the matter is that we had a decentralization policy that was not working. Forgetting about colour, ideology or anything else, the reality is—and he knows it—that there are parts of our country in which enormous numbers of people are living who do not have work and for whom there are very few or insufficient opportunities to progress. I refer to work opportunities, educational opportunities …

That is a very sad reflection on a Government that has been in power for so long.

No, Sir.

This is a Third World country.

That is a reality. I shall reply to that point later.

Mr Chairman, may I ask the hon the Deputy Minister a question?

No, not now. When I have finished, the hon member can put his question. Let me first develop my argument. The fact is that we have these depressed areas in our country and that we must somehow cope with that reality. The policy that we had before was not working—we freely admit that. It was not working well. It was not appropriate to the kind of demands that existed in society.

Sir, after much formal and informal consultation, also with the private sector, with commerce and industry, the Government came with its new programme of decentralization. The problem with the whole policy of decentralization has not been that it has been a failure. The problem has been that it has been a galloping success. The fact is that the number of applications that have been received has absolutely taken off. That also applies to the number of industries …

One cannot judge it by that.

The fact is that there have been a great many applications and that a great many industries have been going into these decentralized or deconcentration areas. The scheme as such has now been run for two years and certain problems have arisen which need to be addressed. As planned for at the time when the scheme was announced, it is now being taken on review and the problems or growing pains, if one likes, that have emerged are now being addressed. If there are loopholes, if there are problems, if there are distortions, if there are possibly abuses and so on, I can promise the hon member that these will now be addressed. There is not necessarily dishonesty involved because the books of all the people concerned are audited. The fact is that the processes that are applied are those suggested by the Auditor-General’s office. As I say, if there are distortions, they will now be addressed and ironed out.

In a country like ours one cannot, however, follow a policy of laissez-faire and say “OK, gentlemen, go wherever you like and do whatever you like”, as that hon member preaches. That hon member says to us that he and his party will argue against the whole principle of having decentralization in the first place, but then he comes along and criticizes our decentralization policy with the inference, aimed at the voters of Newton Park, that, if his party were in power, they would do more and improve the situation. I want to say that, if that hon member’s party came to power and did away with these incentives, none of these industries would be founded in the places we are talking about and more particularly in Region D in the Eastern Cape, the Port Elizabeth/Uitenhage area, East London, Ciskei, Transkei and so on. The reality is that there are massive concentrations of people there and that to provide employment for those people one has to have a policy of affirmative action or call it what one will. However, that hon member comes along and says we must do away with this policy, and then he tries to measure our policy in such a way that the impression is created amongst the voters of Newton Park and the people of the Eastern Cape that the PFP will in fact do something more for those people than they are getting through the policies of this Administration. Sir, that is nonsense. One must consider the facts.

Before I go further, I want to say to the hon member that it is no good having a “beggar thy neighbour” approach. None of us in South Africa can afford that. It is no good talking about the Eastern Cape as if it is some kind of foreign country.

Yet you treat it like that.

No, it enjoys most favoured treatment. The fact is that if that hon member’s party had been in power there would not have been any plants in the Eastern Cape such as exist now. I want to tell the hon member—not that he had anything to do with it—that the reality is that since we have improved the benefits to Port Elizabeth…

Why did you improve them? You improved them six months ago. Why?

That hon member knows very well why. He heard the hon member for Algoa explain during the Budget Debate how these negotiations have been going on for years. That hon member was somewhere in Nepal climbing mountains with the flower-people while our people were hard at work trying to aid the people of that area. Now he comes along and tries to take the credit for the improvements that have been brought about. Let us, however, see what those improvements are. In his example of the factory, that hon member contended that if this or that happened, the new factory would be built and fewer people would be employed and so on. That was his argument today. On a previous occasion he argued that the cash grants meant that people were being taken into employment only to get the cash grants. [Interjections.] The hon member argued that on a previous occasion; or, at least, hon members on that side of the House have argued previously that the decentralization incentives are such that unnecessarily large numbers of people are employed in order to get the cash grants.

That is true. That is correct.

No, but today the hon member argued against that. He put forward a different argument in respect of Port Elizabeth. He advances one argument in respect of Port Elizabeth in one debate and quite another argument in some other debate.

The reality is—and this will give hon members some idea of the trends that are taking place in response to some of our new policy initiatives in respect of decentralization in Port Elizabeth—that seven applications were received from existing industries in Port Elizabeth from November to February. These seven application represent an investment of R10,7 million and an increased employment factor of 748. There were nine applications for the expansion of existing industries within the area, and these represent capital employed of R15 381 000 and involve the creation of 393 new jobs. Applications for totally new projects—totally new industries not industries moved from anywhere else in South Africa—number five. They represent a capital investment of R5 341 000 and employment for 162 people. In respect of industries being moved from other parts of South Africa, we have received two applications representing a capital investment of R13 million and employment for 359 people.

On top of all this, there has been the recent announcement by the State President of the proposed water projects in the Eastern Cape. These projects will mean massive employment—if I am not mistaken they will provide employment for some 19 000 people. Moreover, R100 million has been set aside in the Budget for the creation of employment opportunities in the depressed areas of our country. Furthermore, the hon the Minister of Public Works announced in Port Elizabeth the other day that the Government was in fact advancing certain tenders in order to take up the slack and so employ unemployed people in the area, and that the Government would actually favour those tenderers who used a higher percentage of manual labour rather than machines in the digging of the foundations and similar pick and shovel jobs.

The overall picture that emerges, then, is that of a Government particularly concerned about that part of the world. It is doing what it can structurally. These decentralization initiatives for that area were not announced before the Newton Park by-election. They were announced years ago. It is no use that hon member coming along now and arguing that East London receives 20% more than they do in respect of particular benefits or marginally more in respect of another benefit. There is no use in that hon member’s adopting a “beggar thy neighbour” approach. I want to tell that hon member that if East London, Ciskei and Transkei collapse because they view the situation as a hopeless cause, things will not go well with Port Elizabeth even if we favour Port Elizabeth as that hon member wants us to do.

I want to say that Port Elizabeth is the focal point of the Eastern Cape. Therefore, anything which accrues to the benefit of the Eastern Cape is also to the benefit of Port Elizabeth. Let us take the wool industry for the sake of our argument. The wool industry is located almost throughout the Eastern Cape. The same applies in the case of the mohair industry. The reality is, however, that the benefits which flow from those industries are all destined for the warehouses on the wharf of Port Elizabeth harbour. This in turn benefits the financial institutions, the professions and many other enterprises in that region. Port Elizabeth, being the hub of economic activity in that region, derives the primary benefit. Therefore, for the hon member for Walmer to allege that East London is receiving benefits which are denied Port Elizabeth is I want to tell him absolutely not correct.

I must put it to him that one of his hon colleagues who formerly represented an East London constituency befouled his nest in East London during his stay in that city. The hon member for Walmer, with the help of that hon colleague of his, is now busy befouling their nests in Port Elizabeth. If one had to judge conditions in Port Elizabeth from the speeches of the hon member for Walmer, one would decide that it was the last place in which to erect a factory.

Fortunately, however, we have sensible industrialists in South Africa, who know that Port Elizabeth is indeed a place of great opportunity, of ever-increasing opportunity, and with the help of this Government they will make it the growth point, the focal point of economic growth in the Eastern Cape, which in fact it deserves to be. They will do that in spite of what the hon member for Walmer says and not as a result of what he says.

I want to make just a few further remarks on the question of privatization, competition, and so forth. The hon member for Randburg expressed some fears in connection with concentration and overconcentration in our economy. I want to tell the hon member that we share his fears. There is no question about the fact that one of the structural problems in our whole economy, and particularly in our industrial economy, is this phenomenon of overconcentration. There is no doubt that if we privatize—and privatize we should—in many areas, we must be careful in doing so that we do not add to this whole problem of overconcentration in our economy. I do not want to make any statements in connection with policy because that is the prime responsibility of the hon the Minister of Trade and Industry. I am sure he will address himself to these issues again at a later stage. I do believe, nevertheless, that we must be very careful that when we do privatize that we do not simply create bigger and bigger monopolies in the process. We must also see to it that we structure things in such a way that downstream from the new industries that are being privatized we do not create problems. There are indeed many problems which can emerge downstream from an industrial company such as Iscor when it is privatized and taken out of the relatively benevolent hands of the State and placed into the less benevolent hands of the private sector in our country.

I can think of a few stresses and strains that are indeed likely to emerge as in the case of Sasol, for example, should Iscor ever be privatized. The benefits so far have been overwhelming with Sasol but nevertheless there are certain problems emerging downstream from Sasol owing to the privatization of that company.

What is true is that when we talk about privatization—and here I do agree with many hon members opposite—we must look at opportunities; not necessarily only the huge production opportunities such as we have in Iscor or at the production of goods but also at the opportunities existing in the services. There is no doubt that at local government level there are a great many opportunities for privatization in our country.

*In this respect one thinks for example of garbage removal and sanitation as well as fire-fighting services. Here we find tremendous opportunity for rationalization as well as the utilization of user tariffs in order to rationalize activities or services on the level of local government to a greater extent, thus ensuring cheaper operation. I want to give hon members the assurance that the Government is giving attention to this matter; it is at present undertaking a study to establish which industries and services can in fact be privatized and which services can be amended in such a way that a tariff can be levied on the provision of such services.

Later in the debate the hon the Minister himself will, I believe, furnish further replies to some of the other questions which hon members have put. Unfortunately I do not have the time now to react any further to hon members’ speeches.

Mr Chairman, the hon the Deputy Minister gave a comprehensive reply to the hon member for Walmer’s speech. This year, however, we have had so many speeches, so many debates and so many appeals being made to the State about Port Elizabeth’s problems that I am reminded of the reply that President Reagan gave, on occasion, to one of his voters when one of them also asked for State assistance. President Reagan told the voter concerned that when the good Samaritan, who was a Coloured, was riding along and came upon the Jew lying under a bush, almost beaten to death, he did not telephone the Police, Social Welfare, the Prisons or Pensions, but instead loaded that man onto his donkey and took him to town. He booked him into the hotel and had him cared for. He told the owner of the hotel that when he returned and the man in question had recovered he would settle any additional costs. The lesson to be learnt from the parable of the good Samaritan is not to approach Social Welfare or the State for assistance, but to do something about the matter oneself.

The question the hon member for Walmer and all those who have been moaning such a lot—with whom we do sympathize, of course; do not think we do not sympathize with them; we are as sympathetic towards them as we are towards the man under the bush who was helped by the good Samaritan—should ask themselves is what they themselves have done to solve Port Elizabeth’s problems.

This brings me to another matter. In the Second Reading debate I made a speech in which I asked for the abolition of tax on interest, and now, Sir, I have my own fan club. [Interjections.] In this morning’s issue of Die Burger …

Was that not a letter you yourself wrote?

The hon member for Springs says I wrote the letter myself, but that is not true. In this morning’s edition of Die Burger there was a comment on the speech, and one reader asked why there were not more people like the hon member who has for a long time now been asking for the abolition of tax on interest. He concluded his letter by saying: “Ek hoop mnr Van Vuuren sal die vuur warm hou.” [Interjections.] It makes one think. The reader concluded by saying: “Mag hy baie hulp van sy kollegas kry.”

In regard to the subject of the abolition of tax on interest I want to thank the hon member for Amanzimtoti very sincerely for having dealt so knowledgeably with this matter of the personal saving of disposable income, because in this country we cannot and will not be able to bring about industrial growth in other spheres if we do not increase the personal saving of disposable income. The Small Business Development Corporation does a great deal to assist as far as this is concerned. That is true; it does help a great deal. The policy of the Small Business Development Corporation does not, however, tie in with the lesson we learn from the Good Samaritan. We shall promote growth if people save that portion of the money which they relinquish, so that entrepreneurs can use the money for development and growth, for providing job opportunities, thereby creating additional tax-payers.

I want to say a few words about those entrepreneurs. They are unpaid public servants, and I think the hon the Minister should also express a word of thanks to the unpaid Public Servants who are tax collectors. They collect the pay-as-you-earn contributions from employees, they collect and pay in sales tax contributions, they collect the unemployment and Workmen’s Compensation contributions and also trade union fees, pension contributions, etc. They do a great many things for the benefit of the State but are treated fairly harshly by the Exchequer. I should like to make a request to the hon the Minister on behalf of those entrepreneurs. I know that I should rather address these matters to the Margo Commission, but it is nicer and easier to talk to the hon the Minister across the floor of the House. In order to expand and develop, such entrepreneurs must also sell goods on credit. I know it is said that they do not have to sell on credit, because people should not be encouraged to incur debt, but an entrepreneur must offer credit facilities if he is to have any turnover. Because GST is payable on transactions, the person granting the credit has to pay the tax immediately the transaction is entered into. GST of 12% is one-eighth of the value of the product he sells. He only collects his money from the sale of that product in 12 or 18 months’ time. Particularly in difficult times such as those prevailing at present, there are even instances of payments being skipped, which can extend the period to two years. The question is whether sales tax cannot be collected on an instalment basis, as the specific item is paid off.

I want to conclude by pointing out that we do a great deal of talking—in the House too—about the division of income and about what we should take from those who are more well-to-do and give to those who are not so well off. I do not, however, think it is a crime to be rich. We must not take too much from the rich to give to the poor. The poor are not to blame for being poor, but the rich have worked very hard for their money. The rich are also the people who save, if I may link up with what the hon member for Amanzimtoti said. It is his savings which the banks use to grant loans to the poor. He is the one who supplies the jobs and he is the one who helps to develop the country. I do not think one should make such people feel guilty, in the long run, for being well-to-do. A country in which all the inhabitants are poor can surely not be a rich country. The more wealthy people there are in a country, the wealthier will the country be and the quicker and better will be its development and growth, which would be of particular benefit of the less well-to-do inhabitants of that country.

Mr Chairman, I want to come back to the hon the Minister who referred to me and to my party with so much venomousness and hatred. I am now sending him, across the floor of the House, the registered letter I wrote to Parliament. I am also sending him the attendance register of all the meetings of the standing committee certified by the Committee Clerk, from which the hon the Minister will see that I was present at the second meeting and that it is untrue to tell the House and the public at large that I was not present.

And the third meeting?

Did I not indicate that I had tendered my apologies for my absence. I told the hon the Minister as much on Wednesday in the House. I am sending the hon the Minister the minutes of the meeting of 8 February so that he can see for himself. I am sending him the minutes of the meeting of 15 February, at which I was not present. I am also sending him the Hansard report, the unrevised copy of which the hon member for Smithfield quoted to me. [Interjections.] I also addressed a letter to Parliament. Moreover, on that Monday morning I telephoned the Secretary to Parliament, Mr Joggie Victor, to say that I could not attend the meeting. He returned my call to tell me what proceedings were involved. If the hon the Minister wants to pursue that matter any further, it does not matter. While the hon the Minister was carrying on like that, I wondered whether we were really that bad. The hon the Minister should rather have referred to his own party, to people like Mr Fanie Botha, Mr Hennie van der Walt and this hon Minister of Manpower who earned R4 million in the twinkle of an eye.

We do not want to speak about that, but since the hon member referred to me in that vein, let me point out that I spoke to a man in Harrismith this morning about what the hon member for Smithfield said about my refusal, in the standing committee, to sit next to a Coloured. What did, however, happen? When I arrived at the second meeting, we all sat in alphabetical order. I asked the hon member what was going on and he said that there should be no evidence of apartheid. Apartheid should be completely eliminated. I told him that was absurd. We should ensure that the members of the various political parties sat together. One could not adjourn each time parties wanted to get together on an issue. We deliberated, and what happened? The PFP, the Coloureds and the Indians agreed with me and it was decided that the parties should sit together. [Interjections.] I did not ask the hon member for Umbilo to change seats with me. He told me that it made no difference to him since he was the only NRP representative. It did not make any difference to him. The other people, however, had to sit with their fellow party members. It was his own choice to sit where he did. For me it is not a question of sitting next to a specific person. My policy is based on who is governing whom. My Whites govern my Whites, Coloureds govern Coloureds and Indians govern Indians. [Interjections.] That is what it is all about. But talking about insults, let me mention that the candidate in Harrismith held a meeting a few days ago. Apparently in reply to a question, he said that the NP would never allow a stream of Coolies into the Free State.

You are talking nonsense.

That hon member is free to go and ascertain the facts, but that is what is being said there now by the candidate, Mr Dirk Odendaal. Let me ask the hon member for Smithfield whether he approves of that. Does the hon member approve the fact that Mr Odendaal said that the NP would never allow a stream of Coolies into the Free State? [Interjections.] We do not use such insulting language, but that is what his party’s candidate in the Free State is telling those conservative farmers. [Interjections.] That is what happened in Harrismith. I did not say it.

When did he say it?

A few days ago. [Interjections.]

Now I want to speak to the hon the Minister about another matter. The hon the Minister’s department gave us these information brochures and the memorandum on finance. We thank him for all the documents which the department has given us. I think it is fine. I have said this last year and I am saying it again.

We are still faced with the fact that public debt has increased by 28,3%. Surely things cannot go on like this. The hon the Minister pointed out that the inflation rate was approximately 12%. Why does the hon the Minister and the Government as a whole—I must be fair now to the hon the Minister, because he has not occupied this post for very long—allow this public debt to get so out of hand? Surely future generations cannot go on shouldering that burden. What is the hon the Minister’s policy? What is he going to do to pay off this tremendous debt in the future?

I also want to speak about taxation. Here before me I have the table issued to us in the committee. According to that table the total for income tax is R28 322 million, with company tax constituting 23,9% of the overall amount. Income tax on individuals accounts for 30,5%, GST for 29,3%, customs and excise a net 7,1% and the rest 9,2%. That gives the full tax amount. The hon the Minister is taxing individuals to death. Apart from this direct taxation, there is still the GST which is chiefly paid by individuals.

Why is it that individuals above a certain notch have to pay a surcharge of 7%, whilst this is not the case for ordinary companies? I know that gold and diamond mining companies are, of course, excluded, but what about ordinary companies? These ordinary companies also make profits, and why can the surcharge not be applicable to them too? It is unfair and unjust, and I am asking the hon the Minister to look into this.

The hon the Minister can tell me that everything is now being referred to the Margo Commission again, but that is not what should be happening. The hon the Minister must go into this matter and put it right. He must not tax individuals to death.

I also want to speak about interest rates. It is all good and well to argue that interest rates are used to combat or break the stranglehold of inflation. We know that. It was put on record whilst I was still a Government member, and I am also on record as having asked the Handelsinstituut—the hon the Minister may ask Prof Horwood—for a commission to be appointed to take a proper look at inflation, because there are many forms in which it manifest itself, as the hon the Minister knows too. A proper study should be made of inflation so that it can be curtailed in the proper way.

No country in the world can go on functioning with this high inflation rate that we have. It has now reached 20%.

Where do you get that figure?

I am sorry. I was thinking of the 20% increase in the price of fertilizer.

The fact of the matter is that the inflation rate is increasing. There are those who say that it is going to touch 18%. It is true that the price of fertilizer is going to increase by 20%, an increase greatly in excess of the inflation rate. The fanners have to pay for that. The Government increases the consumer price of maize by 10% without the producers receiving an increase too. I should like the hon the Minister to tell the Committee here this afternoon, so that the public at large can know, why this is so. There has been a tiny little excuse given to explain this—and this will be taken up further in the agriculture debate—but I am saying that it is a flagrant injustice. The consumers in South Africa would also like to know why that distinction is being made. There has been slightly less of an increase in the price of white maize, with a slightly greater increase in the price of yellow maize, but there is a difference.

What would the consumers like to know?

The consumers would also like to know this evening, after the hon the Minister has replied, why the consumer price of maize has been increased by 10%, whilst the producer price has not been increased at all. Could the hon the Minister give us an explanation for that?

I now come back to the question of interest rates. The fact of the matter is that someone who is just starting off in life cannot buy a house today. In Pretoria the prices of stands are anything from R60 000 to R80 000, but then one still needs the money to build a house on those stands. The high interest rates imposed by the building societies are getting people down. We would like to know what the hon the Minister is going to do to force down building society interest rates. That is one of the important issues affecting all our people in South Africa, not only one group. Those who can afford this are not the people we are talking about. I do not think hon members on that side or I would talk about people who can afford it. We cannot ruin the people who cannot afford it. [Time expired.]

Mr Chairman, it is always a strange kind of experience, in these benches, to speak after the hon member for Sunnyside has spoken. The hon member is a senior member of this House. One is always struck by the fact that the hon member, who is his party’s shadow Minister of Finance, always leaves the impression, when addressing this House, of not only being the shadow Minister of his party, but in effect also the shadow over the constituency he represents here, and that is a pity.

I want to refer to what the hon member said this morning when he began his speech. He referred to the successive shock waves hitting the country and to the increase in the maize price. I do not want to concern myself with the maize price, but it is interesting to note that the hon member creates the impression that his party is the sole spokesman for the maize industry.

There are also other agricultural industries involved with the maize industry, for example the dairy industry and various other fodder-related industries. It is interesting that the hon member does not refer to these industries at all. One wonders whether they have no interest in the industries which are dependent on the maize industry. One cannot regard an industry simplistically and in isolation. Here we are dealing with the country as a whole.

I want to come back to the question of excise duty in the liquor industry in South Africa. Its influence on the consumer and the Exchequer is always a topic of conversation. Because the raw materials used by the liquor industry in South Africa are almost completely agriculturally orientated and because the production of the raw materials is, virtually without exception, relatively region-orientated, one frequently finds a very strong contribution being made by the relevant agricultural industry and the region concerned.

The hon the Minister decided, in his recent Budget, not to increase the excise duty on beer this year. [Interjections.] On behalf of the producers of malting barley, and the only producers of malt in South Africa, Southern Associated Maltsters, I should like to thank the hon the Minister for the action he took and for his sound understanding of the situation. Depending on other aspects of the economy which, amongst other things, have an influence on employment and on disposable income, I think that in his decision not to increase the excise duty on beer the hon the Minister has incorporated an element of security into his revenue from this source.

It is a one-man lobby. [Interjections.]

With reference to the remark from my left, let me warn those hon members that they render themselves liable to injury. [Interjections.]

It is a fact that the consumption of liquor products is really price-sensitive. With the high excise duty already being levied on beer, a further increase would, virtually without a doubt, have had a detrimental effect on sales and therefore also on the Exchequer.

Add brandy to it.

For future consideration I want to put it to the hon the Minister today that the respective components of the liquor industry—this includes wine and brandy, for the benefit of the hon member for Wellington—form part of a nation-wide industry furnishing a service to the community as a whole. Each component of this nation-wide industry provides tens of thousands of our country’s citizens with job opportunities and incomes. I want to appeal to the hon the Minister, when he considers the liquor industry as a source of revenue in the future, to try to see to it that it is not only one component of this nation-wide industry which is utilized beyond optimum capacity.

Producers of malting barley, the manufacturers of malt and the rest of the beer industry are probably proud to be furnishing such a large portion of Exchequer revenue. I should like to put it to the hon the Minister that in future we should like to continue to contribute our positive and rightful share. In the interests of the country as a whole one hopes that this positive and rightful contribution by the liquor industry as a whole will also be in a position to increase in the future. For this to be possible, one would have to bear a few aspects in mind.

Firstly natural beverages with a low alcohol content, for example beer, should in the future be treated on a more equal footing. There ought to be fairer competition on more equal terms in the marketplace so that each producer of a natural beverage would have the right to market his product in a system which is free of obstacles and which cannot discriminate against one component of the industry.

By way of its contribution to the Exchequer, by its large-scale utilization of many other industries in the economy and the employment of thousands of people at all levels, the beer industry makes an enormous contribution to the economy of the country. I therefore think it is in the interests of the system as a whole for this industry to be given a better deal. In this connection I should like to furnish two examples. Unfortunately these two instances do not necessarily come within the province of the hon the Minister.

Firstly, from a distribution point of view the artificially controlled restriction excluding beer, for example, from grocers’ and supermarket licences is an unfortunate one.

The Minister of Transport Affairs is not present in the House at the moment, but it is undoubtedly a form of discrimination that only wine, and not beer, is served with meals on aircraft. [Interjections.] I think it is very discriminating. In my opinion the hon the Minister of Finance would benefit if he could convince his colleagues to make beer more freely available. For every litre of beer sold, would the hon the Minister not be getting 37½ cents?

Hon members can allege that it is more a matter of the self-interest of barley producers and beer industry profits. What must be, must be. I am not ashamed, however, of making as much profit as possible, because I have still to see a sound industry that does not benefit the Exchequer more than a protected one.

Mr Chairman, the hon member who has just resumed his seat confined himself to beer and all its good qualities. My subject is not that palatable and cannot be drunk either.

I want to make a few remarks about the one subject that is probably discussed most frequently in the House, and that is inflation. Inflation, whether it is a low rate of inflation or a high rate of inflation, is not a healthy state of affairs. Every price increase is inflationary. In recent times we have frequently heard announcements in which it is stated that certain prices have been increased, but that the said increase of 9% or 11%, for example, is below the expected inflation rate. That does not promote the combating of inflation. Even a price increase of 0,1% is inflationary. If a glass is full, it is full. If one adds a single drop, it overflows.

If we were serious about combating inflation in this country, we would not announce increases which were lower than the inflation rate. In fact, we would not announce any increases at all. In certain instances we would, in fact, reduce prices. Then we would really have the tiger by the tail, the idea being to throw him flat on his back, as the strong men of days gone by used to do.

If a country’s inflation rate is considerably higher than that of its trading partners, it inevitably becomes increasingly difficult to compete and to export goods. In turn this leads to unemployment.

It is the opposition parties, in particular, which frequently remark that inflation is caused by what the Government does. The Government and its policy are criticized as supposedly being the cause of inflation, and the Government is attacked for supposedly not being able to combat inflation. On the strength of those remarks I want to go a little further today and look at other factors that do have a bearing on inflation.

In referring to financial objectives, the critics, particularly those of the Government, should know that their objectives should not include impractical contradictions. Stringent financial restrictions and optimal employment are very difficult to reconcile with each other. So if a low inflation rate is our only objective, we must bear in mind that there are other ideals which are not attainable. The combating of inflation needs more than a mere monetary or fiscal policy.

Since the absolutising of one ideal necessarily has a negative effect on other ideals, let me refer to those courses of action and consequences that would lead to a lower inflation rate: An economy that has cooled down, with virtually no growth, or no growth at all; unemployment; decreasing profits; lower salaries and wages; credit restrictions; decreased State expenditure; higher taxation; an effort to save more; higher productivity; no money being created; a lower gold price and price control. Each of these aspects jointly, or as a whole, would probably be able to curb inflation completely.

The question we have to answer is whether, in the process, some or other important economic objective would not be jeopardized. The action taken by the State, and its monetary policy and fiscal measures, play an important role in regard to inflation. The way in which State expenditure takes incurred, the way in which it is financed, the availability of money, the negotiating of loans by the State and the creation of money and quasi-money do, of course, play an important role. Equally important are subsidies and controlled prices. Members of the Opposition, who are continually taking the State to task for being a cause of inflation, are certainly not discovering the wheel for the first time.

An important cause of these inflationary conditions is to be found in the private sector too. What about the role played by monopolies and cartels in the manipulation of prices of consumer goods? As a result of an absence of competition, and mutual agreements between competing groups on the determination of prices, the consumer has no other choice but to pay higher prices. Have hon members encountered undertakings in the private sector which, with a view to combating inflation, voluntarily prescribe for themselves the nasty medicine of lower profits, no growth at all, smaller salaries and higher taxation? These are surely all factors that would lead to a lower rate of inflation.

What about the trade union demands for higher wages without the quid pro quo of a more effective and cost-saving increase in production? In South Africa this does, after all, play a very important role in fanning inflation. Those who protest against the increasing cost of living are, by way of their wage and salary demands, frequently the direct cause of the higher inflation. Entrepreneurs make little, if any, effort to combat the higher costs of an article, for example as a result of higher wage demands, by way of more efficient methods of production or a smaller profit margin. The increase in manufacturing costs is simply added to the price of goods, thus fanning inflation.

The economy is not primarily maintained by money and the creation of money, but rather by effective and productive labour, entrepreneurship and managerial expertise. Monetary policy covers a much wider field than inflation as such. Although a low rate of inflation is an ideal objective, this must be set off against a variety of other objectives. The balance of payments is an important consideration, as is price-level stability, the external value of money, foreign and gold reserves, economic growth and a high level of employment and labour peace. These are all important economic objectives. The choice is therefore not always an easy one.

Drastic action is often advocated, amongst other things in the form of price-increase restrictions and the pegging of wages and salaries. Such action frequently leads to the disjointed distribution of products and resources which are in short supply, which must necessarily result in an increase in prices and salaries.

There is only one way in which we can successfully combat inflation, and that is by close co-operation between the authorities, the private sector, the labour force and the consumers.

As far as the authorities are concerned, there must be control of Government spending, with preference being given to expenditure which would enhance our production capacity, for example training and the creation of infrastructure. Deficits should be financed in a non-inflationary manner and the creation of money should be limited. If the gold price were to rocket again, this would mean that revenue from this source bore no relationship to the production input in the industry, and that can also be inflationary. Building up a reserve of all the money not immediately released into the economy should be considered. The authorities are already playing their part by displaying financial discipline, by creating infrastructure and by devoting a great deal of money and attention to education and training.

Let us look for a moment at the private sector. The ideal situation would be for the private sector—and here we include the trade unions and consumer organizations—to decide upon a course of action too. They should therefore, for once, write out a prescription themselves and take the medicine they themselves have prescribed. The medicine that is going to work is not palatable; in fact it is unpalatable. It could, amongst other things, include the following: Lower profit margins, wage and salary restrictions, greater productivity and restrictions on loans. The private sector could make a further contribution by actively participating in the Government’s decentralization programme. The utilization of under-utilized resources and labour could lead to greater production on the local front. If we were to succeed, in the process, in keeping our unit costs lower than those of products in the established economy, we would make an important breakthrough in the combating of inflation.

The consumers also have a duty. They must stop accepting price increases with equanimity. Producers must become conscious of costs and not simply push cost increases through to the consumer. Overspending of expensive capital must be restricted. Individuals must make a greater effort to save and to live within their means. A high rate of inflation tends to feed on itself. Investors take steps to counter inflation, and this frequently increases the demand for goods. They invest in fixed assets, for example, and this leads to an increase in the demand for assets. Instead of saving, purchases are made at an earlier date, and that is also inflationary. Entrepreneurs expect cost increases and frequently purchase new goods in advance. It is a psychological process that has a very negative effect on the combating of inflation. Everyone must play a role—the State, individuals, workers, entrepreneurs and consumers. Then we would be able to grab hold of this monster in the South African economy by the tail.

Mr Chairman, the hon member for Springs has attempted to shift the blame for inflation across to the private sector. That will simply not wash. There are an overwhelming number of economists in the world who will tell him that inflation is the responsibility of a government, any government.

They print the money!

I want to take issue with the hon the Deputy Minister who spoke earlier. He did not challenge my assertion that we are one of the most highly taxed countries in the world. [Interjections.] This was conceded. However, the reason advanced by the hon the Deputy Minister was that the tax base in South Africa was too narrow. I do not disagree with that statement. It is a problem and it needs to be addressed urgently. However, the major reason for the high taxation, I would submit, is the overexpenditure on the part of Government on its ideological schemes and on certain wasteful procedures and practices which it follows. The reason why taxes have reached punitive levels at present, is that the ordinary taxpayer is now being called upon to pay the price for decades of apartheid.

There are six areas in the present Budget where, I believe, we are wasting money. A government which was trying to manage this economy on a rational basis would strip away expenditure in these areas. I can mention six major categories. Firstly there is the whole question of population control in order to achieve racial separation. Under this heading one can look at the amount of money we spend regulating labour, repatriating Blacks, enforcing pass laws, forcing removals of whole communities, on the issuing of permits and licences, and on residential regulations and population classification and registration. We are spending hundreds of millions of rand purely on the exercise of separating people on the basis of the colour of their skin. It is economic nonsense. It is costing us a fortune and the taxpayers have to pay for that.

Another major category is the money this country has spent transporting Black workers from townships out of town to their place of work. Any normal society allows workers to live where they can, which is generally as close to their work as they can possibly make it. This country forces them, on the basis of the colour of their skin, to live miles away. There are people living in kwaNdebele who have to travel two hours per day to get to work. It costs a fortune. A lot of the money of these people themselves is spent on transport, apart from the Government’s subsidization that is necessary. [Interjections.]

A third major area of wasteful expenditure which is part of the cost of apartheid is the decentralization incentives. The hon the Deputy Minister tried to defend this expenditure. The fact is, however, that over R500 million of precious taxpayers’ money is spent shifting businesses from one part of the country to another without adding to productivity and without creating new jobs but merely shifting jobs and in some cases reducing their number because of the capital incentives. [Interjections.] It is unproductive. It merely shifts precious taxpayers’ money around. The hon the Deputy Minister calls it a galloping success. He is going to rue the day he used that description.

The fourth area one should look at in the present Budget to find wasteful ideological expenditure on apartheid is the subsidizing of the homelands. We pump over R2 billion per year into this project and it is only because we have this hang-up about separating people on the basis of their skin colour.

The fifth area is the present expenditure on maintaining our security forces in general. I am talking about the Defence Force, the Police Force and the Prison Service. We spend hundreds of millions of rand on these services to maintain a situation which is inherently coercive. If our society was based on the consent of the governed, we would have a more peaceful situation and we would not have to spend that amount of money on these services. The difference is the cost of apartheid. [Interjections.]

The sixth area one can look at is the disproportionate size of the State’s payroll because of these policies. The RSA allocates 15,5% of its Budget to its payroll. In the USA the figure is 8%. Maintaining the abnormalities of the apartheid system makes up most of the difference.

[Inaudible.]

The South African economy is riddled with examples of duplication of services which serve to maintain nothing other than the apartheid system of separation on the basis of skin colour. The massive misallocation of precious resources this represents makes a substantial impact on the money individuals in this country have to pay by way of taxes. If one goes through the Budget and assesses those elements, as I have done—and I invite the hon member “bromming” in the corner to do the same—then, while it is very difficult to arrive at an exact figure, one can come to a provisional estimate of wasted money in this category totalling the staggering figure of R6 billion to R7 billion. That is something like 20% of the total Budget of South Africa. That amount of money will allow one virtually to abolish entirely the taxes paid by private individuals. Obviously, that is not what I am pleading for. Obviously, one cannot transform a society overnight, but one can certainly move in the direction of eradicating these wasteful elements. If we could deliberately move away from the distortions which this Government’s race policies have introduced into the economy, we could generate enormous sums of money which could be redirected into productive developmental and educational directions and at the same time allow our much burdened taxpayers the relief of a tax cut which would stimulate growth, confidence and investment.

Mr Chairman, what is as plain as a pikestaff is that that hon member and the members of his party are the very last people to ascribe the economic problems of this country to the ideology and politics of this side of the House. What would happen if a national convention were announced the day after tomorrow? It would be a complete economic disaster in this country. There would be complete confusion and instability, money would leave the country and there would be no growth here. What happened in Zimbabwe and other parts of Africa would look like a Sunday school picnic. Those hon members are the very last people to use that argument against us. [Interjections.]

The hon the Deputy Minister referred to the Margo Commission. That is proof of the Government’s desire to take another look at our tax system. In this atmosphere I should like to lodge a plea for tax relief for home-owners. I am doing so for two reasons: Firstly this would bring about a fairer system of taxation in the short term and, secondly, it would promote home-ownership, and thereby also greater economic independence amongst the people of our country. Taxes should not merely be judged on productivity and economic grounds. Social factors are equally important, if not more important. Accommodation is an absolutely basic need of the people, and this Government acknowledges it. Because this Government acknowledges it, the system of taxation ought to reflect this and give some encouragement.

In the short term, however, I should like to emphasize the aspect of fairness. Before clarity was reached about the values to be assigned to fringe benefits, there was obvious discrimination, in regard to this aspect, against certain professional people, and in particular those with their own business undertakings. Whereas many wage-earners obtained tax-free housing benefits, for example Public Servants, bank officials and insurance company officials, professional people and those with their own business undertakings—they are probably amongst the most productive individuals in our economy—obtained no benefits of this kind.

I want to suggest that after determining the value of fringe benefits, this unfairness will continue for at least seven years, ie for the duration of the phasing-in period. There are also people who will not have the benefit of the phasing-in period. So within that seven-year period these people will be treated unfairly.

I also want to contend that even after the seven years there will be very good reason to give tax relief to home-owners. Firstly it would encourage people to obtain housing for themselves. It is, of course, a very good way in which to make people independent so that they are not dependent on the State when they are old.

What I cannot understand is that although there is, on the one hand, tax relief when provision is made for pensions during a person’s productive years, there is no tax relief in regard to the provision of housing. Surely the provision of housing is as important as the provision of pensions for one’s old age.

Secondly I want to argue that if this tax relief were to be introduced, it would also be fair to those who already have their own housing. At present there are many people who make use of subsidized housing, even though they do not actually qualify. I want to suggest that certain categories of people of colour, who have made tremendous strides in the past two decades as far as income is concerned, still make use of their subsidized housing because it is so cheap. If, however, obtaining their own housing would mean tax relief for them, they certainly would be encouraged to obtain their own housing.

It is easy to make such an general proposal, without specifying in any way. I therefore want to suggest the form that such taxation should take. Firstly a specified amount for mortgage interest should be deducted from income. That should be linked to a person’s salary. If a family’s salary is R15 000 per year, for example, an amount of R100 per month could be written off as interest payment. If the family’s salary is greater, however, the amount written off could be increased. A maximum amount should, of course, be determined for this.

The great benefit inherent in this would also be the fact that it would discourage fringe benefits, because this benefit would only relate to salary and not to fringe benefits.

The disadvantage of this tax lies in the fact that it would bring about greater administrative costs. These costs would not, of course, be any higher than the present costs involved in the pension benefits granted by the tax system.

As was said initially, in taxation one should not only give consideration to productivity, but also to social benefits, which in this case are considerable. I therefore want to ask the hon the Minister to consider these representations. There are various countries already offering tax benefits of this nature, for example England and the USA, and I think it could make a great contribution towards encouraging our people, from all population groups, to obtain their own housing.

The intention here is to get away from State subsidies and to encourage people to obtain their own housing.

Although I have taken up the cudgels for many business and professional men, it is perhaps only fair for me to raise another matter too, a matter which actually has a detrimental affect on businessmen. I am doing so, however, for the sake of the farmers.

Mr John Tungay, editor of Farmer’s Forum, recently made a very interesting statement to the executive of Nampo, a statement we would do well to take note of. He spoke about the problems being experienced by farmers at present. He came to the conclusion that the essence of these problems actually involved the country’s present tax structures. I should like to quote what he said:

Mr Tungay mentions that he knows of one gynaecologist who bought four farms with this object in view. The question is whether, for the purposes of taxation, that individual should be treated on the same basis as an ordinary farmer who is actually part and parcel of the agricultural industry. My argument is that this is another matter that requires urgent investigation.

Mr Chairman, it was a pleasure for me to listen to the carefully argued and balanced speech of the hon member Mr Schutte. It was good to note the arguments he advanced. I hope he will receive a favourable reaction from the hon the Minister.

The purpose of the Department of Finance is, amongst other things, to determine and uphold the overall economic and financial policy of the Republic of South Africa. With a view to achieving that objective, the Government has a long-term financial strategy. The chief aims of that strategy are threefold, ie a high and sustained real economic growth rate, the creation of sufficient job opportunities on the basis of reasonable price stability and a sound balance of payments.

I want to make three remarks about this strategy today. The first is that South Africans should have no illusions about its being easy to achieve any of these objectives.

The second remark I want to make is that if our strategies do not succeed, if we do not achieve our objectives, the chances of our country having a stable future are about zero. If we maintain a low growth rate in the next five years, and if we continue to have double-figure inflation, we are in for trouble. If, under such circumstances, we have the expected population growth, and if there are going to be as many people entering the labour market as has been predicted, we have a classic recipe for serious political unrest.

This brings me to my third remark, which is that the Government can lay down the strategies, take the steps necessary to place the economy on a goal-directed course, but cannot of itself achieve those objectives. Achieving those objectives would need a team effort. As a matter of course the public sector would have to be a member of that team, but the private sector and every individual living in our country would have to be members of that team. If those who already have a great deal want to maintain their way of life and their living standards, and if those who do not have a great deal want to improve their circumstances, simply looking to the State will not help at all.

The State has an important role to play. The State can be expected to maintain law and order in the country, to provide certain of the facilities for education and training and to create a climate conducive to economic growth—a climate in which private initiative can function without hindrance. The State cannot, however, also take over the functions of the private entrepreneurs.

The following, amongst other things, are expected of the private sector: Imaginative entrepreneurship, optimum productivity in the field of labour, capital, salaries and wage demands which are not out of proportion to productivity and a greater orientation towards saving. The people of this country are simply expecting too much of the Government. That is why we have developed the tendency to expect everything to be put right by laws and regulations.

The time has come for us to realize that the Government cannot make us rich or keep us rich.

In addition the role played by gold in the creation of wealth for our rapidly growing population will increasingly diminish in the future. In a world orientated towards technological development the demand for our other raw materials will also decrease. We must simply accept the fact that the days of making easy money in this country are past. There is no alternative to matter-of-fact, hard work.

Talking about work, opportunities must be created to enable our people to work, and the private sector must help to do this. We must manufacture more goods with a view to exports, but then, of course, we must also be competitive as far as quality and prices are concerned. For that we also need those things that the private sector can cheaply provide, ie greater productivity at related salaries, a greater orientation towards saving and so on.

I must re-emphasize that there is no acceptable alternative. The Government alone cannot guarantee our survival or increase our standard of living. If there are any of us who are still hesitating about putting our shoulders to the wheel, let us look at a single unavoidable alternative.

In 15 years from now, by the year 2000, the South African population, including that of the TBVC countries, will number 44 million, 34 million being Black. Of these Blacks 39% will be under the age or 14 years; only 3% will be over the age of 64 years and 58% will be between 15 years of age and 64 years of age. They will be the people who will want to work and who will have to work—almost 20 million people. If one now accepts that half of those people will be men, there will be 10 million people competing actively in the labour market. That figure is 3 million to 4 million more than the presentday figure. One can just imagine what would happen if we were not able to succeed in giving increased training to this multitude of people and providing them with work.

On the other hand, one cannot help being excited about a future built upon the success of our objective of providing work, because it is true that South Africa’s potential is unlimited. We must merely merely meet our challenges and utilize our opportunities. The Government cannot do so for us. We must do so ourselves. We shall have to combat the process of inflation in good time. We shall have to do so, because we do not have a choice. If we do not do so, we are going to price ourselves out of world markets, and apart from that, in this country we shall be creating an impossible situation for ourselves if the buying power of the rand continues to drop.

The Future Research Institute at the University of Stellenbosch has calculated that if inflation continues at a rate of 12% to the year 2000, a suit of clothes would then cost R1 370, a liter of milk R5,15 and a kilogram of beef R34,00. A car costing R25 000 today would cost R172 000 and an ordinary, average house R687 000. If we are serious about our future, we shall have to be less critical, drop the level of our expectations and get down to doing more. The challenges we are faced with require the very best in us to come to the fore. Any fool can criticize or denigrate, but our future will be built by sensible people who are positively orientated. They alone will be able to ensure our future. I think that we have enough people of that calibre and that our hon Minister is one of them. I therefore have faith in our future, and it is consequently a pleasure for me to support the approval of the Vote.

Mr Chairman, I am very grateful that we were able to conclude the debate on this Vote in the neat and positive way the hon member for Stellenbosch did it.

†I must say that this has been an extraordinary debate as far as other debates of this nature are concerned. I cannot recall a single question which required me to refer to the masses of documentation which the department has prepared for me on the details of this particular Vote.

*Consequently I can draw only one conclusion, namely that the entire House is absolutely unanimous that every cent which is going to be spent by the Department of Finance under this Vote meets with the complete and unanimous support of the entire House. There was not a single question concerning a single rand. I could hardly have expected a better present on the very first occasion that I was responsible for the Vote. I thank hon members for that. I feel sorry for those officers who did all the preparation work unnecessarily, but I think it will be useful reference material in the files. I want to thank them so much for their trouble. It would in any case not have been a problem to reply to any difficult question because these were really well-prepared documents.

†I want to conclude the debate by referring again to the remarks made by hon members, and I want to start by referring to a point raised by the hon member for Pietermaritzburg South when he said that production costs are no basis for pricing. I would like to add a condition to that, namely “except in extremely exceptional circumstances”. I agree with the hon member that if one prices a commodity purely on its cost, one will find, for example in the case of an agricultural product, that marginal soil will be exploited to grow a particular commodity and that the consumer will have to pay for the cost of doing it. I believe that we shall have to allow the market forces to determine to what extent marginal soil can be developed, or to what extent products for which there are only a marginal demand, can be produced. I am in absolute agreement with the basic principle contained in the hon member’s statement.

*The hon member for Pietermaritzburg South warned against monopolies, and the hon member for Randburg also referred to the subject. I shall come back in a moment to what he said. The great danger of power concentration undoubtedly exists in a developing country such as South Africa. If one considers the history of the American economy, one sees that at one stage they needed the Sherman Acts in terms of which steps had to be taken against certain big companies in order to combat monopolistic conditions.

The hon member for Gezina, as always, made a constructive contribution in a language which any student of the economy would be able to understand very well if he were to take the trouble to read the hon member’s speeches in Hansard. Like the hon member, I am also very grateful that our capacity to save improved towards the end of last year during the final quarter. I cannot recall whether the hon member mentioned the figure, but it was more than 5%, if my memory serves me correctly.

The hon member made a very important point—and this is something we should consider very carefully in our economy, especially at this juncture while we are in a downswing phase and are entering a phase in which we will be moving sideways for a while and in which we must prepare for the following upswing phase—and that was the bottlenecks which arise as soon as the economy picks up and begins to grow again. The hon member put his finger on the precise spot where we get hurt the most, which is that every time our economy begins to grow, it is the availability of properly trained manpower to fill those key vacancies in our economic life which is important, because each one of those qualified people is able to provide a number of less qualified people with work and guidance. That is why it is such a pity that it was not possible for us at this juncture to have appropriated more funds in this Budget for the training of people. This would have been the ideal time for that.

Yesterday I heard part of the debate in one of the other Houses when my colleague, the Minister of Manpower, pointed out that there were in fact unemployed people who were now being identified and who were receiving certain training. It is indeed true, as the hon member for Gezina said, that the intensity and the duration of our next upswing and growth phase will be directly determined by inter alia the availability of properly trained manpower.

The hon member made an important point in regard to the environment in which a person finds himself, and beginning with the clothes one wears. The influence of the environment a little further removed from one than one’s dress also has a great influence on one’s productivity. This is undoubtedly true. A matter which caused us and our department great concern was the tragic condition of the officers of the Receiver of Revenue in Johannesburg. It was literally the case that some officials had to cover their desks and their files with a piece of protective sheeting over a weekend so that, if it rained, their documents would not get wet. In the coming financial year no less than R1 million is going to be spent on at least making that place habitable again and a more pleasant environment to work in. There are also a few other offices of ours that have suffered during the past few years and to which we are also giving attention.

I want to compliment the hon member for Randburg on the point he made when he said that it was interesting that whenever references were made to monopolies, they were always made only to monopolies in the Government sector. In its essence a monopoly is as dangerous in the private sector as it is in the Government sector. In that respect the hon member made a very important point. However, I want to differ with the hon member in this respect that he argued that in South Africa it would only be the big conglomerates which would be able to purchase shares or segments of large State undertakings if we were to privatize them. The department and those who are at present conducting the enquiry into privatization are putting together the particulars of what happened in Britain with the privatization of segments of their communications services. Their express condition with privatization was to distribute it as widely as possible. I take it that this will also be the basis on which we shall do it. What is the advantage of doing it this way? It is not merely the case that they then in fact become the possession of the people, the population, the nation in the fullest sense of the word, but that there is a person who is involved and who is a shareholder who will look after this asset.

For example, let us see what would happen if telecommunications services were privatized. If there are five pickup trucks standing around a pole and only two people are working on the wires overhead while the rest are having a braai down below, something will have to be done about the situation. Hon members will recall that our former colleague, Oom Cas Greyling, told us how he came upon Escom workers, and a lot of pickup trucks were standing around while work was being done on only one pole. The rest of them were braaing meat and having a good time.

If there are many shareholders, however, there are many co-owners. If a person drives past a scene like this, he will feel that the business undertaking is suffering a material loss. He has an interest in the undertaking which is being harmed, and he will do something about it.

Actually it is ironic that although those State undertakings are today in fact owned by every taxpayer who happens to drive past such a scene, people seem to feel that a distinction is being drawn between those undertakings and the State. The State is in fact made up of every person in this country. This is nevertheless a concept which we will find difficult to correct.

I see the hon member for Randburg is back in the Chamber. He was probably being productive for a while. [Interjections.] The hon member argued that it would be impossible, but I say that it will be extremely difficult to accomplish and it will be a major task to monitor constantly to ensure that a market orientation manifests itself in a monopoly, whether it is a monopoly in the State sector or in the private sector. How did the hon member put it again?

A market behaviour.

Yes, that a market behaviour manifests itself.

I agree with the hon member in that respect and I also agree with him that the answer does indeed lie in the question of competition. We have a difficult country with long distances between the metropolises, and that makes it very difficult to operate certain services economically in some other way besides throwing everything into one pot. In the final analysis, healthy competition continues to be the best price regulator.

†The hon member for Pietermaritzburg South entered the debate a second time. He made the point that vast numbers of people in South Africa did not share in our commitment to the free enterprise system. The hon member is absolutely correct and that is why there is such a grave responsibility on all of us and also in particular on the private sector where one finds the interface between the people who do not see their salvation in the free enterprise system and the exponents of the free enterprise system, the owners of private enterprise undertakings.

In many instances where they do not share in the fruits, they have the tendency to turn their eyes towards different ideologies as far as the economy is concerned. They turn their eyes, with the view to obtaining a better standard of living, to any system which is different from the one they are experiencing now. It is the shared responsibility of private enterprise and ourselves to put that right because experience in Africa has shown that there is no way in which salvation economically speaking can be found in anything else but the slow but sure development of the free enterprise system.

The hon member made the point that the reason in South Africa for such people feeling the way they do was that only Whites were free to enterprise. I want to dispute that point. I want to differ with the hon member because even in those African countries which have had independence for a long time, free enterprise is certainly not blossoming to the extent that they can really even meet their international commitments.

In many of the African countries which have been independent for a long time and where nobody was in terms of some kind of legislation, as the hon member presumably argues, restricted from free enterprising, the GDP is not sufficient even to pay the interest on their loans. We must therefore be careful not to condemn out of hand. Fundamentally, however, the hon member is right that we should foster and promote the acceptance of the free enterprise system and participation in it.

*I am grateful for the contribution made by the hon member for Newcastle. He spoke inter alia about the activities of the Auditor-General. These are people who have a very difficult task and who work under tremendous pressure. We have too few well-qualified people. Those who are there are really doing a wonderful job. We are heavily indebted to them. I am grateful that the hon member referred to them the way he did. It was also interesting to hear from him the history of the Select Committee on Public Accounts.

†The hon member for Cape Town Gardens apologized for not being able to be present this afternoon. My hon colleague has already replied to the question of GST on medicine, and I do not want to reiterate what he said.

I just want to refer to the hon member’s remark that we as a Government should not forcibly extend the tax base in South Africa by involving the poor people. I think that is a fair representation of the point he made. The contrary is true. In the Budget that is under discussion at the moment we went out of our way to meet the poorer sections of our community. We narrowed our tax base as far as income tax is concerned by increasing the thresholds at which income tax becomes payable. We did the exact opposite of what the hon member accused us of doing. I would like to stress it and have it put on record that it was a conscious effort on our side to alleviate the plight of the lower income group as far as income tax is concerned. We knew we had to increase the GST and we wanted to compensate them at least for that and to do even more than merely compensate for that if it was at all possible. I believe we achieved that balance in a fair way.

The hon member for Cape Town Gardens accused this side of the House of having a “fat cat” image on the strength of his interpretation of what the hon member for Paarl had said. Before I get to the argument, I just want to say that it is after all not our money, it is not the Government’s money. The money does not belong to this side of the House; we are merely the custodians of public money. [Interjections.] It is not a “fat cat” government that for the first time equalized pension increases, and pension bonuses. It is not a “fat cat” government that spent R447 million in the past year on farmers suffering the plight brought about by drought. It is not a “fat cat” government that spends R250 million of public money on the maize subsidy. It is not a “fat cat” government that spends R200 million on the bread subsidy. It is not a “fat cat” government that spends on development, housing and subsidies on transportation the amounts this Government is proposing in the Budget. Lastly, it is not a “fat cat” government that earmarks R100 million to alleviate the plight of jobless people. I could continue along these lines but I would be trespassing on my hon colleagues’ portfolios. This Government cannot be accused of being a “fat cat” government; there are no grounds for that argument.

We are in fact accused on quite the opposite grounds from different quarters—this kind of criticism also came from benches across the floor—that we are taxing the job creators, the entrepreneurs, the people with initiative. We are also accused of over-taxing these people. I fail to understand the logic of that argument.

*The hon member for Heilbron discussed the maize price and I want to thank him for not introducing any emotionalism into the matter. As far as this matter is concerned, it is important to note—the same applies to the hon CP members’ arguments on the maize price—that the subsidy of R250 million earmarked for the industry goes in the first place to making good the loss on imports which are still applicable this year. It also goes towards interest on the Maize Board debt of R221 million and for paying off that loan. An amount of R100 million then remains which is available for storage compensation. That is as far as this Budget could go. The remaining money which still has to be spent on these matters must unfortunately be borne by the consumer. Fortunately it is as little as 9 or 10%.

Surely we were unable to continue to solve the problems in the maize industry by means of prices. There are maize farmers who have excellent crops this year and there are others who unfortunately have had no harvest for yet another year in succession. Surely we are unable to remedy this with a price increase, particularly in view of what happened to the maize price last year and the year before.

The net producer price rose by 60,1% over the past two years. In real terms alone this increase amounted to 27,6% over the past two years. In contrast the average net producer price of all agricultural products except maize—the hon member also referred to this—declined in real terms by 8,1%. During the past two years the net producer price of wheat in real terms declined by as much as 13,3%.

This decision—I am saying this for the benefit of the hon member for Sunnyside—on the maize price was taken in the best interests of the South African economy as a whole. It does not mean, however, that we have written off the maize farmers. Because we could not solve the problems of the maize farmers simply by means of a price increase does not mean that we have changed our attitude towards them. [Interjections.]

Besides, we do not have only maize farmers in South Africa. We do not have only maize producers. There are thousands of farmers who are also maize consumers. We must take their interests, as well as those of the economy as a whole, into consideration.

If I remember correctly the hon member also said that the diesel price had soared. I heard something this afternoon which I still have to clear up with the hon the Minister of Mineral and Energy Affairs. During lunch today someone, who had in turn heard it from an authoritative source in the oil industry, told me that in spite of the recent increase of approximately 40% in the fuel price, there had been no decrease whatsoever in fuel consumption in South Africa. This is a very interesting fact, for fuel is after all not used for production purposes only.

What has happened to agricultural diesel in the process to make such an increase in the fuel price inevitable? I have the particulars here:

This gives us a total of 22,6 cents per litre. This is the conduct of a Government that, according to those hon members, has withdrawn its hand from the fanner. [Interjections.]

I should like to thank the hon member for Hercules for the speech which he made, and I want to differ with him. Unfortunately I cannot become a member of his fan club when it comes to the abolition of tax on interest, because interest earnings are income and income is taxable. If the hon member were to advocate that tax concessions should be increased from time to time, within the means of the Budget and also that of the country, with a view to encouraging thrift, then I am a member of the hon member’s fan club, but then he must substitute the expression “reduction” or something of that kind for the expression “abolition”. [Interjections.]

I should like to associate myself with the hon member’s expression of thanks to our thousands—there are approximately a quarter million of them—of GST collectors, and also to the thousands of employers who collect other taxes for us.

The hon member asked us to allow GST to be paid off, to put it that way. I do not know whether the hon member is aware of this, but as far as we were able to ascertain, South Africa is the only country in the world which gives a reserve of 50% on an outstanding amount. The hon member was therefore asking for a 100% reserve, but we cannot do that. We are already accommodating the person who sells his products on terms. This is of course in conflict with the principle of GST, because it is a transaction tax which ought to be payable immediately.

The hon member, and other hon members as well, raised a very important point, which was that there could not be such a thing as a rich country without affluent individuals. It is impossible to have a rich country without rich people. Therefore it is not a disgrace to be affluent. South Africa is in fact a country with so many opportunities that if one really wants to, one can make a very good livelihood in an honest way. I therefore want to give the assurance that that is the standpoint of this Government, and that the standpoint of the Commissioner of Inland Revenue and the Treasury in particular is precisely the same. We welcome affluent people in South Africa, and we look forward to the day when it is going to be possible to effect a downward adjustment in their taxation, for as regards the creating of employment opportunities they are in fact the mainstay of our economy. It is indeed not a crime to be rich.

I want to react to the hon member for Sunnyside. For the sake of the record we must say—I hope this is the end of the hon member’s saga now—that on one occasion the hon member tried to apologize to the Chairman, but unfortunately it did not get through to him. Nevertheless the hon member demonstrated that he did try to apologize on this occasion. That is a fact. The other fact is that the Committee section of Parliament states:

I was therefore correct when I said that the hon member was absent from two meetings, but one of these two meetings did not deal with the SA Police Special Account Bill, but with one of the other Bills. But the fact of the matter is—and we must place this on record—that the hon member was not present at two meetings.

Mr Chairman, I just want to rectify this matter. I was present at the second meeting, which the hon the Minister said I had not attended. [Interjections.] I am simply telling the truth now.

The hon member discussed the national debt and asked what our policy was and how we were going to pay it off. Our policy is to finance our Budget in such a way that we generate a minimum amount of national debt this year. In that respect I must therefore accept that the hon member agrees with me completely that, instead of borrowing, taxes should be increased. Does the hon member agree with me?

Yes.

Thank you. It is in sharp contrast to the previous argument he advanced, but this is merely for documentation purposes. [Interjections.]

The truth is that we were worried about the public debt and wanted to finance the Budget correctly. Therefore our argument to everyone who tells us that we should rather have borrowed money is to say that it is not good for the economy if we borrow more money because we want to cut down our activities on the capital market as much as possible and do not at this stage want to finance our current expenditure with loans which our children will still be paying off long after we have gone off on pension.

In the second place, the State is paying market-related interest rates these days and that is why our national debt is so high this year. We are determined to work it off in an economically sound manner. As far as privatization is concerned, on which my hon colleague is working so hard, we shall be able to deal with our national debt in that way as well and pay it off in a proper manner.

The hon member asked me why we had not imposed a surcharge on company tax. That was a very fair and a very important question. He said that it was very unfair and very unjust and that we were, in contrast to that, taxing the individual to death. I shall come to that in a moment. I just want to point out to the hon member that a company pays 50% tax on its profit. He knows that. Since the marginal tax rate is now 53,5%, surely the hon member must concede that I am correct when I say that no individual in South Africa pays 53,5% of his total income in tax. Does the hon member agree with me?

No. [Interjections.]

The hon member is therefore saying that if I walk from here to that wall over there and I halve my distance every time, I am eventually going to reach that wall. That is what he is telling me. Surely we have a progressive tax system. Surely one pays the full rate just above a certain amount. Because one does not pay 53,5% on all the income which one has earned up to that amount, one can never in aggregate pay 53,5% in tax. [Interjections.]

That is the first point I want to make. Companies are already paying 50% tax on every rand. An individual cannot pay 53,5% tax on every rand of his income. Secondly, in the past I asked him across the floor of the House by way of a friendly interjection—not acrimoniously, because I feel no acrimony for the hon member; I am simply having problems with his logic—whether he had forgotten about the levies on regional services councils. Now I want to ask him again today, in all friendliness and without any acrimony, whether he has forgotten about the regional services councils levies which are now in the pipeline. Everyone who reads the newspaper is aware of them. [Interjections.] Very well, the hon member is nodding his head, I therefore accept that he knows about them. Surely he will remember, then, that the companies are going to make a contribution if we introduce the regional services councils levies. We were therefore making fair tax proposals when we said we were not going to increase company tax because we would be taking the little bit extra which we took from everyone else from them too, but in a different way. Otherwise we would have taxed them stone dead.

Does the individual businessman also pay?

Yes, everyone will pay it—the State and the authorities as well.

Now the hon member is saying that we are taxing individuals to death. My hon colleague who come from the Transvaal will remember that, shortly after I had received this post, I ventured to say in public at the NP congress in Alberton—it was reported in the media—that individuals in South Africa were paying altogether too much tax in proportion to the total income.

Then we are agreed.

Very well, that is nothing new. It also gave rise inter alia to the Margo Commission, and furthermore it led to individual tax being reduced by almost 3%—in any event by almost 2% in this Budget.

I want to ask the hon member, when one of his colleagues again levels this accusation at us—it has already been said across the floor of this House that we govern with commissions—to take it upon himself to persuade his colleagues that a commission can in fact be a good thing, for today the hon member again asked for a commission of inquiry into inflation in order to deal with interest rates. Collectively speaking I think we know enough about inflation, and I think we have the expertise, but our greatest difficulty is our ability to bear the consequences of drastic anti-inflation campaigns, because in South Africa we do not have the social structure and the reserves in respect of unemployment insurance and so on to be able to cope with a really high unemployment rate. If we had been able to do that, we could have destroyed inflation completely in South Africa. I said something about interest rates this morning, and I am not going to say anything further about them.

As far as building societies are concerned, the hon member made a valid point, namely that we had to bring building society interest rates down. I do not think any of us will argue about that standpoint. Then he asked me how we were going to do that. I shall tell him what this Government has been doing up to now. According to the information which I have available at this moment—I want to qualify this because it is subject to confirmation—we have by means of tax concessions to building society investors, contributed more than R500 million towards lower interest rates on building society loans. I am not all that certain that this is the best way of helping the home-owner. If I understood the De Kock Commission correctly, they said that building societies should pay and charge market-related interest rates, and we should then use that R500 million or more in some other way to help needy home-owners, rather than to help everyone in the process, as is happening at present.

From what source are you going to draw the money?

At the moment we are losing the money in any case. After all, this does cost the taxpayer something. The Exchequer could receive more than R500 million extra if we abolished that tax concession on building society loans, and then we could use it to assist the people who are really in need and not bring about a general reduction in interest rates which help the fat cats and the poor people indiscriminately.

The hon member for Caledon expressed a word of thanks, and I just want to tell him that he must not think that we are going to make a habit of leaving the various industries alone for a while. We receive very large amounts from that industry through the increase in GST, but I appreciate the fact that he conveyed his thanks. We gave a great deal of thought to that industry and felt that we should have a fairer approach in respect of the industry as a whole. [Interjections.]

The hon member for Springs really made a very well-prepared and well-thought-out speech and I want to congratulate him sincerely on it. This is the kind of speech which can be analysed very thoroughly by our department. His speech displayed thoroughness and uniformity from beginning to end. I want to tell him that I endorse his standpoint that inflation can only really be sorted out if there is close co-operation among all who are involved.

†The hon member for Constantia made the point that the Government was solely responsible for inflation. That is purely a political slogan. It was supported by one of his hon colleagues who said by way of interjection, “Because they print the money”. It is not on account of the printing of money that an oversupply of credit is generated but rather on account of the creation of money as a function of the financial system. There is no connection per se between the printing of money and an oversupply of credit. So I presume that the hon member who made the comment meant it symbolically. However, I cannot respond meaningfully to it because it is manifestly untrue. Productivity and the cost of labour are factors that also play a part in inflation. If the hon member denies that and insists that the Government is responsible for inflation, I do not think we have common ground for a meaningful debate.

The major part is Government spending.

I should like to differ with the hon member Mr Schutte on a point which he made, namely that professional and business men were not sharing in the benefits of the phasing-in of fringe benefits tax. They are definitely not doing so if the matter is seen from the point of view that they can now have a fringe benefit on which the tax is being phased in. In that respect the hon member was quite correct. I want to remind him, however, that with the announcement of the details of the quantification of fringe benefits in December we also announced a lower tax curve. Subsequently we also stated repeatedly that as the tax on fringe benefits was phased in, we would adjust the income tax curve downwards. Therefore the person who had no fringe benefits last year is paying less tax this year. Typical examples of this kind of person is the professional man and the small businessman. Therefore while I concede that his facts are correct, there is another aspect of the matter on which, I believe, we really differ with one another.

The hon member spoke about housing subsidies. I have a reply for him to this matter. There is a possibility—and I just received a note from the experts—that in those countries in which there is a tax rebate—I am not referring to housing subsidies, but to tax rebates on building society bond repayments—ways and means are being sought to phase out the building society bond payments. However, I think this is something we could look into as soon as we have made further progress with the results of the tax commission.

As far as housing subsidies are concerned, I want to agree with him absolutely. If we could change those people receiving subsidized housing into homeowners, things would go well with this country, particularly in the Black residential areas. I do not know whether it is known yet, but our colleagues in the House of Representatives are taking drastic steps to make it easier for their people, their community, to obtain houses. This is the crux of our free enterprise system, this is the crux of responsibility and one can identify oneself with it. There are so many advantages to be derived from it that it is just not true. However, we will not be able to phase it out entirely because there will always be people living in places in which they would not like to live if things could be otherwise.

The hon member for Stellenbosch also made a very good speech. I cannot but agree with him wholeheartedly that if we have a low growth and double-figure inflation for the next five years, we are going to have problems. We shall have to give very thorough attention to this matter, but I also want to accept that he agrees with me that that growth may only take place in a healthy way. After all, cancer is also growth, it is also life, but it is life gone wrong. If a country therefore has the wrong kind of economic growth, it is eventually consumed by that growth. Inflation consumes a society’s middle-class, and we cannot allow these diseases in our economy to continue. It prevents us from initiating the growth we need to meet the challenges of our particular population structure. I agree with him, the Government definitely cannot perform this task on its own, and a team effort is in fact needed.

As I said a moment ago the hon member ended on a splendid, positive note when he said: “The Government cannot make us rich and keep us rich.” I should like to thank him for that contribution.

The Whip has indicated that I must stop now, and I shall do so in a moment; however, I promised to say something about credit cards. I have the particulars here, and I shall make them available to hon members with pleasure. The particulars we have here show that credit cards are in reality no longer the danger we once thought they were. Credit cards are not being posted without people having asked for them; people are being invited to apply for a credit card. There is one bank which refused more than 40%—if my figures here are correct—of 80 000 applications.

I just want to say very briefly that purchases by means of credit cards during the year ending 30 September 1984, amounted to R2,4 billion. The growth and turnover compared with the previous year was almost 30%. Repayments outstanding, however, had dropped drastically to R572 million on that date—to 23,4%, whereas they had been almost 28% two years previously. Provision for irrecoverable debts as a result of fraud, as a percentage of turnover, was only 0,26%. Consequently it is not all that dramatic, but there are other interesting matters here which I cannot deal with fully now. I should, however, like to make them available to hon members.

In order to conclude properly, I should like to repeat what the hon member for Stellenbosch said, namely that the Government cannot make us rich and keep us rich, and that we should accept the challenges of the future.

Mr Chairman, may I ask the hon the Minister if he has any idea of how much was written off as bad debts?

This figure does not show how much was actually written off.

*What is indicated is “Fraud—Provision for Irrecoverable Debts”, which amounted to R6,4 million. That was what provision was made for; how much of that amount was actually written off I do not know.

In view of what the hon member for Stellenbosch said, allow me to conclude by saying that we must accept the challenges of the future. In Johannesburg there was a secondhand furniture shop which was probably the untidiest shop ever to do business in Johannesburg. He always had all his goods on the pavement. It was always the epitome of a person who did not know what was happening in his business, but in his window he had a giant poster on which was written: “Problems are the price of progress. Don’t bring me anything but trouble; good news only weakens me.” [Interjections.] Sir, during these difficult economic times I think this is the attitude in which we should tackle our economic problems. I want to express my sincere thanks to all hon members who participated in a constructive debate.

Vote agreed to.

Chairman directed to report progress and ask leave to sit again.

Mr Speaker, I move:

This Bill amends the Development Trust and Land Act, 1936 to which, for the sake of convenience, I shall subsequently refer as the “Trust Act”. Most of the provisions deal with consolidation and seek to expedite this process in accordance with the guidelines spelt out so clearly by the then Prime Minister in the House of Assembly on 7 February 1979. Because the Trust Act is a complicated measure we have dealt with the Bill quite comprehensively in the memorandum on its objects. A repetition of the terms of this memorandum may consequently occur in this speech. I am doing this for the sake of clarity.

In terms of the 1973-75 consolidation proposals approval was granted for certain poorly situated released Black areas to be deproclaimed, or put another way, declared to be White areas, and that the inhabitants should move from such areas to other farms which had to be purchased in exchange for the Black area concerned. In the interim, however, it has been decided that certain of those poorly situated areas should be retained as Black areas. Consequently the compensatory land purchased by the SA Development Trust with a view to such removals had again to be declared to be White areas.

On the other hand it frequently happens that a portion of an owner’s land situated outside the approved consolidation area also has to be purchased in order to implement consolidation. In particular this happens when the owner’s unit is situated partially within and partially outside the approved area, and to prevent such owner being left with an uneconomic remainder, both pieces of land are purchased.

Section 2(2) of the Trust Act provides that the State President may in fact excise land from any released area provided that he in turn allocates other specified land to replace the land so excised. The proposed amendment in clause 1 seeks to resolve the untenable situation by providing that, in respect of the two aforementioned cases, it is not necessary to allocate other land upon deproclamation of such lands.

The first part of the amendment in clause 2 consists of a correction, while the omission of the specified words is essential because cases occur in which persons other than the Trust or Blacks own land in scheduled areas. What we have in mind here, for example, is a trading post which is still registered in the name of a White person, or a mission station which belongs to a church which does not comply with the requirements of the definition of a Black in the Trust Act. As the section in question now reads, the said properties cannot be excised from the scheduled area.

The second part of the amendment resolves the position in respect of the compensatory land which was included in an independent state prior to clearance. The compensatory land is in fact still utilized for the purpose for which it was acquired, but upon the deproclamation of the scheduled area no other land is allocated in its stead.

As a result of the rationalization of the development process, the Economic Development Corporation Limited will soon have to be dissolved. The functions of the Economic Development Corporation are primarily being transferred to the development corporations in the national states. The functions formerly performed by the Economic Development Corporation at Soshanguve were, with effect from 1 April 1984, transferred to the Small Business Development Corporation Limited.

Soshanguve is a South African Development Trust area near Pretoria which does not form part of the area of jurisdiction of any national state. The status of the area is not expected to change within the foreseeable future. The Economic Development Corporation was responsible for economic development in this area and was also involved in the issuing of housing and business loans.

The Small Business Development Corporation is taking over the assets at net book value and as quid pro quo it has to issue shares. At present the Development Trust may only be a shareholder in development corporations and corporations established in terms of the Promotion of the Economic Development of National States Act, 1968, and the amendment to section 9(1)(fA) of the Trust Act enables the Trust also to acquire shares in such other body as the Trustee may determine.

†Section 10(2) of the Trust Act limits the acquisition of land by the South African Development Trust to scheduled Black areas, released areas, land adjacent to a scheduled Black area or a released area and of which the Trust or a Black is the registered owner, and land adjacent to the last-mentioned land. Land registered in the name of the Minister or any other person in trust for a Black, a Black tribe or Black community is not included in the definition of a Black in section 49 of the Trust Act. It is deemed necessary to provide that the Trust may also acquire land which borders on such land.

As a result of representations made by organized agriculture, it is furthermore recommended that the powers of the trust in regard to the acquisition of land be extended to land which constitutes a detached, uneconomic remainder of a farming unit. The uneconomic remainders comprise separate properties which form part of a so-called divided farming activity and are situated in White areas. They may not be acquired by the Trust at present. The properties will be registered directly in the name of the State after acquisition by the Trust so as to obviate the necessity of deproclamation at a later stage.

The further amendment of subsection (3) of section 10 of the Trust Act arises from the amendment of sections 10(2)(e) and 18(3) of the Trust Act and adjusts the quota position in regard to the land mentioned in the said sections.

*Section 18(3) of the Trust Act provides that the Trustee of the South African Development Trust may, with the approval of Parliament, allocate, sell, exchange or otherwise dispose of Trust Land to persons other than Blacks. The requirement that parliamentary approval shall be obtained entails administrative red tape and a duplication of functions for Parliament since such alienation of Trust Land only takes place to give effect to consolidation proposals already agreed to by Parliament which therefore in principle agrees to the alienation. Naturally Parliament has no interest in the particulars of a transaction and the responsibility of clarifying these details rests with the aforesaid Trustee.

In the proposed amendment to section 18(3) of the Trust Act, the requirement that alienation of Trust Land shall be subject to prior parliamentary approval is being qualified by the provision that such approval shall not be required if the alienation takes place in terms of an agreement with the government of any area which is or was in terms of any law a self-governing territory within the Republic.

Section 24(1) of the Trust Act provides that all persons except Blacks must have written permission to reside or be or carry on any profession, business, trade or calling upon land in any scheduled Black area or a released area of which the Trust or a Black person is the registered owner, or which is held by any religious denomination or Society.

Problems are being experienced in practice in regard to the issuing of the necessary permits. The areas covered by the provisions of section 24 are large and can be entered at various points. Therefore it is not always practicable to exercise full control. Frequently a person must enter the area in order to obtain a permit. You will observe, Mr Speaker, that the amendment only deletes the restriction on the presence of persons other than Blacks in the aforesaid Black area, and the requirement of permission to be obtained in respect of the other activities specified in the section remains unchanged.

Mr Speaker, I trust that the proposed amendments will be acceptable to hon members.

Second Reading resumed

Mr Chairman, members will probably look askance at anyone who makes a long speech at this late stage on a Friday afternoon. Therefore I say that at such a stage this House ought really to adjourn, but that is in not in our hands.

This amending Bill has been dealt with by the standing committee. It is, not in fact, a contentious Bill and accordingly my primary purpose in standing up is to say that this side of the House supports the Bill.

I just have a few other remarks to make about it which will only take a few minutes, if that. I am not going to repeat the hon the Minister’s Second Reading speech or the memorandum. As far as I am concerned, it is really unnecessary for us to waste the time of this House by repeating what has already been said by the non the Minister in his analysis of the amending Bill.

There are just two remarks I should like to add. The first relates to clause 1. It is a technical clause that we need not deal with here, but it is not clear to me why reference is made in the proposed new section 2(2A)(a) to section 3, viz the reference to “the proposed declaration or excision or the proposed deletion or excision in terms of section 3”. I do not understand why section 3 should be brought into the proviso to subsection (2), because section 3 has its own proviso. This is purely a technical point and as nothing to do with the principles of the matter.

In the nature of the matter we do not feel very happy about the restrictions embodied in section 24 of the principal Act, to which clause 6 effects only a minor amendment. We broached this matter in the standing committee. We felt that far more provision should be made for exemption than is provided for in the legislation.

Finally, I refer to the proposed section 18(3)(a) in clause 5 in terms of which the approval of Parliament is not required. This concerns the granting of land to persons other than Blacks in the interests of Blacks if it takes place in terms of agreement with the Governments of the self-governing states. Section 10(3)(c) of the Act provides that if land is transfered to the self-governing states, the Trust is still deemed the owner for the purposes of the quota. I ask that consideration be given, in all honesty, and bearing in mind the State President’s reference to the question of property ownership, to the transfer of the Trust’s land situated in the territories of our national states to the Governments of the self-governing national states. I believe that this would constitute evidence of our confidence in the ability of those governments to deal with the matter properly. At the same time those governments will be given the power to convert the land, which at the moment is in fact largely an uneconomic asset, into an economic asset for the sake of the finances of those self-governing states.

I hereby give our support to the proposed legislation.

Mr Chairman, we are grateful to the hon member Prof Olivier, for his and his party’s support of the measure we have before us. I just wish to react to the one question he asked, viz why reference is made in clause 1 to section 3 and not to section 2. As I understand the provision, section 3 deals with scheduled areas in terms of the 1913 Act, whereas section 2 deals with released areas in terms of the 1936 Act. Although the difference between the two kinds of area are small, they exist nevertheless and for that reason reference is made in clause 1 to section 3.

We are grateful for this new measure. It will facilitate considerably the process of consolidation, particularly as regards the buying out of land which is the responsibility of the hon the Deputy Minister sitting next to me. It is a measure that will make it possible to eliminate certain practical problems that have cropped up. We on this side of the House take pleasure in supporting the legislation.

Mr Chairman, in the absence of my colleague from King William’s Town I wish to indicate that we will be supporting this legislation. Coming from Natal, I am pleased to be doing so because I feel this legislation has a particular significance in the light of the pending consolidation proposals that are due to be made available shortly in relation to Natal/kwaZulu.

The future of certain released areas has become somewhat confused over recent years, and we welcome this legislation in that we see it as an attempt to stabilize what could become a neverending process of land acquisition and land excision. The decision to retain certain badly situated Black areas as referred to in the second reading speech of the hon the Deputy Minister is logical in the light of the Government’s recent commitment to suspend forced removals, as well as the impracticability of moving people from certain existing Black areas.

I must point out, however, that the decision to retain Black areas carries with it an obligation to ensure that the proper planning and correct land utilization takes place in these areas. There is evidence of serious land abuse in many Black areas. This must be corrected if the areas themselves are to sustain even their present population. Furthermore, steps will have to be taken to ensure that correct farming methods are applied if the complete destruction of the agricultural potential in these areas is to be avoided.

We in these benches accept the fact that it is necessary that provision be made in this legislation that certain land falling outside but adjacent to consolidation areas be purchased in order that the owners of the land affected are not left with uneconomic units. This will also apply to landowners who may find themselves encircled as it were as a result of consolidation proposals. I wish to stress to the hon the Minister that when cases of this nature take place he must give the assurance that organized agriculture will be consulted before any final decision is made.

We have pleasure in supporting this Bill.

Mr Chairman, we thank the hon member for Mooi River for their support of this legislation. The sole purpose of this legislation is, of course, the expediting of the consolidation proposals, and it contains nothing contentious.

The hon member for Mooi River referred to the consolidation proposals for kwaZulu which are to be published shortly. It is true that the commission has made a great deal of progress with its work and we are working at considerable speed in order to achieve the State President’s final target date for consolidation.

The hon member referred to stabilization. It is expected of us—and this is a major expectation—that when we have specified what the borders are and people know exactly where they stand—this matter has been dragging on since 1936—we shall achieve a really essential form of finality in this regard.

As regards the resettlement of people, the Government has stated the standpoint that we shall not allow unnecessary removals of Black people or Whites to take place. However, I must point out that in certain instances further removals will have to take place, with the approval of Black people.

The department makes provision for the orderly planning and use of the land. It is true that in many of the Black states, malpractices do occur with regard to land usage, but recently they have been profoundly conscious of the fact that they must preserve the land and use it properly. In this regard I refer to the recent statement by the Chief Minister of kwaZulu to the effect that they have, for example, taken positive action with regard to the condition of the soil of the Tugela River and are implementing their planning in that regard.

The dual-based farming to which the hon member referred is dealt with by this legislation. It relates to people whose property has been bought out for consolidation purposes and who are then saddled with an uneconomic farm. Even though the farm is situated far from the consolidated area this legislation provides that this farm, too, may be purchased; in other words both farms, one within the consolidated area and one outside it, can be bought by the State and alienated again in order to prevent the person suffering detriment as a result of having to farm on an uneconomic unit.

As far as organized agriculture is concerned, we are on the instructions of the State President performing the difficult task of consulting with all those involved; Whites and Blacks and the various agricultural unions in Natal in the case of kwaZulu and with the South African Agricultural Union. We are doing that.

We thank the hon members for their support and we have pleasure in supporting this legislation.

Mr Chairman, to begin with I want to thank hon members for their support and their contribution in the discussion of this legislation in this House today. I think it would be only fitting if I were to convey a special word of thanks to the standing committee, and in particular the chairman of the standing committee, for the discussion of this Bill in that committee.

It was my privilege to pilot this Bill through the other two Houses as well, and on those occasions I was impressed by the work that had been done by all the members of the standing committee, but also with the information provided to the members of the standing committee at that stage to enable them to convey to the other members of the Houses in question, the amendments that had been effected. This is a typical example of how the new dispensation can work, if a standing committee has members who know their work and are able to convey that knowledge. Accordingly I wish to convey a special word of thanks to the chairman of the committee but also to all the other members who made a contribution in the committee.

I just wish to respond briefly to a few points put forward here. It was a privilege for me to be able to confer with the hon member Prof Olivier in this regard, since as a student at Stellenbosch I studied under him in this very subject. [Interjections.] Accordingly I am grateful that he supports the Bill and that a good amendment has been effected. The first point he made has already been replied to by the hon member for Ermelo, and in addition, I have obtained from the department the information that the law advisers are satisfied that the amendment and reference to section 3 in that specific clause is correct in the technical legal sense.

The second point raised by the hon member Prof Olivier relates to the transfer of land and the utilization of that land by the national Black states involved. As far as the transfer of land is concerned I specifically made the point that not all the phases of the consolidation packages for the various states have been finalized yet, but that finalizing this may, in the nature of the matter, affect certain land. I have already conducted discussions with the relevant states.

We have established bilateral committees at ministerial level to plan, not only the transfer of the land, but also the way in which it will be dealt with and utilized after transfer, so that they may know what land they are going to obtain at what stage and can plan and budget for it. In this way they can make provision for the necessary funds and administration to utilize that land effectively. We shall have to finalize this matter as soon as possible after the consolidation announcements. The states with which we have negotiated thus far are satisfied that this is the correct approach and that they prefer it that way. Moreover, they understand the problem.

Is it necessary to wait until after consolidation has been finalized?

No, it is not necessary in all cases to wait for consolidation. Certain cases can be finalized and we are prepared to do so. However, there is land that is subject to consolidation and therefore we must act accordingly.

I wish to convey a special word of thanks to the hon member for Ermelo for his support and for his exposition here. I do not wish to elaborate on that further because I think that he furnished a concise answer to one of the points. The hon member for Mooi River asked a few questions. He asked inter alia that the publishing of consolidation proposals take place at the earliest possible date. The Government is working on this and is trying to publish them as soon as possible, but the decisions must be well considered. The process is under way and we have made a great deal of progress with many of these announcements and with the various phases in terms of which this will take place.

†I want to add to this. The hon member for Mooi River also mentioned two other factors. Firstly he referred to the use of the land which I have mentioned in passing in my response to the hon member, Prof Olivier. I can say that the State President has also announced that we must, as far as is practically possible, see to it that the land is used optimally after transfer to the national states. We are doing that, and we have also arranged with the national states to have an agricultural committee so that we can discuss ways in which we can help them so that the land can be used to the best advantage not only of the soil itself but also of their people. However, this is also easier said than done. We accept that we shall have practical problems in this regard, but we are working on the matter and I think we can solve it in this way.

The second point he raised was that we should also confer with organized agriculture. It is the policy, as the hon member for Vryheid has said, to confer not only with organized agriculture but also with all bodies which may have an interest in this situation. Up to now we have not had much contact with the Natal Agricultural Union because consolidation arrangements with regard to kwaZulu have not yet progressed far enough for us to do much there. However, in all the other cases we do have discussions with organized agriculture. We take note of what they say and what they want but we also take note of other requests which we may come across during the course of our discussions.

*I wish to conclude on this note and express my thanks once again for the support shown. I think that these are good amendments that are being effected not only with regard to the farmers who are selling but also with regard to the Black states who will ultimately receive this land. Finally I wish to convey my most cordial thanks to the hon member for Vryheid, who as deputy chairman of the consolidation committee put forward certain standpoints here, for his support and for the work that he has done in this regard.

Question agreed to.

Bill read a second time.

Certified fair copy of Bill to be transmitted to the State President for his assent unless the House decides within three sitting days after the disposal thereof in all three Houses to refer the Bill to a committee.