We spent the whole of yesterday showing that South Africa did not deserve the Government it has now and showing up the maladministration of this Nationalist Government, which has got worse as the years have gone by. They have become arrogant and they no longer have the interest of the country at heart. They only have their own interests at heart.

When the debate closed last night, I had said that the dairy industry of South Africa faced a crisis and that the people of South Africa in particular faced a crisis unless something was done now to stabilize the dairy industry, to restore the confidence of the dairy industry in that Government and particularly in that hon. Minister of Agriculture. South Africa faced a situation where all the milk that was being produced would have to be channelled into the fresh milk market and we would be faced with a chronic shortage of other dairy products. Here I refer particularly to butter, cheese, condensed milk and powdered milk. I said this advisedly because we find that the production of fresh milk in 1969 was 111,3 million gallons: in 1970 it had dropped to 106,5 million gallons; and for the first half of the 1971 dairy year, the best climatic year we have had in the last 15 years, the production of fresh milk was only 52,6 million gallons. The indications are that the production of fresh milk for this dairy year will he only in the region of 95 million gallons, which represents a drop in production in the region of 16 per cent over two years.

Are you in favour of removing the quota for fresh milk production?

I am glad the hon. the Minister has asked that question in regard to the quota, because this is the whole point. This hon. Minister’s Deputy unfortunately is not here today, but he came to this House on 30th April and boasted about the introduction of a quota system which he said the farmers asked for and which he said was working. But what is the truth? The truth is that it is not working, and it was withdrawn. It was withdrawn by the Minister’s department before the Deputy Minister made that statement in the House. How dare that Deputy Minister come here and make such a statement? The hon. the Minister knows perfectly well that that quota system is not working today in the Western Cape. It was withdrawn at the end of February. He should know that, but obviously he does not know, and that is exactly what we are trying to point out. He does not know what is going on in, his own industry. He has been delegating his authority again, he has thrown away all his responsibility and he does not know what is going on. I want to say to that hon. Minister that it is time that he investigated what was going on in the Dairy Board, too, because the dairy farmers are dissatisfied. They are most dissatisfied. This quota system, if it was properly applied as asked for by the farmers, would be all right, but under his quota system, for the two months for which it was applied, the dairy farmer for his quota milk should have got 33 cents a gallon, but not one single dairy farmer in the Western Cape got 33 cents for that month. Why? Not for one single gallon did he get 33 cents, and he still only got 14,7 cents for the surplus milk that he sent in. Do you wonder, Sir, that there is no surplus fresh milk today in the Western Cape? Because of that very policy, dairy cows were slaughtered and farmers have gone out of the industry. In one district in my constituency, seven dairy fanners, representing over 2 000 gallons of milk a day, have gone out of business and are not producing any more. Seventeen dairy farmers in one district of the Mooi River constituency have gone out in the last two years. And the Minister has had warnings. He has had warnings from the Natal and East Griqualand Fresh Milk Producers’ Union: he has had warnings from the Milk Board, and he has had warnings from the Dairy Industry Control Board, but he has not heeded any of those warnings at all. Only now when he finds himself faced with a crisis has he belatedly come with an increase in prices.

Nonsense.

I mentioned production figures, but what happened to the consumption in that period? The consumption over that period increased by 15 per cent. So we are faced with a drop in production of 16 per cent and an increase in consumption of 15 per cent. More and more industrial milk is being drawn into the fresh milk market. This is why Prof. George Marais, the Dean of the faculty of Industrial Economics at the University of South Africa, predicted in 1966 that in 1970 South Africa would be short of 60 million gallons of milk. What is the shortage?

[Inaudible.]

I have no time for the hon. the Minister, Sir. Let him just listen and learn for a change, instead of arguing. The fact is that in 1971 we are going to be short of over 100 million gallons of milk. This shows how close Prof. Marais was in his estimate, because he said that in 1970 there would be a shortage of 60 million gallons. He was very close indeed to the correct figure, but Prof. Marais goes further and predicts that in 1975 there will be a shortage of 110 million gallons of milk, produced in this country. At the present rate of production we are going to find ourselves in 1975 with a shortage of well over 200 million gallons of milk in this country. That is why I say that we are going to be faced with a chronic shortage. It is time this Minister investigated the industry. It is time he stopped delegating his powers and found out for himself exactly what was going on. Hon. members will remember that I had the same advice for the Minister of Bantu Administration. The Minister of Agriculture must go out and meet the dairy farmers. He must hear what they have to say.

Sir, more important than this is the effect this will have on the housewife. How does this affect the people of South Africa? What has happened to the housewife this year? Not only has the housewife found, because of the maladministration of this Government, that she has had no butter to put on her table, but she has also found that she has had to face an increase in the price of butter. I am prepared to say at this stage that that increase in price was totally unnecessary. The subsidy this Government pays in respect of dairy products is R5,7 million, and that amount was budgeted for in March this year. Subsequent to that we had an increase in the price of butter, but what was coupled with that increase in the price of butter? Coupled with that increase we have had tremendously large imports of butter.

Do you know, Sir, that in the first half of this year we have already imported more butter than during the whole of last year? In the first half of this year we have already imported nearly three times as much cheese as we imported during the whole of last year. In the first half of this year we have already imported more than double the amount of milk powder imported last year. In this period we have also imported nearly three times the amount of condensed milk imported last. year. On every one of those commodities which have to be imported, the hon. the Minister is making a profit. It is a profit which does not go to the Dairy Board so that the Dairy Board can be helped to subsidize the consumer price, which will enable the housewife to buy a cheaper product. That money goes to the General Revenue Fund, It was estimated three months ago that the profit this Minister was going to make from the sale of these imported products, all of which he sells at a profit, would be R3½ million. Butter was sold at a profit of 17c per pound until the price was increased, and the profit is now, according to the deputy chairman of the Dairy Industry Control Board, 19c per pound.

A week ago I put a question to this Minister regarding production, consumption and import figures in respect of dairy products for the last two months. I have not yet had a reply. I wonder why he is so shy? I wonder why he is so coy? Why does he not give us the figures I have asked for? Surely he must know the figures in respect of production and imports for the last two months. Sir, I shall tell you why he has not given the House those figures. He is afraid to do so.

What reply are you referring to?

I put a question a week ago, on Tuesday of last week, for written reply, and I have not vet had the reply. I shall tell you why I have not had that reply, Sir. The reason is that he did not import any butter in those two months. This is just another example of maladministration on his part. He was aware of the coming shortage, but he did not take the necessary steps to see that the housewife of South Africa was protected. He did not take the precaution of importing butter. Then, in a mad panic, he ordered butter. According to the Financial Mail, the delivery of that butter was delayed because of the preoccupation of this Government with ideological claptrap. They refused to take delivery of that butter in pound and half-pound packs. The butter all had to be repacked into 500 gram and 250 gram packets, and that is why the housewife suffered a shortage for that period of two weeks when there was no butter to be had. This all resulted because of their preoccupation with red tape. As have said, I do not believe that any butter was imported at all during April and May. I do not know, because the hon. Minister will not tell me, but I do know that butter was imported during June.

The amount of butter imported during June on the ss Magnetic, which arrived on 1st June, was 2100 metric tons, or 4,6 million pounds, and on the English Star, which is expected either on 30th June or 1st July, there will be another 625,8 metric tons, or 1,3 million pounds of butter. This means that a total of nearly 6 million pounds of butter was imported in one month, as much as was imported in the six month period from October, 1970, to March, 1971. The profit on that 6 million pounds of butter, the profit to this hon. Minister, in the words of his own chairman of his own Dairy Industry Control Board is R1,13 million at 19c a pound. And what are they doing with that money? I want to revise my estimate of a profit of R3½ million this year. The hon. the Minister tells us that he made R¾ million profit in 1970 on the importation of dairy products.

On that basis I want to say that his profit is going to be nearer to R5 million, an amount which is sufficient to allow him to subsidize the price of butter without any cost to the State and to help the housewife to the extent of 10c per kilogram—5c per pound. But what was his increase in the price of butter? In the region of 5c a pound; that was the increase to the housewife. And what is happening to these profits that are being made? These profits are being placed to the credit of the General Revenue Account and not to the credit of the Dairy Industry Control Board or to the Milk Board for the benefit of the dairy farmer, nor to the benefit of the housewife. Instead, these profits go into the General Revenue Fund. And what comes out of this fund? The running expenses of the Government, the money to buy Cadillacs, to repair houses of Ministers and buy houses for them, for land deals such as the Agliotti deal. In fact, this is a windfall for the hon. the Minister of Finance which he did not budget for in March. He did not anticipate this. So it is a windfall for the Government to spend on maladministrating the country.

I am satisfied that the people of South Africa, particularly the housewife, faced with this increase of 5,7 per cent in the cost of living over the past year, realize what is happening to them today; they know where to apportion the blame. We have seen reports of a housewife’s revolt taking place in this country. Sir, that revolt receives the full support of the United Party because it is time that they woke up and realize what was going on. If we can help them in that by pointing to the maladministration of this Government, we shall continue to do so. I am certain that at the next poll, whenever the hon. the Prime Minister decides to call an election, the party on that side will get its answer from the housewives of South Africa.

It is remarkable how much courage the hon. member for Pietermaritzburg District has gathered since the debate began yesterday. One does not mind the fact that the hon. member is aggressive, and one does not mind if he is exceptionally zealous. However, when he makes a speech here like the one he made last evening and the one he has just made now, speeches that were contemptuous, derogatory and defiant, particularly with respect to a very senior hon. Minister of this House, someone who has meant a great deal to South Africa… [Interjection.] That is nothing for the hon. member to boast about. If the hon. member now makes that kind of speech, he must excuse us if we tend to approach the matter on a personal basis. On behalf of this side of the House I should like to say a special word of thanks to Minister Uys… [interjections]… for the service he has already given to South Africa. I shall not allow myself to be taken in tow by the hon. member for Newton Park, an hon. member who said here yesterday that under this hon. Minister’s guidance over the past 13 years thousands of farmers have left agriculture. That is surely a scandalous thing to say, because he knows, after all, that it is not true. Why does the hon. member not also speak of the improvements in many sectors of agriculture under this hon. Minister’s administration? But the hon. member rather pursues a little political gain…. [Interjections.] I should like to say this to the hon. member for Newton Park. He should rather say that he is very sorry that a man. who has already given such service to South Africa, had to be left in the lurch by senior officials in whom he placed the utmost confidence. The hon. member should rather have said that, instead of hunting for a small amount of political gain in a situation such as this.

The hon. member for Pietermaritzburg District also thought last night that he could be terribly spiteful to the hon. the Prime Minister. That was in connection with Chief Buthelezi, who had not yet met the Prime Minister. The hon. member tried to fling that in the Prime Minister’s teeth, as if to imply that the Prime Minister should run after Chief Buthelezi in order to meet him. This was again solely for political gain. I shall give the hon. member the true facts.

May I ask the hon. member a question? Does the hon. member think it was good for South Africa that Chief Buthelezi was put in the position where he had to answer as he did?

Who placed him in that position? If he did less travelling around abroad, he would have met the Prime Minister long ago. He would do well to take note of that as well. I do not mind him hearing about it. The sooner the better. But I shall tell the hon. member what the facts are. I made inquiries about this from the hon. the Minister of Bantu Administration and Development. I also think that the hon. member for Pietermaritzburg District ought first to put his facts right. The fact is that after the hon. the Minister of Bantu Administration and Education had said it, the hon. the Minister of Information, Dr. Mulder, announced at a Press conference that the hon. the Prime Minister would meet all Bantu leaders in South Africa in the near future. In April of this year it was arranged that the hon. the Prime Minister would meet Chief Buthelezi and the leaders of the Executive Council of Zululand on 28th July of this year in Pretoria. Chief Buthelezi ought surely to know this.

How long has he been leader of the Zulu people?

What is more, the hon. member knows, surely, that the hon. the Prime Minister met the Tswana leaders, the Venda leaders and the Ciskei leaders during the past few weeks under the guidance of, and together with, the hon. the Minister of Bantu Administration and Development.

For the first time.

The hon. member also knows, surely, that the hon. the Minister of Bantu Administration and Development makes it his task to take the leaders to the hon. the Prime Minister, which he is also going to do in the case of the Zulu leaders who will meet the hon. the Prime Minister on 28th June, 1971. I again want to ask the hon. member what he wants to achieve by coming here, as spitefully as you please, and saying that Chief Buthelezi was embarrassed in America because he had not yet met the Prime Minister of South Africa.

That is not true.

That was the hon. member’s attitude last evening when, as spitefully as you please, he cast it in the teeth of the hon. the Prime Minister. I now want to tell the hon. member frankly that such an attitude and display on his part is really not very pleasant.

The hon. member, and other hon. members opposite, including the hon. the Leader of the Opposition, said every now and then during the debate yesterday that this side of the House was running away from the problem of the urban Bantu. They say that we are leaving the urban Bantu in the lurch and that we do not want to debate the question. They say that we are the cause of the urban Bantu’s frustration. Yesterday this was again mentioned by four different Opposition speakers.

They are all correct.

If that is the position, let us have a look at it and debate the question. Then the hon. member must not speak about milk and butter when we are dealing with Bantu affairs in the debate. Then hon. members say that we are running away from the urban Bantu problem! I should like to tell members on the other side that we would like to thrash this matter out with them. This has already been done in previous debates during the year. Hon. members cannot show me a single debate in which the hon. members opposite wanted to speak about the Bantu, and find out certain particulars about the urban Bantu, where the hon. the Minister and Deputy Minister did not both get up and thrash this matter out with them.

We challenged them.

Yes, we challenged them. But let us now settle this matter at the end of this session. [Interjections.] If the hon. members there against the wall would just give me a chance so that I can make myself heard, we can thrash the matter out. The matter of main concern to the Opposition is that the urban Bantu must obtain proprietary rights and build up a peaceful middle class in their areas. This would give rise to greater stability. That greater stability would contribute to greater security for South Africa. That is the matter of chief significance. But let us now analyze the situation the Opposition is trying to create. Yesterday I used a word in this connection which I had to withdraw. I cannot, at the moment, think of a better word. What is the true position? What is the United Party's policy in respect of this matter? The United Party’s policy is (translation): ” To let the Bantu have an interest in the maintenance of law and order by making it possible for the deserving Bantu to obtain controlled proprietary rights on their houses in the large Bantu urban areas”. This is contained in the official documents I have here. What is the present position? When does the Bantu qualify as a deserving individual? hon. members opposite may tell us about this, is it the Bantu's conduct, his number of years’ service, his number of children or his political attitude that will allow him to qualify? hon. members opposite must please tell us, further, what controlled proprietary rights are. In the deeds offices of the Whites we have no knowledge of anything like controlled proprietary rights. How can we have controlled proprietary rights for the Bantu in the urban areas? Now the United Party must tell us, in addition, why proprietary rights should only be allocated to the Bantu in the large urban areas? Those are the United Party’s own words in these official documents. When would such a township area or urban area qualify as ” big”? What distinction does the United Party draw between a Bantu in a big urban area and the Bantu in a small White urban area? The United Party must tell the Bantu. The United Party is the group, after all, that wants to strengthen this westernized sector of our population. The United Party must answer these questions for that sector which they would so much like to westernize.

Then the United Party must also tell the Bantu what, according to its view, is the Christian and moral justification for this distinction that I have sketched? What does the hon. the Leader of the Opposition himself say? He says (translation)—

And then he says further—

Then the hon. the Leader of the Opposition continues by referring to a statement which the United Party issued in respect of the Bantu in 1954 and which, inter alia, reads as follows (translation)—

Now he already has to furnish proof that he has earned this right—

Efforts must now be made to reconcile such utterances with speeches made during this Session in the House. I ask the hon. Opposition what form this proof must take before the Bantu earns the right to property? The United Party does not tell the Bantu, they just come along with a lot of nice pious stories. I want to ask, moreover, when a Bantu, according to the United Party, becomes urbanized? The hon. member for Turffontein, who is now beginning to look so sick, can give us an answer to this at a later stage. *

What have I got to do with you?

When has a Bantu become permanently urbanized? I now ask the United Party who is going to determine these norms of urbanization: Is it going to be in consultation with the Bantu in the urban area, is it going to be in consultation with the Bantu leader in the homeland, or is it going to be in consultation with the Bantu leader in the urban area? The United Party must tell us who it is going to consult and who is going to determine those norms. Then the United Party must tell us, moreover, when a Bantu, according to their opinion, qualifies as a South African. Does this South Africanship of the United Party mean that the Citizenship Act will be abolished if the United Party comes into power?

But let us take a further brief look at this double talk of the United Party. The United Party must not think that the Bantu in the urban areas do not take note of this. I wish the United Party could hear what the urban Bantu leaders say about them. The urban Bantu leaders see just as little of a future for the United Party, with its Bantu policy, as we on this side of the House see for the United Party.

Let us now look, for example, at what the hon. member for Hillbrow says. The hon. gentleman says in a speech made here this year that the overall majority of the Bantu absorbed into the industrial effort will be regarded as permanent. In other words, these Bantu industrial workers will be regarded as permanent. If that is so, what then about the Citizenship Act? Moreover, does the hon. member want to treat them on an absolutely equal footing? Because you see, Mr. Speaker, the hon. member for Hillbrow says that those Bantu who are absorbed into the industrial effort will be regarded as permanent. But what does the Leader of the Opposition say? He says (translation)—

Then he claims that for 20 years we have been refusing to accept this simple truth, as he puts it. And the hon. member for Durban North? What does he say? He says that the urban Bantu must be given a share in this country by way of proprietary rights in their residential areas. How do all these things tally with what has been said in debates this year? How can this double-talk be reconciled? One says that as soon as a Bantu is absorbed into our industrial effort, he must be regarded as permanent; another first wants the Bantu to qualify in all kinds of ways; the hon. member for Durban Point says that they must have a share in the country; and the hon. the Leader of the Opposition says that they must be treated differently from the Bantu in the homelands. What does the United Party mean by this? Tell us, and tell the Bantu in the cities, in what respect they must be treated differently to the Bantu in the homelands. What problem do you foresee if the urban and the homeland Bantu get the same treatment? The Opposition must tell us these things. Is the Opposition’s actual problem not that the Opposition foresees that the National Party is successfully implementing its policy? Is that not the reason why they are running away? If the United Party now wants to treat the urban Bantu differently, does this mean that they no longer see that Bantu in his national context—in other words, they become a patchwork community, an appendage of the White nation and community. If this is so, what is going to happen to the urban Bantu one day when, as a developed person, he demands a share in the administration of the community of which he forms a permanent part, according to your view? On what grounds will you be able to refuse him the franchise, and if a limited franchise is granted to him, what would be the moral justification for that?

What about the Coloureds?

That hon. member’s little horse is really no longer running. This analysis I am busy with projects one's thoughts further. For example, how does the hon. the Leader of the Opposition’s view of the homeland Bantu as against the urban Bantu, tally with their policy as set out on page 19 of their policy booklet? It is stated that the urban Bantu committees can exercise a measure of local self-government and have defined and limited representation on a separate role in Parliament. It continues by stating that they, together with the Bantu in the Reserves, take part in the election of the eight Whites in the House of Assembly and the six in the Senate, for whom provision will be made in their Federal Constitution. What does the Opposition tell the White voters? Here in their booklet they say that the homeland Bantu and the urban Bantu can vote jointly for their representatives in Parliament. But here in Parliament the hon. the Leader and other members of the Opposition say that the urban Bantu must be treated differently. It seems to me as if the only hon. member opposite who is prepared to do a little thinking about these things, is the hon. member for Durban Central. If the United Party now accepts that the urban Bantu is detribalized, having no national context whatsoever anymore, why must he then participate in voting with the other Bantu living in their national context in the homelands? Why must the urban Bantu vote with these Bantu for their representatives in Parliament, and how long does the United Party think would the Tswana, the Zulu, the Venda and all the others be prepared to vote with other people in such an unordered, one could almost say misleading manner? The Opposition must think about these matters and give us answers to these questions.

I foresee that they will be able to come to no conclusion other than acceptance of the fact that the hands of the clock simply cannot be turned back anymore. But they refuse to accept this, while they feel the ground slipping from under their feet, a process they simply cannot check. Bantu leaders confirm this. Specifically in this connection the chief councillor of the Ciskei states (translation)—

What he says here is typical of what all Bantu leaders say; the United Party, however, simply do not want to accept it. Another fact the hon. Opposition must accept is that all Bantu in White areas, i.e. urban and rural, must be regarded as citizens of their respective homelands. If the urban Bantu is regarded as permanent after a certain period, with the concomitant allocation of proprietary rights and franchise, what about the Bantu in the rural areas, those who have also obtained a form of permanence according to the Opposition’s view of that concept? Why. according to your view, must the rural Bantu be refused proprietary rights? In the homelands you want a kind of labour class, to which you give the best possible care as far as food is concerned, but otherwise simply keep there. In the urban areas, on the other hand, you want a westernized Bantu whom you want to dress up nicely and allow to drive around in a motor-car. In between there is still the third group of Bantu, the farm labourers. Apparently there is no goal for them. That is then the United Party set-up.

In various speeches this year the hon. the Leader of the Opposition claims that it is our restricting measures with respect to the Bantu, i.e. the urban Bantu, which is giving us a bad name abroad; that it is our restricting measures that are creating frustration among the Bantu, and it is because by legislation we recognize the urban and the homeland Bantu as one and the same thing that makes us unpopular in the eyes of the world at large. But let us analyze this situation, and then hon. members opposite can give us the answer. You must say what changes you are going to make to the situation, what changes you are going to make to these so-called unpopular measures. For example, what are you going to do in connection with the pass laws, in so far as they relate to the nocturnal movements of Bantu in White areas? Are you going to abolish these laws? You placed good laws on the Statute: Book, inter alia, the Bantu (Urban Areas) Act, the provisions with reference to influx control, measures to which changes have been made from time to time by the National Government in order to enhance their functioning. But you must now tell this House, the world at large and these Bantu, whom you would so much like to westernize. what you are going to do in connection with influx control and the provisions of the Urban Areas Act, particularly section 10? Are you going to abolish all these provisions? You see, Sir, it is very easy to speak of restricting measures. Let us look at the Group Areas Act—that is surely also a restricting measure because it makes provision for separate residential areas. This is, surely, also a measure that you present as being restrictive. Another so-called restricting measure involving the Bantu, a measure which ostensibly makes us unpopular in the eyes of the world at large, is the Mixed Marriages Act. What about this Act? What about the Immorality Act? Go and speak to the urban Bantu and listen to what he says about the possible abolition of the Immorality Act. In this connection I can quote from a speech, which an Opposition leader in the Transkei made, in which he spoke with the utmost contempt of mixing between Whites and non-Whites, even in the social sphere. The Bantu would like to mix socially with his own people, except on special occasions where he mixes with the Whites in an official capacity, and otherwise perhaps, but he expressed himself very strongly against social mixing. These are surely restricting measures which supposedly place us in a bad light in the outside world. I also want to ask hon. members of the Opposition whether they regard the Bantu Citizenship Act as a restricting measure, and if so, whether they are going to abolish it, because the hon. member for Bezuidenhout asked, in one of the debates here, what Bantu would exchange his citizenship of South Africa, where his citizenship covers South Africa as a whole, for citizenship of a small part of South Africa. He said that no Bantu would do it. Sir, the Opposition will not be able to prove to this House that there is one single right-minded Bantu in South Africa, whether for the Government or against the Government, who would want last year’s Citizenship Act abolished. [Interjections.] No, Sir, we must face up to the facts. The Opposition invited us to speak about the urban Bantu, and to weigh up policies. They thought we would run away from it, and that is where they made a mistake. Now that we are doing it, the hon. member for Turffontein looks as if he is going to have an attack.

But, Sir, let us for a moment come to the hon. member for Houghton who is also so fond of telling us in speeches in this House about the famine and the increase of tuberculosis in the Bantu townships. She speaks, for example, of Soweto and then claims (column 226)—

That is one of the things she says. Sir, what are the facts?

That as right.

Yes, that is what the hon. member said this year; I have the Hansard here. What are the facts? The facts are that the increase in Bantu wages in the larger urban centres were 26 4 per cent from 1964 to 1970 and, according to the information furnished here by the hon. the Minister in a debate earlier this year in 1970 the salary increases for all races was 7,8 per cent. The increase for Whites was 10 per cent, and for the Bantu it was 8,3 per cent. It is easy to tell the world at large that the Bantu are left here with dregs for wages, if these are not the true facts. Sir, let us compare the position of the Bantu here with that of the Bantu in any other comparable country in Africa, not with the position of Whites. I do not have the time now to quote the figures for the hon. member, but I just want to ask the hon. member this question: Why do none of the depressed, aggrieved Bantu of Soweto emigrate to any other country in Africa; it is because they are living here in the country of milk and honey; that is why they do not emigrate. Sir, I read an interesting remark of a Bantu legal man in Johannesburg the other day who gave a reply about this same matter and said (translation): “I would not emigrate to another country in Africa; what is more, I would not even emigrate to America.” That is how well-off he is financially here in South Africa.

Sir, I want to refer to one other aspect, and that is the accusation the hon. member for Houghton made here one day, in a very irresponsible manner, when she claimed that the figure for tuberculosis among the urban Bantu is increasing alarmingly, and that this is a sign of undernourishment and poverty. She referred to urban Bantu, and I now want to allege that she was specifically referring to Soweto. But surely the hon. member for Houghton knows better; she surely knows that Soweto’s people, taken as a whole, are amongst the most well-cared for Bantu in the country. The Bantu of Soweto are amongst those earning the best wages in our country. One only needs to read through this monthly magazine Bantu of the department; I hope the hon. member does so. One only needs to look to the physical appearance of Bantu at social occasions, at the development of their businesses and at the increase in the number of motor-cars owned by them.

Sir, I could also mention many other examples to you. What are the true facts? Take the tuberculosis figures, for example, for the urban Bantu; I have the figures here for 1962 to 1970, but I do not intend to quote them all. In 1962 the figure was 20614; in 1966 it was 19 467, a decrease therefore. In that connection hon. members must bear in mind the increase of the Bantu population. In 1970 the figure stood at 19 012. In other words, from 1962 to 1970 there was a constant small decrease per annum of approximately 1 600, notwithstanding the percentage increase in the population in these urban areas. It is easy for the hon. member simply to make such remarks here in speeches. Those remarks of hers are published in the world outside because they are made by the hon. member for Houghton. There is, unfortunately, a part of the world that does take notice of her. Why does the hon. member for Houghton not take the trouble to ascertain the facts?

Hon. members of the Opposition, and the hon. member for Houghton, speak of so-called poverty and undernourishment in these areas. I have already told you, Sir, that here the Bantu are among the best cared-for people in Africa. What is the position in these urban areas? In Soweto, and even in the smallest Bantu townships in the cities, you find that these people have their own shops, their own cinemas; in some of the large places they have their own swimming baths; they have their own libraries; they have filling stations, sports fields, churches, restaurants and bar and other facilities. Although I am forced to concede that there are some of these Bantu areas that do not have the same economic vitality as the White urban areas have, no one can deny that these people lack absolutely nothing for their peaceful enjoyment of a well cared-for stay in those cities.

Sir, I am not the only person who says this. I took the trouble—and I am sorry that my time is almost up—to go and read what is published in newspapers in Canada, in France, in Germany and in England. Unfortunately I do not have the time to quote this to you. These are not newspapers that are necessarily well-disposed towards us. One of the newspapers, from which I am going to quote to you, is completely hostile to us. Sir, what does one find in those newspapers if one just tries to display a little elementary objectivity? In these newspapers they speak with great praise of what this Government has done to clear up slums areas, to construct these new urban areas and to establish proper facilities. Certain comparisons are made, and they point out that Soweto, for example, compares favourably with the residential areas for workers in the outskirts of London, and that it is even better. I am now not speaking about backward areas in England; I am speaking solely of labour areas in London, for example. People abroad, after they have visited South Africa, speak with the utmost appreciation of the amount of money this Government has spent on the upliftment of these under-developed people. Sir, unfortunately I cannot go on with that; I just want to conclude by saying that hon. members of the Opposition must make a study of these matters instead of coming along here with juicy stories and thinking that they can thereby gain a little popularity outside; if they did that, we would get somewhere in a discussion about our policy with respect to the urban Bantu.

Mr. Speaker, I will in fact be dealing with the position of the urban Africans during the course of my speech, but I just want to say one or two things to the hon. member for Potchefstroom. He must realize that percentage increases are very deceptive indeed if the absolute figure on which the percentage increase is based is itself very low. If I tell the hon. member that the recent Wage Board determinations were as low as R8 a week for nearly 100 occupations on the Witwatersrand, then perhaps he will realize that when I complain that wages are too low for urban Africans I am not talking without factual information. If I tell him that more than half the families living in Soweto are below the poverty datum line he will perhaps also realize that there is some factual basis for my complaint, and if the hon. member tries to catch a train from Soweto in order to get himself to work in Johannesburg by 8 o’clock, in the morning, he will also know that what I was saying was absolutely true. I want him to know that there is no point in comparing the conditions of Africans in South Africa with the conditions of Africans on the rest of the Continent because Africans in South Africa compare their conditions, as they are entitled to do, with the conditions of the other inhabitants of South Africa and it is here that the contrast is so sharp. [Interjections.] This is true, Sir; this is where they live. They are South African citizens. Why should they not be able to compare their conditions with those of other citizens of the same country? That is obviously the correct comparison. Anyway, Sir, the hon. member will be interested to know that in August of this year I am going to address a meeting at Potchefstroom University by invitation of the students and I would be very interested indeed to hear whether he would like to come along.

What date?

I think it is the 11th. If he would like an invitation, I would be delighted to have one extended to him.

Before I get on to the main subject of my addressing this morning, I just want to say one final word about the Agliotti affair which occupied the House with considerable interest the whole of yesterday. The thing that struck me about the whole of the Agliotti affair was how silly the Government was in trying to vindicate itself in this affair. A far more effective thing for the Government to do would have been simply to have admitted that it had made a parlous mistake; to say just for once that they were wrong; to admit that a mistake had been made, that it was wrong to have left such extensive powers in the hands of the officials, that it was wrong not to have supervised those officials and to have made sure what they were up to, and that it was wrong, as I believe, not to have suspended them from duty once it was discovered what they were up to. Once the report came out I think it was quite wrong for the Government not to have suspended the officials involved. They were simply transferred. I believe that if the Government had taken this line, it would have emerged from this sorry Agliotti affair with much more dignity and it would have saved some face. Instead we had speaker after speaker yesterday putting up what I can only call a blustering defence of what was, after all, a pretty indefensible situation, and we have had no satisfactory replies to very many pertinent questions, such as in regard to Mr. Venter’s passport. I got no reply again today from the hon. the Minister of Police. I got no reply whatsoever. It is absolutely absurd to tell me that the Police do not act in these cases. I am absolutely certain that when criminal investigations are taking place, the Police do not wait to find out whether somebody is about to go overseas; they make sure that he has not got a passport, and if he does have a passport, they impound it. That is exactly what should have happened in the Venter case. Sir, I believe the Agliotti affair has done this Government no good and I believe that there is no doubt that what they could have retrieved from the wreckage, such as it was, they have failed to retrieve because of their really immature course of action post hoc the appearance of the Lindeque report.

Now I want to leave that and I want Jo come back to the hon. the Minister and the Deputy Minister of Bantu Administration and to the hon. member for Potchefstroom, who has gone. All these gentlemen were telling us that they were going to deal with urban Africans. In fact, the hon. the Minister said sharply that he did not like to talk about urban Africans; he likes to talk about Africans in the White areas. Well, I agree with him wholeheartedly that the most neglected section of the Africans probably are the 3 million Africans on White farms, and I believe, and I have said it before, that it is high time that a full-scale inquiry was made into the conditions of Africans living on White farms and working as farm labourers, to see what wages they are paid and the conditions under which they work, because I believe that one of the best ways to halt the influx into the urban areas is not by influx control and pass laws, which do not work, but by trying to improve conditions in the rural areas, both in the rural Bantus tans and also in the White rural areas.

Now, the discussion we had last night from both the Minister and the Deputy Minister was not a discussion at all. They certainly did not give us any real facts as far as conditions are concerned. We heard a great deal of philosophy; we heard all about their philosophy, but we did not hear very much about the facts. We heard what they believed about tribal links and how those should be maintained, and language rights. The hon. the Deputy Minister had a great deal to tell us about language rights, but we heard very little about the aspirations and the fears of the urban Africans the Africans living in the so-called White towns, who, at over 4 million today, not only outnumber the Whites living in the White towns, but outnumber the total While population throughout South Africa, because there are something like million urbanized Africans today and there are 3¾ million Whites in the whole of South Africa.

The Minister chose, and so did the Deputy Minister, to ignore all the far-reaching effects or urbanization, and there is today a third generation of urbanized Africans born in the cities. The Minister has chosen to ignore all the far-reaching effects of industrialization. I want to tell him that the effects of urbanization and industrialization are just as far-reaching on Africans as they are, in fact, on the White population of South Africa. Our White population today is very different from the White population that lived in this country, say, three decades ago. The Minister told us what they believe the urban African should want, and they told us what a Tswana chief told them what he thought the urban Africans should want. But what they did not tell us was, in fact, what the urban Africans do want. If one reads what the urban Africans have written, and if one bothers to talk to them—and I stress talking to them, and not at them—one soon finds out that what they really want is security of tenure They want better housing conditions. They want better transport. They want better schooling for their children. They want safety in the townships, and, above all, they want a better standard of living. All those are the things they want. They do not sit there longing for their tribal links. [Interjections.] There is a shortage of housing today. Whereas the Government could proudly say that it had made up the terrible backlog which arose because not a penny was spent on housing by the United Party City Council in Johannesburg, for instance, during the war and the immediate post-war period, which is why those shanty towns arose, the Government today is allowing those towns to fall back into slums, and they will be in another few years unless the backlog of housing is caught up with.

Sir, these are the things the urban Africans want. They do not want their tribal links so desperately, and language means so little to them in fact that they ask that their children be educated through the medium of English. The first thing that the Transkeian authority did was to change the medium of instruction, when it got the portfolio of Education, back to English, and the hon. the Minister knows that pretty well. It is my firm belief that these are the things which occupy the minds of the urban Africans and not the semantic pleasures of talking in Tswana, or the romantic dreams of becoming the head of a department, shall we say, in the Transkei, or of becoming a general in a non-existent army in Zululand.

Now I want to leave all these things aside and I want to come to the one or two positive things that this pretty futile session has in fact produced. The one thing that was really positive which emerged was that the Government had a change of attitude in regard to equal pay for equal work in the Civil Service for non-Whites and Whites. Now, this is all going to take time and it is hedged around with conditions, but it does show a change in the direction of thinking. For this I am profoundly grateful, because it will remove one of the sources of grievances of the non-White people, and more particularly of the educated non-White people.

Then there was another announcement, which was treated in some circles with enthusiasm and in other circles rather more cautiously. I refer to the recent announcement by the hon. the Deputy Minister of Bantu Administration about the handling of pass offenders at aid centres. I am sorry that the hon. the Deputy Minister has already spoken in this debate. I was rather hoping that I could get some direct answers from him across the floor of the House. Well, that is not going to be possible, but perhaps I can get these answers from him at a later stage. He has invited me to have a cosy little chat with him, and I have accepted that invitation. [Interjection.] We do not want the hon. member for Transkei to be present either. This is going to be a tête-à-tête between the hon. the Minister and myself, and I hope I am going to get some information.

Now, as we all know, or should know, the arrest and imprisonment of Africans under influx control and pass laws is probably the greatest single cause of racial friction in this country. There is no question about that. Sir, the figures are absolutely staggering. There are an estimated 1 700 prosecutions per day. Nobody knows how many are arrested and pay spot fines, but there must be many thousands more who do this. In regard to our offenders in gaol, convicted people, out of a Bantu prison population of 408 000 last year, more than 223 000 Africans went to gaol for one month or less. I think it is fair to say that the vast majority of those were pass offenders. They were people who had committed offences under the Urban Areas Act, or were guilty of pass offences. I hope that the hon. the Deputy Minister is going to be able to reassure me about how these aid centres are going to work, because if there is one thing I do know a little about, it is the physical implementation of influx control and the pass laws. I have not only made it my business to make a special study of the laws affecting urban Africans— indeed, it was this that first fired my interest in politics—but I have made it my business regularly, at least two or three times a year, every year, to visit the Fordsburg Bantu Commissioner’s court to see this system being implemented. I can tell you. Sir, that anybody who has seen that system in action cannot but end up hating the pass laws. If one looks at these wire cages, full of human captives, and watches this sausage machine that disposes of them at the rate of about one a minute with fines of R10 or two weeks, etc., and watches the way the system is implemented, one cannot help but end up hating the pass system…

We are going to change all those things.

… and so I hope I am going to be given the reassurances I really want from the hon. the Minister, because I for one will welcome a change and improvement with all my heart.

But why do you criticize a genuine attempt before you know the facts about it?

Wait a minute. I want to ask certain questions before I can give this “genuine attempt” my sincere endorsement. If the hon. the Deputy Minister can answer these questions, I shall be the first to endorse this attempt, I may say that it is not only I who want the answers to the questions I am going to put, but also millions of African citizens. They are very interested indeed in this matter. Sir, let us take a look at this matter of the aid centres. The first thing I want to say is that it is not a new idea. Aid centres were in fact provided for under the Bantu Laws Amendment Act of 1964. which amended various laws. It was a highly contentious piece of legislation. Seven years have passed since then, and to the best of my knowledge, not a single aid centre has yet been established. Sir, I am going to assume that the aid centres are going to become reality and that the hon. the Minister is going to see that they are set up. Will he tell me where they are going to be, and who is going to run them—B.A.D. officials or the Police?

Not the Police.

I see. Are they going to be detention barracks?

No.

I must know, because there was such an extraordinary debate about this subject in 1964.

Let me tell you straight out that they are not going to be detention barracks. They will be aid centres.

Good, but how do you hold people who have committed offences? This is what I want to know.

We are trying to channel them to the proper places.

Yes, but one has to trace the sequence of events from the time that a man is arrested. I mean, not everybody is going to walk into an aid centre and say: “Here I am. I do not have a pass. Help me”. Some people may do that, but if you are trying to stop people from going to gaol for the pass offences, you have to follow the system through. I shall go into the categories in a moment, but let us take the case of a man who is picked up. What happens to him then? Does he choose to go to an aid centre, or is he merely taken to the aid centre? We had an interesting debate on this question in 1964, and the hon. the Deputy Minister’s predecessor, who then represented the constituency of Heilbron. said that “the person who goes to an aid centre goes there voluntarily. He is admitted at his own request. He does not land there because he has been arrested. If he were arrested, however, he would say: ‘Look, I am under arrest. I realize that if I do not go to the aid centre, I will go to a police cell. If I go to the aid centre, I can ask the official there to assist me.’ ” Id other words, he said that such a person would not be arrested and would not be forced to go there. Now I do not know how a person goes there voluntarily, if he is not arrested, but never mind. The Deputy Minister’s predecessor then goes on to say that if this man has been arrested, his arrest ends at the door of that aid centre, because once he goes in, he is no longer under arrest. Do I assume then that he can walk out of the aid centre once he has been brought there? That is what the ex-member for Heilbron said to us. He said: “The minute he enters the door of the aid centre, he is no longer under arrest. If, however, he does not avail himself of the facilities of that centre, the minute he walks out, he again becomes an offender.”

We have tackled this whole matter de novo, and you need not go all the way back to 1964.

So you are not going to implement this scheme in terms of the 1964 legislation.

I said that if a change in the Act is needed, we shall not hesitate to bring an amendment before Parliament.

The hon. the Minister must envisage the actual practical implementation…

But we do.

All right. Let us take the case of a man who is picked up, presumably by the police, because how does he get there otherwise? Can he then choose to go to the aid centre, or can he say that he would rather go to court and be tried? Is he entitled to say: “I would rather pay a fine. I do not want to go to an aid centre and be sent off to do a job”? Will he have the choice? These are the questions to which one wants answers. The aid centres under the law of 1964 were to be set up, I presume, generally in an African area, in a township. Does that mean that these aid centre courts will be closed courts, that one cannot go to them? Will I be able to visit these aid centres in the same way as I visit Bantu commissioners’ courts? Will that be possible?

Yes.

It will be possible? Well, I am very glad…

We cannot have a debate on it now…

I am sorry the hon. the Minister spoke first, but we will still have this little tête-à-tête. I also want to know whether the hon. the Minister is going to find officials who will be able to deal with every case sympathetically, to find out what is going to happen to the African. Is he going to get Prisoner’s Friends? These were mentioned in the White Paper on the 1964 legislation. Is that what the Minister envisages?

Much more than that. But the prisoner’s aids will be incorporated.

Are you going to offer work to these people?

Yes.

Are you going to liaise with the Labour Bureau?

They will be channelled by the Labour Bureau.

It is not going to be just farm work for instance?

No.

So, I can be absolutely certain that this is not the legalization of the in-lieu-of-prosecution system which was such a bad system in the fifties?

We want to circumvent that as far as possible.

Yes, but what worries me is that that system also circumvented gaol. I wonder if the hon. the Deputy Minister remembers that system; it was before his time. I remember it very well indeed because I raised it in this House. It was a system whereby B.A.D. gave a departmental instruction to the Police that when a man was arrested for a pass offence, he was to be told that he could either go and work on a farm in lieu-of-prosecution or he would be prosecuted and go to gaol. This led to the most terrible abuses and I hope the hon. the Minister is not contemplating anything like that.

Of course not. We want to relieve the pressure on the courts and the prisons for technical offences. That is the gist of it.

Yes, but what are you going to do with them instead? This is what interests me. I know there has been talk of rehabilitation centres. We are always busy sending people to rehabilitation centres which often do not exist, like under the Drugs Act. There no such thing exists, yet we are busy sending people to rehabilitation centres. Now I come to the categories. These are all very important and practical questions. This is what happens to a man when be gets picked up.

It is nonsense for you to say that we are sending people to rehabilitation centres which do not exist.

We just had a Bill which did that while there are no rehabilitation centres for Africans and two for Coloureds. But, as I have said, I want to take the different categories. The first category is that of a man who is arrested merely for the non-production of a pass. His pass is in order but he just does not have it on him. The hon. the Minister mentioned this as one category of the type of man he would like to prevent going to gaol. Well, I am with him there 100 per cent. But shall I remind him that since 1954 there has been an instruction to the Police, in terms of circular 23, an instruction which was repeated in 1963 and in 1968, to the effect that the Police are not supposed to arrest Africans for the mere non-production of a pass? Why have we not had the co-operation of the Police in this regard? Why are they still picking up Africans for mere non-production of passes? It happened only last week, when, while I was home, a constituent phoned me, furious, because there was an attempt to arrest his maid, who was in uniform, by a passing Police van. Actually they tried to drag her through the gate of the house to the police van just because she did not have her pass on her. This is not B.A.D.’s business at all; it is the business of the Minister of Police, I want to know why the Police are not carrying out the instructions given as long ago as 1954. If the Police were doing their duty and the magistrates were doing their duty, this category of person should not appear in the aid centre at all. The second category is those who enter legally and thereafter become illegal; in other words, they come in to a certain job, they do not like the job and they leave the employer to whom they have been contracted to seek other work. In this connection I want to tell the hon. the Minister that very often those people who get contracted from the Bantustans are not even shown a copy of the contract. Everybody else gets a copy—the Labour Bureau, the Bantu authority in the town, but not the man himself. He arrives here and finds he is doing a job he really does not want to do at all. Many people think they can do better than the jobs for which they have been contracted and they may well be right. There may be justification for this viewpoint. The terrible thing about the pass laws is that they not only prevent a man initially from selling his labour in the best market, but they thereafter prevent a man form changing his job to improve his position. “Once a farm labourer, always a farm labourer.” The hon. the Deputy Minister will remember who said that. To stop a man’s incentive and prevent a man from improving himself even by virtue of his own labours, is a devastating thing to do. I sincerely hope that efforts are going to be made at tile aid centres to ensure that officials do not insist upon a man becoming a coalheaver or a garbage remover, when the man knows he has more education and should do a better job. Where a man has become illegal because the job he had contracted for was not what he thought it was, or because the employer is a bad employer, I hope the aid centres will help him to get a better job and that they will not insist on his taking any job which they want to give him.

What worried me too is that, in terms of the 1964 Act, a man can be “deemed to be idle” in certain circumstances. If he is offered three jobs consecutively and turns them down, he can he deemed to he idle. If he is dismissed twice within a year, he can be deemed to be idle. I sincerely hope that the hon. the Minister will amend the legislation in this regard. I do not see where we will get the officials from who will work out whether a man should do this job or that job. What happens to a man after he has turned down two jobs and is deemed to be idle I would not know. Does he become a “won’t work”? Does he get sent back to the homelands? If so, what does he do when he gets back to the homelands? Who looks after him there? Does he get detained? Is he sent to do work on a trust farm? It is all very well to say that such a man does not go to gaol, but I want to know what happens to him instead. As I say, I am very anxious to know whether a man who says “I do not want to go to an aid centre, but would rather put my case to the Bantu Commissioner and perhaps in so doing get off with a fine” will have the option to do that from now on?

Then there is the category of Bantu who ab initio come into the urban areas illegally. By far the greater percentage of These Bantu come into the urban areas without permission because there is no work in the homelands. They must have work. As they cannot get permission, they come in without it. What happens to these people when they get picked up? Are they going to be offered work or is the hon. the Minister going to insist that they return to the homelands? If we can do away with the rule of making a man first return to the homeland while he could get a job in the urban area, I think that would be an enormous improvement. Firstly, it will save transport and, secondly, it will save very valuable man hours. There is a tremendous wastage involved in making a man return to the homeland before he can reenter legally. If all these are ideas which the hon. the Minister has in his head, I think it will be an enormous improvement if he can make these changes. It will, of course, mean changes in the law. There is no question about that Finally. I want to say that I do not like the hon. the Minister’s definition of what he called “won’t works” which he gave in an interview. He says a “won’t work” is a Bantu who has been convicted two or three times under the pass laws.

Please, there is no such thing as a ” pass law” any longer.

What do you want to call it? Do you want to call it a “registration book law” or an “abolition of pass laws law”? They are pass laws. Let us call them what we all know them as. Every policeman who stops an African says to him: “Where is your ‘dom’ pass?” This is the accepted confrontation. The hon. the Minister knows that the policeman does not ask for the Bantu’s registration book; the policeman does not say: “Where is your abolition of pass book?” That is ridiculous. These are passes. In defining a “won’t work”, I am in fact quoting the hon. the Minister who said “It is a Bantu who has been convicted two or three times under the pass laws.” That is how I read it in one newspaper interview he gave in this regard.

Where did you get it from?

I cannot remember, but I will get it for him if he is interested.

I can assure you I did not say that.

All right, you said “people who have been convicted two or three times under the registration book laws”.

Reference books.

I mean “reference hook laws”.

What does the policeman say?

He says, “where is your ‘dom' pass?”. It actually means “where is your damn pass?”. These people are often not idle or “won’t works”. They are the unfortunate people who spend their lives in and out of gaol. They go into gaol because their reference book is not in order. When they come out of gaol they are in exactly the same position they were in before they were picked up by the police. So they get picked up over and over again and, consequently, half their lives are spent in gaol. I hope that the hon. the Deputy Minister is going to be able to do something about this. As I say, this is the great single source of racial friction in this country. It is a tremendous grievance with Africans that so many hundreds of thousands of them go to gaol. I am not doubting the hon. Minister’s bona fides. I will give the hon. the Minister a fair chance. I will go and have that cup of tea with him.

Do not criticize these things before you know the facts.

I am not criticizing, I am putting some very genuine doubts that I have. The hon. the Deputy Minister must realize that I am not the only person who has these doubts. The aid centres system as it was originally mooted, was not really going to help the situation at all. Seven years have gone by since then and nothing further has happened. Now we have this new idea. I will give the hon. the Deputy Minister time before I take up this invitation to talk to him, to work out exactly what happens from the moment a man is actually arrested all the way through. These are the important issues. This is what is involved in this whole aid centre system. I believe the only way to really fix this problem is to do away with these laws.

Of course, that is your idea. Then we will have chaos.

I believe in mobility. I know there will be transitional problems, but they can all be solved. One can build houses, one can open up jobs, one can improve conditions in the rural areas, Bantustans and the White rural areas, One can channel labour through a voluntary labour bureau where it is required. Other countries have had to face problems of industrialization and urbanization. The poor White problem was not solved by sending the Whites back to the rural areas. We are faced with a poor Black problem. The way to solve that is not to send them back to the Reserves and the Bantustans, to starve out of sight, to be jobless out of sight. The way to solve that problem is the way the Van Eck Commission recommended way back in the forties, namely to industrialize, to remove people from those rural areas so that they can be more productive and not less productive, to remove people so that pressure of population and animals on a fixed amount of land is in fact removed, so that those people can come into the towns and be industrial workers. That is what solved the poor White problem in South Africa. That, I am convinced, is what will solve the poor Black problem if only we were not so desperately frightened of the thought of having Africans in the urban areas. I would rather have them here legally than have them here as we do, by the thousands illegally, ever on the run from the Police, fugitives from justice, never able to earn a decent living. [Time expired.]

Mr. Speaker, if one has been listening for five months to speeches of this nature, to all these lamentations of the United Party and to all these divergent instant solutions, one realizes why all these clever people are sitting in the Opposition benches. I think it is a real compliment to the voters of South Africa. Their sound judgment speaks volumes. Just imagine what would become of this beautiful country of ours if these negative, pessimistic, press-addicted Opposition were to be governing.

Tell us about that meeting you attended.

Mr. Speaker, I shall come to that in a moment. I just want to circle round a little so that I can approach the vultures from an upwind position. “The United Party realizes that separate development is succeeding. That is why we have these cries of despair. Or is it perhaps the death rattle of the United Party school of thought? In South-West Africa we have a proud example of traditional independent development. The Ovambos settled at Ondangua almost 100 years ago. Over the years migratory labour has been utilized because the chiefs prefer it. That is why it was significant for us to hear last week that the chief councillor of Ovamboland. Chief Ushona Shiimi, had declared unequivocally that if a referendum were to be held, as requested by South Africa, they would vote unconditionally for South Africa and against the U.N. The Kavango people also pledged their support to South Africa. Just listen to what Chief Shashipapo of the Kavango people has to say. He said (translation):

He went on to say—

This same chief also made an attack on Israel after Israel’s donation of R2 000 to the O.A.U. A few weeks ago two of our South African policemen lost their lives in that area. The S.A. Police has a herculean task to perform. We who are living in peace and prosperity here, forget so easily that they, and together with them the Defence Force, are our guardians. That is why I should like to convey my gratitude, on behalf of the voters I represent here, to the S.A. Police. I know that there are thousands of families who pray every day for the safe return of a father serving somewhere on our borders. If murderers deprive two families of a husband and father, it is probably no more than fitting that we make an appeal to everyone in South Africa to see to it that our money does not, via Israel, end up in the hands of terrorists. The handling of this matter we leave with the greatest confidence in the hands of our Government.

Yesterday the hon. member for Simonstown again disclosed what he regarded as a secret document here. In a previous debate in this House the hon. member also called in Adv. Niehaus as a witness. Allow me, quickly, to introduce Adv. Niehaus to you. He is the Leader of the Opposition in South-West Africa, at present an hon. Senator. He was rejected by the voters of South-West Africa in one election after another. On various occasions he even contested two seats at the same time—one for the House of Assembly and one for the Legislative Assembly. But now he has found his way here to the Other Place on the hack of the old faithful steed, Natal. In 1960 the Government had to defend its case before the World Court. While the Government and its competent legal team were having to fight day and night, this hon. Senator said that he sometimes thought that it could be beneficial to be governed by the U.N. The hon. the Leader of the Opposition here once said in South-West Africa that it was in fact a great injustice to the country that Adv. Niehaus was not yet a member of the Executive Committee. Does the hoc. the Leader of the Opposition therefore approve of this statement made by the hon. Senator? In the Suidwes-Afrikaner the official mouthpiece of the United Party in South-West Africa, it was reported what Adv. Niehaus said on 19th April, 1962, i.e. that world opinion could not be checked and that the quicker we fell into step with it, the sooner there would be hope for us. “If we move with world opinion, the speaker sees a safe road through for us to the other side”, according to the report.

Is that a Nationalist Party publication?

No, it is the Suidwes-Afrikaner—the official mouthpiece of Adv. Niehaus himself. This is not a secret document. On 23rd October, 1963, he said (translation)—

On 3rd December, 1965, he said—

Is that the school of thought of the United Party, or is it the school of thought of the Progressive Party? Apparently this links up with what the hon. member for Turffontein said, because he has already been turfed out. The youth whom that hon. member represents here with so much renown, do they represent the school of thought of the United Party or of the Progressive Party?

Before I turn to the subject of fish, I undertake to reply to all the questions and misgivings of the hon. member for Simonstown honestly and sincerely. But first I want to say that I got the impression that the hon. member for Simonstown seems to be of the opinion that he discovered a closely guarded secret. He referred to my having allegedly said “a crime remains a crime”. The hon. member represents a constituency with a great name and if he wants to be worthy of that name, he must now tell us whether I am correct when I say that he came by that document in an improper way. [Interjections.] I now want to test the integrity and honesty of that hon. member.

Look at him blushing!

I am referring now to an interview we had with the then Minister Haak. It was no secret meeting, but an official interview. As deputation of the municipality we made a full report, as befits a deputation, to the council; as hon. members know, no council meeting can be held in secret, but must take place in public. The newspapers in South-West Africa published as much of the proceedings there as they wanted to. Therefore, it was absolutely no secret. [Interjections.] That just shows how little the hon. member knows. But I shall return to this in a moment because I am still waiting for a reply. If he wants to be honest, he must admit that he came by this document in an improper way. [Interjections.] The hon. member must tell us where he got it and how he got it [Interjections.] The hon. member is making a fool of himself and he is dragging his party with him. While they tramp around in the sewers, the Progressive Party is becoming the alternative Opposition in this House. If the hon. member does not want to tell us where he came by that document, surely he is also guilty of a crime. Surely a crime remains a crime, and we will hold it against him as long as we are able to.

Allow me an opportunity of returning briefly to the fishing industry of South-West and South Africa. The cold Benguela current which makes its way from the Antarctic to our West Coast is rich in mineral salts. It washes up against our West Coast, assisted by the prevailing South East winds which exert pressure cm the upper layers of the water. As a result of that there is a swell running in along the coast. This water, rich in mineral salts, which is exposed to our sunlight, offers ideal conditions for plankton. Because the biggest swells along the West Coast run in along the coast of South-West Africa, these are the richest fishing grounds in the world. Plankton is the staple diet of sardines, anchovies and all other kinds of pelagic fishes, as well as the whale. All the other predatory fishes, predatory marine animals and birds live off these pelagic fish. It is a fact that along the South African coast one finds 1 300 species of fish. Of these 1 300 species only 30 are being utilized and only six of these species are responsible for 90 per cent of all catches.

What species is the hon. member for Simonstown?

He is a vulture. With this great onslaught by man on these six species the natural equilibrium is being tremendously disturbed and without an equally great onslaught on the predatory marine animals, the ratio is being drastically reduced. The economic consideration becomes predominant. If we consider the catches during the past few years, we see that the catches in 1963 totalled 612 000 tons, in 1964 701 000 tons, in 1965 734 000 tons, in 1966, 795 000 tons, in 1967 1 047 000 tons, in 1968 1,7 million tons, in 1969 1.4 million tons and in 1970 561 000 tons. Sir this illustrates very clearly the onslaught on the fishing resources after the arrival of the factory ships. Sir, I just want to sketch the position to you now as far as our trawling grounds are concerned. In 1960 102 000 tons of stockfish were caught along the South African Coast, all by South Africa. In 1968-69 this had already increased to 561 000 tons, and only 17 per cent of this was caught by South Africa; the rest was caught by foreign powers. No fewer than 100 foreign ships were at that stage active along our coasts. For that reason it was deemed fit to allocate a factory ship licence; for that reason the South-West African Administration allocated a sardine quota to Consortium Fisheries in 1968, on condition that they should apply the profits to develop this major white fish industry. Does the hon. member for Simonstown have anything against that?

He wants to give it to the Russians.

May I ask a question?

Sir, I just want to finish. The hon. member can pul bis question in a moment; he will only waste my time. It became clear to us all that the fishing resources of South-West Africa could not withstand this major onslaught, and for that reason all of us tried to put a stop to it. The hon. member once appropriated to himself the doubtful honour of being the only man who fought for the interests of this industry. I think it is now clear to the hon. member how wrong he was. He has for the first time now discovered that all of us, a long time before he tried to do so in this peculiar, devious way, had made representations through the right channels in an honest and direct way. In the first instance I went to the Executive Committee of South-West Africa, and after that we had the interview with the ex-Minister Haak. Sir, before I leave the topic of the Willem Barendsz, to go on to something else, I just want to say that one of the things we are working for now is that this Willem Barendsz should disappear from the scene.

When?

I wish that hon. member would disappear from the scene. Sir, I would just like to present to you this secret document now. One of the things we asked for, to which the hon. member referred, was that these people should be given a land-bound quota in exchange for withdrawing from the territorial waters. Inter alia, I stated it to the Minister like this: The decision as to whether it should be one of two factories or how great the quota should be we leave in your hands. It is general knowledge that the Government did this. They offered these people land-bound quotas. It is general knowledge that the Suiderkruis accepted it and dearted; it was only the Willem Barendsz which refused to accept it.

But read page 11.

I shall come in a moment to page 11. A further request was that the Government should in 1970 not allocate any quota to these factory ships. This was granted, Sir. We asked them to try to reduce the number of small catchers. We asked for automatic scales, and these were installed. We asked them for the division of the so-called pool fish, and this is being done. We asked them for the withdrawal of the Sarusas quota, and this has been done. We asked for the earlier closing of the season, and this has been done. We asked them for the retention of the 90 000 tons quota, and this has been done. We asked them for a commission to be appointed…

To investigate who stole that letter.

To investigate control measures.

On a point of order, Sir, the hon. the Minister of Coloured Affairs asks who stole those documents which were in the hands of the hon. member…

Sir, if what I said can be interpreted to mean that a member of the Opposition or the member for Simonstown stole it, then I withdraw it, but I said, “to investigate who stole that letter”.

Sir, I have just referred to the fact that we asked for a commission of inquiry into control measures. After all, the hon. member read the document; it deals exclusively with control measures. I have never yet had any objection to any concessions which have been granted. I have not even objected to the interests Mr. Oppenheimer has in the fishing industry. But the hon. member’s objection concerns the allocation of concessions…

To Afrikaners.

To Afrikaners, and I have no fault to find with the allocation of concessions. We have complained about control measures and I have read out to you what was done. Last week, in this building I asked a deputation here in the presence of the hon. the Deputy Minister whether they had any further complaints, and there sits the hon. the Deputy Minister. The answer was “no complaints”. The only complaint is that the fishermen of Walvis Ray are suffering as a result of a quota restriction on sardines because we want to protect our sardine resources. It happens day after day that they sail through large shoals of sardines looking for anchovies. They are not allowed to catch those sardines, but then the catchers of the Willem Barendsz, come along and catch the same fish; there is dissatisfaction about that. That is why I say that the Willem Barendsz must disappear from the scene. Secondly I want to make a serious appeal to the Minister to expedite the purchase of a modern deep-sea research ship so that our sea fisheries division will be able to ensure that we can utilize the other one, 1 270 species. This ship could also be used by our marine geologists and our marine biologists. I think that the seals alone are this year going to devour as many fish as the total catch of the landbound factories. I want to content myself with that. I just wanted to aks the hon. member for Simonstown to please tell us where he got that document.

May I ask a question? Did you ask for a judicial commission of inquiry in South-West Africa?

Yes, I said it equivocally, but in regard to control measures and not in regard to quotas and concessions. Now I want to tell the hon. member that he put words in my mouth which I never spoke. I said that there were rumours, there was mention of bribery and so on, and that is why I said it would be in the interests of the officials and in the interests of the Government—and that you can read. I said that those were the allegations which were being made. But I would like to ask the hon. member again. He came by that document in a dishonest way. Can we not appoint another commission…

Order! The hon. member may not say that it was done in a dishonest way. He must withdraw that.

I withdraw it. I say he obtained it in an irregular way. We do not know how; the hon. member must tell us.

It is a stolen document.

On a point of order, may the hon. member say that I obtained the document in an irregular way?

But you did.

I did not hear what the hon. member said,

The word he used was “irregular”.

Yes, and what about it?

Is the hon. member entitled to use the accusation “irregular”?

Yes.

On a point of order, Sir, if the hon. member says it was obtained irregularly, then he is saying that the hon. member obtained it improperly.

This document which the hon. member obtained in an irregular manner, can he tell us how much he paid for that document?

Order! No. that the hon. member may not say. He must withdraw it.

I withdraw it. I should very much like the hon. member to tell us. He persistently Implied here that there had been irregularities. He is an honourable person. The hon. the Minister is being accused day after day. The hon. member should really have the courage of his convictions and stand up and tell us where he got that document from and how he came by it. This document deals with an interview which was conducted with a Minister. This document was, from the nature of the case, not laid upon any Table. It was not even necessary for the Minister to put it in writing. In other words, that hon. members must have come by it somewhere in an irregular way. We do not know how and we should very much like to find out from him how he did this.

In the recent Rio Transatlantic Race a yacht took part under the name Omaruru, representing the constituency of the previous speaker. Let me merely say that the performance of that yacht in that race was a much better one than the performance of the speaker in this House. The hon. member for Omaruru made little response to the charges of the hon. member for Simonstown and has contributed just nothing to the debate.

Just as the position of the little Free State town Excelsior will never again be the same since the tragedy and the scandal that left such a long shadow over its people some months ago, so the Department of Agriculture will never again be the same, and, indeed, so the entire Civil Service will never again be the same as the result of the hon. the Minister of Agriculture having refused to accept responsibility for an administrative faux pas of the worst sort in his department. However, long after the little persons who are concerned in the Agliotti scandal have passed from our memories, there will remain in Hansard, and can always be quoted, the statement of the moral code of norms put forward by the hon. the Leader of the Opposition as regards our United Party expectations in regard to the conduct of a Cabinet Minister accepting responsibility for his department. Also, there will remain on record the statement by the hon. member for Prinshof, and we are happy that he made this statement, that he finds that the standards set by the United Party are too high for the Nationalist Party. Let me say, further, that we on this side of the House believe in that old Chinese proverb: ‘‘If perfection is attainable, why be satisfied with less?” The hon. the Minister of Agriculture will have to live with his decision and will have to live with a department which in future may not be able to accord him the respect which it is necessary to accord the ministerial head of the department.

I now want to pass on to the comments made by my hon. leader when in the general debate on the Third Reading of the Appropriation Bill he mentioned the muddle that is taking place in the motor industry. He mentioned that this is taking place against claims by the Nationalist Party that were made on three occasions yesterday that we have entered the dynamic decade of the 1970s under the régime of the Nationalist Party. Perhaps we can sum up the position more clearly and more briefly when we say that under the present regime we have entered the decade where South Africans will become “eaters of yellow margarine and bakkie drivers”.

Sir, the motor industry is the third largest industry in South Africa. For that reason it is clear that we must appreciate that when the motor manufacturers come upon evil times, when there is a threat of unemployment and short-time work, we are not merely dealing with large names such as Ford and Chrysler, overseas firms where overseas capital is available. The motor manufacturing industry at that level is still in essence an assembly industry and consists Largely of a large number of ancillary manufacturers, many small in nature, who contribute collectively to the total effort. If the motor manufacturers are either over-producing or, due to the fiscal policy of the hon. the Minister of Finance, are unable to maintain their sales, then thousands of small manufacturers will be affected. I mentioned in a previous speech that the ripple effect will continue, to the detriment of South Africa as a whole and to the detriment of our third largest industry.

Now I want to expose certain inconsistencies in Government policy in regard to the motor industry. The first concerns the implementation of Phase III in the motor industry, which was initiated in January of this year through the policy of the hon. the Minister of Economic Affairs. Now let us be quite clear. Our charge on this side of the House is that in introducing Phase III of the local content programme for the motor industry, this was badly timed and has had an inflationary effect on the economy at the very time when the Minister of Finance is doing his best, in terms of the Government’s policies, to restrict production and to bring about a deflationary situation in South Africa. To appreciate the situation, it is necessary that we should view the brief historical background underlying the local content programme for the industry,

In 1960, when South Africa was facing economic depression, the Board of Trade and Industries Report No. 6613 propounded the theory that because there was a surplus supply of skilled and unskilled labour, of capital and of raw materials, it would make sense for the Government to implement a policy to bring about a motor manufacturing industry in this country as an inducement to our overall economy. The points they made were that the use of labour would provide employment, that capital was cheap to acquire and that it, along with raw materials, could be usefully employed.

The Franzsen Commission, which was a Government sponsored body, in 1970 laid the criticism at the door of the Government that, whereas the policy of having a local content programme for the motor industry in 1962 was entirely correct, in 1971 the policy of increasing the local content from 52 per cent to some 66 per cent over a period of six years was entirely wrongly timed, because the economic situation had changed completely. How can we justify the implementation of stage III, which calls for a greater use of labour, a more intensive use of capital, and a greater use of raw materials, of which steel is the major part, and which is in short supply, at a time when the economy is overheated and is about to be damped by the hon. the Minister of Finance? How can a Cabinet make such conflicting resolutions?

Then, Sir, we find that the hon. the Minister of Finance, who has dealt a number of hammer blows at our third largest industry, one of our largest employers of labour, has this record behind him: In March, 1969, the sales tax was introduced, affecting the motor industry. In August, 1970, an extra 5 per cent sales tax on cars over R3 000 was introduced. In October, 1970, hire purchase terms were tightened up, in terms of which deposits were increased from 33 per cent to 40 per cent. In January, 1971, phase III was started. This envisaged the application of capital investment of R160 million, split into an amount of R110 million to the motor manufacturers and R50 million to the car component manufacturing section. R30 million was invested in the first year. Then, in January, 1971, we had an extra 5 per cent sales tax on all cars, and in March, 1971, the Budget savings levy on companies was increased by 5 per cent. In April, 1971, there were increased petrol prices, and in May, 1971, through no responsibility of the Government, the South African Conference freight rate was upped by a further 12 per cent. Surely these are crippling blows to this industry? They are blows which not. only affect the employment of many persons, but which also affect the very existence of most persons in South Africa, where public transport is not sufficient to cater for the civilian needs. The cost of living has been driven up because of the higher costs of transport. There is therefore no need to wonder why the housewives and those with families in South Africa have reached the situation where, in desperation, they are in revolt.

We have the situation where today car plant after car plant is going onto short time work. The livelihood of the employee, the essential worker, is being threatened. Unemployment is growing in the sector where it can be least afforded, namely the non-European sector. Large cities and towns in South Africa are having their entire economy threatened. There is, for instance, the city of Port Elizabeth, which is highly dependent upon the motor industry. Then there is the town of Uitenhage, the cities of East London, Durban and Pretoria, whose economies are all being threatened because of the deflationary policies of the hon. the Minister of Finance.

Then there has been the accusation that this is not the Government’s fault, but that it is the result of over-production. Mr. Speaker, I challenge the hon. the Minister of Economic Affairs to deny that the motor industry never asked for phase III. It was forced upon them by Government intent, and although the hon. the Minister may say today that Phase III is accepted by the motor industry, it is accepted only as the lesser evil of alternate solutions. The motor industry is worried that the Government is going to adopt the policy, in terms of the Franzsen Commission’s recommendation, of one popular vehicle for each manufacturer. We know very well that the Government accepts the fact that the manufacturer, the people themselves and Government policy prefer a free market to dictate the number of models to be available. But now at the very time that we have models standing idle on showroom floors and while fantastic sums of capital remain locked up which could be put to better use, what do we find?—the importation of some 1 800 Toyota model 1700 sedans built up in Japan for a Natal company, Toyota (South Africa) Ltd., a privilege which has not been extended to any other manufacturer in South Africa. We find that the other motor manufacturers are taking exception to this situation. Only two weeks ago I put certain questions in this connection to the hon. the Minister of Economic Affairs. But when he did not have the answer, I placed a question on the Order Paper to get the answer. It is a tragedy that in a country where we have an excess of vehicles, import privileges are being granted to one manufacturer only, on the pretence that he is moving his plant from Durban to a place four miles away. The motor industry is a rugged one and capable of looking after itself. The Toyota plant has never stopped production and has shown no drop in production. Now it has the additional advantage over other manufacturers of having a surplus of vehicles available to it imported under a concession which would not be granted to any other manufacturer.

I have suggested that it would have been wiser on the part of the Government to take cognizance of the recommendations of the Franzsen Commission in its third report, the recommendation that at this stage a halt should be called in the national interest, as suggested also by the hon. the Leader of the Opposition, to the Phase III programme and to re-examine the situation by means of an interdepartmental committee composed of the departments of Economic Affairs and of Finance, it to include the economic adviser to the Prime Minister and the Board of Trade and Industries as its secretaries. I was asked by a speaker across the floor whether I was in favour of discontinuing Phase III entirely although I had asked that a moratorium of five years be allowed so that the Phase II implementation could be absorbed and digested and the problems recognized. I wonder whether the Prime Minister or the hon. the Minister of Economic Affairs would react to the question why an industry which is essentially one of private enterprise, the motor industry, should have any compulsory phases at all if the industry is economically viable. There is no phase for the woollen industry and there is no phase for the mining industry, nor for the clothing industry. The motor industry is a high capital intensive industry run with overseas skill and know-how in most cases. If this industry felt that the growth of the demand for vehicles in this time and age is such that they ought to move into a more intensive South African motor manufacturing programme and if the manufacturing resource is available in this country, then surely General Motors. Ford, Chrysler, Volkswagen, Toyota, Leyland are capable of making their own decisions and need not be molly-coddled by the Government. The stark fact is that this is not an economic time to proceed with Phase III. The industry is almost on its knees, and Phase III does not help the small component manufacturer—a suggestion which has been put across the floor. Phase III, as we all know, involves largely in-plant manufacture, the manufacture of the more intricate pans and components which is done by the motor assembler himself for the large foundries in this country. It does not involve high employment ratios; it is capital intensive with a large output and unless therefore turnovers are tremendously large it becomes uneconomic.

Finally I should like to refer to the fact that the hon. the Minister of Economic Affairs said that there would only be a ten per cent additional cost disadvantage to the South African consumer. The Franzsen Commission report highlights the fact that, although the Board of Trade and Industries' statistics show 10 per cent, the figure is far greater than 10 per cent by the time escalation of costs has taken place because of the additional trade margins. Today the South African public, as a result of the additional costs incurred and because of the additional fiscal costs, is facing a cost of vehicles which are now priced between 30 per cent and 50 per cent higher than the cost would be if those cars were imported directly.

We are as South African as the Nationalist Party is. We have accepted that it is wise to have a motor industry, although this is not essential. Switzerland, for example, does not have a motor industry. However, it is wise to have one and we have accepted that the 52 per cent local content programme, has resulted in the South African manufacturers being able to gear themselves up to the supply and manufacture of those components which we can reasonably and economically produce profitably in this country. Even the completion of Phase II was not realized by 1969. Consequently the Government allowed 1970 as a period of consolidation. Even today component manufacturers cannot meet the full requirements of the industry. They are also not entirely economical. In this regard they appealed to the Government to introduce a Phase II local content programme for light commercial vehicles.

I want to refer at this stage to a subject which is indeed serious. I am not advocating that light commercial vehicles should not be imported. However, one must react to situations which are real. The growth of the light commercial vehicle market in this country has been so astounding that during last year 65 000 light commercial vehicles were imported into this country free of excise duty and sale tax and without any detrimental provisions of the H.P. restrictions. I have here an article from Die Rapport which, referring generally to these vehicles, says—

This is the snag. We are talking about a light commercial vehicle which has concessions because it is used commercially. Today this vehicle is however, so popular that it is pouring into this country. Like Gresham’s law, which says that bad money will oust good money, or throw good money out of circulation, so the light commercial vehicle will threaten the sale and manufacture of the passenger vehicle in this country. That is what is serious. It has become a status symbol today for the private individual to buy a vehicle which is identical in all respects to the passenger car except for the fact that it has a cab behind it instead of a rear seat, and to use this vehicle privately. Those individuals are getting the benefit of tax concessions which are meant to support the farmer and industry. This is a serious matter and this trend will continue. It has been said in Australia that the light commercial vehicle is taking over the industry there entirely. I merely make mention of this point, because I feel that the Government must take cognizance of the fact that the light commercial vehicle is identical. in respect of all the parts, to passenger vehicles which are being manufactured in this country under the local content programme. They contain the same components, but they are imported with all the concessions and are available much more cheaply than the passenger vehicles are. We want the consumer to buy cheaply, but one cannot justify the Government’s policy which wants a major motor industry in this country. which has a turnover of only 200 000 vehicles per annum, if one bombards the number of available vehicles with an additional 65 000 rising to 100 000 and 125 000 almost identical vehicles made in Japan.

Our local component manufacturers are complaining that they do not stand a chance because they cannot have the runs they require. Our passenger car manufacturers are complaining too. These are matters for which the Government is responsible and of which it should take cognizance. I believe that this Budget has shown that the Government does not appreciate the fact that, had they allowed South Africa to go ahead along the policies recommended by the United Party of improved living standards, increased consumer requirements, increased work ability and increased use of raw materials which are available, we would have had a motor industry which could have achieved some of the objectives referred to by Dr. Kuschke. We could then have a vehicle purchase potential of 300 000 by 1980 and 750 000 by the end of the century. With this Government’s restrictive politices, we do not stand a hope of achieving that and we can hardly justify the motor industry as such.

Mr. Speaker, after the discussion of the Agliotti affair the hon. member for Gardens said that the Department of Agriculture and the Public Service would never be the same again and that the blame for this would always rest on the shoulders of this hon. Minister for not having had proper control over his Department, But let us go back a little in time. Yesterday the hon. the Minister explained here what could happen. It is humanly impossible for any Minister to keep tabs from morning to night on everything which is being done in his Department. Things like this can happen. But I want to remind the United Party of what happened when they were still in power. Can the hon. Opposition still remember the Leibbrandt scandal which took place on the Railways when they were still in power? Can the United Party still remember the case of the Newclare Smelting Works? The official involved in that case did not occupy a low position. He was chief electrical engineer of the Railways. Did the United Party at the time set up a clamour to the effect that the then Minister of Railways, Mr. Sturrock, should resign? This kind of case can occur in a department. That is why I say that we on this side of the House are quite happy with the explanation furnished yesterday by the hon. Minister. We are also happy with the explanation made by the hon. the Prime Minister in this regard, i.e. that this matter will be thrashed out properly and that the guilty parties will be called to account.

The hon. member for Gardens also discussed the import of Toyota vehicles. The hon. member received a reply from the hon. the Minister in regard to this unsavoury story about the import of Toyota vehicles. The hon. Minister told him that this was done to accommodate these people during the transitional period, since they have to move their factory. I challenge anyone to prove that any other company or other enterprise in South Africa has done more than this company to help the Government in the application of its border industry policy. These people are providing work in Durban to many hundreds of the non-Whites living in those border areas. I say that this was a warranted permit granted to these people to tide them over this transitional period. But I want to repeat what I said the other day, that this entire agitation is aimed at the Afrikaner industries with strong capital resources which are making progress in this country. I want to level the accusation today that the United Party is still fighting the Boer War in South Africa. As soon as an Afrikaner enterprise comes into its own, attempts are made to demolish it and it is placed under a cloud of suspicion with might and main and all the eloquence at the command of that side of the House and the venom of the English-language Press. We are sick and tired of this. People who live in glass houses, should not throw stones. The hon. member for Simonstown spoke about fish concessions and fishing shares. But sitting in that same United Party are people who also had large blocks of shares in fishing companies, and still have. Some time ago a letter appeared in Die Burger written by a certain R. F. van Rooyen. He is not afraid to append his name to a letter or a document in the newspaper. He does not, like the hon. member for Kensington, write under a pseudonym in the Sunday Times. I accept the word of Mr. Van Rooyen, and that he knows what he is talking about. He said (translation)—

May I ask the hon. member a question?

No. [Interjections.] He applied for 50 000 shares. I have nothing against that. I have no quarrel with the hon. member for Sea Point. I am with him all the way. This is a country of free enterprise. If I apply for shares, I am not ashamed to tell the world that I have applied for them. Nor is the hon. member for Sea Point ashamed to do so. Why should only the Nationalists be sniffed out when they acquire shares in such companies?

Yes, hut they swindled me.

Order! The hon. member must withdraw that.

I shall say then that they diddled me.

The hon. member for Sea Point must not pick a fight with me. He and I are ad idem as far as this matter is concerned. We see eye to eye. I think he is as annoyed with the hon. member for Simonstown for coming to light with this unsavoury matter because a thing like that is not in his nature. I quote further—

They received 30 500. But that hon. member received 43 750 of these shares. This is a sniffing out of the Afrikaner. The Afrikaner youth will take note of this. They are the rising generation which has to go out to meet these future developments in commerce and industry and the economy in South Africa. We reject it with contempt.

That hon. member said that we would become a country of yellow margarine and the owners of Toyota motor-cars. Thank you very much for the publicity he gave to Toyota. I think he will quite probably still be thanked for that. But what insinuation did that hon. member make in regard to the Toyota pick-ups? Must this Government teach the motor companies and the motor industry their business? If I find a Toyota pick-up, a Datsun pick up or any other pick-up convenient to drive around in, why can I not purchase one then? Why should that company be prohibited from manufacturing that article if it is a popular article? Why should it be prohibited from doing so? It is the farming community in South Africa which makes use of these pick-ups. They are a very useful and handy means of transport for them.

I now want to deal with this question of Bantu affairs. The policy of the United Party as stated in this yellow pamphlet of theirs, states that as far as the urban Bantu are concerned, a measure of local government will be granted to them. What is meant by “a measure of local government”? The hon. the Minister of Bantu Administration said that full councils were being given to these people in which they would be able to decide on their own affairs. Ultimately they will have complete control over these councils. What does that mean?

In the White areas?

Now I should like to put a question to the hon. members. Did they consult the Bantu and are they satisfied with having only a measure of control? Did the United Party discuss this standpoint of theirs with the interested Bantu as we are doing day in and day out? When we tackle matters of this nature, these people are consulted. I want to make an allegation which I want to substantiate with fact, that the United Party’s policy, as it was announced today, is rejected by the leading Bantu in this country. The hon. member for Transkei can tell us whether there is one responsible Bantu in the Transkei—and that hon. member knows many Bantu—who goes along with the policy of the United Party? I challenge him to mention one!

Then there is Buthelezi, the man about whom the hon. member for Pietermaritzburg District got so carried away here. Apparently he had not consulted with the Prime Minister before going overseas. Here I have part of an interview a reporter of Dagbreek had with Buthelezi. This is in Dagbreek of 25th October, 1970, I am reading what Buthelezi said (translation)—

He also said—

Then this report continues as follows—

Then Buthelezi went on to say—

May I ask the hon. member a question?

No, I do not have the time. He also said—

Now hon. members come along and say very piously that the Bantu leaders go along with them in their formulation of policy. That is why I make the allegation that the United Party in its entire presentation of policy do not have the Bantu leaders behind them.

What did Ben Pienaar say?

Attempts were made in this debate to question the credibility and the political honesty of our leaders and our Ministers. Doubt has been sown among the people outside that the administration in this country is supposedly not in good hands. I think we have every right and every reason to take a look at the credibility of the politicians in the United Party. Last year we held an election campaign, and the hon. member for Bezuidenhout said in a speech he made at Henley-on-Klip—

The hon. member then went further and said—

This is the element which is showing a bit of verkrampte leg. Then he goes on to say—

The hon. member made this allegation that there was an element which was showing a bit of verkrampte leg after the hon. member for Sea Point had in his election campaign produced his slogan “Keep Sea Point White”. The hon. member for Bezuidenhout became annoyed at this bit of verkrampte leg the hon. member for Sea Point was showing. But, Sir, you will remember the debacle we had in this House when the hon. member for South Coast complained here about the Bantu who were being employed by the Railways. The hon. member then adopted a very strong attitude here; this was just before the election. The hon. Minister of Transport then said that this kind of thing was being done to influence the voters in Klip River. The hon. member for Bezuidenhout then became annoyed at that hon. member as well. Sir, it is members of the United Party who go around in the rural areas with the story that we Nationalists are negrophiles. The hon. member for Bezuidenhout became annoyed with this hon. member and spoke about the “old supporters in the United Party” trying to pay back the Nationalist Party in their own currency, according to that report. The hon. member went further and said—

Tell us about Benoni.

In Benoni as well, those hon. members went round from house to house with these stories, and in Langlaagte they also went round from house to house with this negrophile story. [Interjections.] That is why I say that they are blowing hot and cold. But the hon. member for Bezuidenhout went further and said—

He gave you good advice.

These are tactics which are being applied in their own party. These are tactics which you are applying in your own party. He said—

Then he said—

These same things are now going on in the United Party. Did he express his disapproval? Did he take steps against the hon. member for South Coast? Did he take steps against the hon. member for Sea Point? Absolutely nothing was done. Instead of that, so effective was his attack on the hon. member for Sea Point that no less a person than the hon. the Leader of the Opposition, Sir “Div”, took action and, as the headlines put it, “Div defends Jack Basson”. This was after the attacks of the hon. member for Bezuidenhout and others. Then “Div” had to take up the cudgels for him and what did “Div” say inter alia?—

I now want to ask the hon. member for Bezuidenhout whether he agrees with Sir “Div” that the hon. member for Sea Point in this statement which he made, “Keep Sea Point White” was not being verkramp.

Why are you repeating the lie of the Sunday Times?

I am not talking to you. You want to be everywhere. You want to be wing and you want to play full-back; you want to be all over the field. Give this other namesake of yours a chance. He went on to say—

“Most of it”. It is very important that he did not say “Everything” is inaccurate, but that he went so far as to say that most of it was inaccurate. [Interjections.] Sir, nobody in this country believes the United Party. The United Party is the biggest bluff of a party which ever existed. The Bantu do not believe it. The Indians in this country do not believe it nor do the Coloureds believe it. I now want to say this. The hon. the Leader of the Opposition said in a speech the other day that we were doing the Coloureds an injustice, but I just want to remind them in the dying moments of my speech, of the solemn pledges which they gave the Coloured population of South Africa. On 15th August 1957 they adopted a resolution that certain solemn pledges would be made to the Coloureds. The first was that the Cape Coloureds whose names had been removed from the common roll by the Nationalist Party Government will be restored to the common roll with Europeans. Where do they stand today in that regard? The second was that the Cape Coloureds qualifying for registration will be enrolled again. Where do they stand today? And the third was that higher qualifications for future registration will be instituted after consultation with the leaders, and the fourth was Coloured voting rights will for the first time be extended to the Free State and Transvaal for the election of Senators, and fifthly the number of senators representing the Cape Coloureds will be increased. To how many of these undertakings you gave to the Coloureds do you still adhere?

Business suspended at 12.45 p.m. and resumed at 2.20 p.m.

Mr. Speaker, before business was suspended, the House was addressed by the hon. member for Langlaagte. He utilized 90 per cent of the time at his disposal for reading from newspaper reports. The other 10 per cent he used in an attempt to revert back to the outmoded type of politics in South Africa, to sweep up the feelings between the English and the Afrikaans-speaking people. When I listened to him, I realized why Mr. Dirk Rezelman threw in the towel. Then I realized why he could not sell the political party opposite to the voters of South Africa.

Not even on terms.

We are now reaching the closing stages of the Budget debate. This Third Reading has been devoted almost entirely to a discussion of the Agliotti land deal. That became necessary because of the timing of the actions of this Government. Having received a report in December or January from the commission the Government tabled it only in the closing stages of this session, on the 3rd of June. Despite the lengthy debate, questions remain unanswered and we still have an unrepentant Minister. My leader called for the resignation of the hon. the Minister of Agriculture, but the only attempt to get away from that call was the attempt of the hon. member for Prinshof, who made it clear that in his view the test of my leader and the test of this side of the House of ministerial responsibility was too high and too unrealistic. I would have thought that no test could be too high if any action affects public confidence in the government of a country. What is strange is that no alternative test has been suggested except to sit tight in the cushions of the Cabinet and not to accept any responsibility for any wrongdoings or maladministration in the department for which the hon. the Minister is responsible. The facts which have emerged from the debate so far are, firstly, that it was possible for this deal to be handled and to be finalized without the responsible Minister having any inkling of what was going on in his department. It was not a deal which was completed in a day or two. The handling of this transaction went on through the whole of February and for a part of March. It was only through a casual conversation that the Minister became aware of a cheque having been issued on Friday the 6th of March. The hon. the Minister has told us that his casual conversation with the chairman of the Land Tenure Board indicated that an amount of R6 300 000 was involved. He then went on to say that he made some inquiries from the Secretary and deputy-secretary of his department. I would like to ask the hon. the Minister if he is to make his appearance in the House, whether he did not find out that same day, on Friday, that it was R7 500 000 and not R6 300 000, as mentioned to him.

Ask the Minister of Transport; it is his airport.

What are you talking about?

It is your airport. Did you not know about it?

Order!

I have given you the answer.

Order! The hon. member may proceed.

The hon. the Minister has now joined us. On Friday, the 6th, he heard from Mr. Henning about the cheque for R6,3 million. He made some enquiries from the other officials of his department. I assume that the Minister was then told that it was R7,5 million, and not R6,3 million, as he had heard from the chairman of the Land Tenure Board. Now, what did this Minister do in finding even conflicting figures, which he must have found out at some time or another? In a Press report he said it was too late to do anything. In this House he said he received the information after 5 p. m. on the Friday evening. The facts are that the cheque was deposited at Barclays Bank on the Saturday, and it was cleared through the Reserve Bank some time the following week, on the Monday or the Tuesday. Why did the hon. the Minister do absolutely nothing? There can only be two alternatives—either he was indifferent to the whole matter, or he was quite ignorant of the fact—which I cannot believe —that it is possible to stop a cheque.

He could not care less!

The only conclusion is, as the hon. member for Yeoville has said, that the Minister adopted an attitude of not being able to care less about the whole affair.

The other extraordinary fact which has come forward in this debate, is that not until we questioned the hon. the Minister yesterday, did he apparently even take the trouble to see who had signed the cheque.

He did not know.

He did not know yesterday. He had to go out and find out who had signed it. The first information was that it was Mr. Todd. A little while later he said “No, it was not Mr. Todd; it was two of the officials who had to do with finance, who signed on the instructions of Mr. Todd”.

If these facts are insufficient for the Minister to tender his resignation, if this conduct is insufficient and our test is too high, let me then turn to another aspect which I think should convince the hon. the Minister that he should tender his resignation. There has been an argument on it.

[Inaudible.]

The hon. member for Langlaagte will also admit that there is maladministration in departments. [Interjection.] The hon. member for Langlaagte must listen. But who is guilty of the maladministration in this case? They were not officials that were foisted upon this Minister, not officials that he was given or took over from some previous Minister. It was his handpicked Secretary, in whom he had such confidence that he did in fact secure Cabinet approval to override the recommendation of the Public Service Commission. Then we go further from the handpicked Secretary to the Land Tenure Board, of which it is his prerogative to appoint the members. Now, Sir, if there is not a responsibility on a Minister to resign when his handpicked officials act as has happened in this particular case, there can be no test whatsoever as to whether a Minister should resign, and it must be the most secure occupation that can be offered in the political field.

The Minister has also not explained the position of Mr. Venter. A cursory glance at the report of the Commission would have shown that any further investigation —the hon. the Prime Minister said there would be further investigation—would require Mr. Venter to be present, either to give a statement to the Attorney-General or to give statements to the Police. What are Mr. Venter's movements? Did the hon. the Minister give him leave of absence, or where did he get authority to go overseas?

He just went!

Or did he just go? Can the Minister tell us? No doubt, he must have inquired. Did this man have leave granted to him? It is a most extraordinary fact that Mr. Venter left this country, not in January, when the commission’s report was handed in, but on the 1st June. That was the day the printers delivered printed copies of this report to be tabled in the House. It is on that day that Mr. Venter left this country. In that interim period of five months, neither the Minister of the Interior, nor the Minister of Police, nor the Minister of Agriculture, nor the Minister of Mines, nor the Minister of Finance did anything whatsoever to ensure that Mr. Venter remained in the country. When one looks at these facts, and particularly the fact that Mr. Venter has been able to leave the country, one can only conclude that there is complete indifference to what Die Burger itself now calls “the burden of shame” that that side of the House has to bear. That paper also refers to “an affair which has shaken the public’s confidence in the handling of public money”. All this accumulation of opinion is, however, not sufficient to cause the hon. the Minister to resign from the Cabinet. The hon. the Prime Minister said yesterday that he had full confidence in the members of his Cabinet. He is entitled to his opinion, and he is no doubts sincere in that opinion, but that is an opinion which is not shared by growing numbers of the public of South Africa. I believe it is not an opinion which is shared by many members on that side of the House, sitting behind the Cabinet benches. Sir, we have seen something very notable during this Budget debate. Had you been in the House during the Committee Stage, Sir, you would have noticed something very significant, and that was the complete absence of “dank-die-Minister” speeches from that side of the House.

Except from Potchefstroom.

Yes, this morning there was an attempt by the hon. member for Potchefstroom to put matters right. In the past the procedure, during the debate on the various Votes, has been to award D.S.M.’s, or the “dankie-se-medalje” to those members on the other side who say ” dankie” often enough. On this occasion, having listened to this debate, I think there should be a flood of oak leaves for the Sunday Times because of the number of times it has been mentioned in speeches during this debate.

Sir. my Leader voiced public opinion when he referred to the mismanagement of the affairs of the country, to incompetence and to the failure of the Cabinet to meet the challenges of the seventies, to stimulate confidence in the economic development of South Africa and above all, to provide leadership for South Africa today and tomorrow. I believe that there is good reason for my Leader to make such an attack. At the present moment we have a Cabinet which is unable to govern without a multitude of advisory boards and councils surrounding it. We now find that these bodies relieve the Minister not only of the necessity to plan but also of the responsibility for mismanagement within his particular portfolio. All the Ministers, from the Prime Minister downwards, have these boards and advisory councils around them and encircling them, and these bodies provide an easy way out for Ministers. When something goes wrong in their management of this country, they say that they were acting on the advice of an advisory board or an advisory council.

This proliferation of responsibility is growing in this country. It is growing to such an extent that a Cabinet Minister can take office without having the ability to discharge the functions he has as a Minister, because he can simply lean back on a board or an advisory council. What is happening, too, is that the officials concerned, and particularly the permanent heads of departments, are becoming completely frustrated. They are there to serve the successive governments of different political parties, and they have become completely frustrated as far as the discharge of their duties and the running of the country is concerned because of the fact that they are now subservient to outside boards and bodies composed of many different persons.

Over the years this Government has obstinately opposed and rejected the advice that has been given from this side of the House on various aspects of government, but I want to say that it has in recent times been driven to adopt some of the suggestions and some of the policy aspects which we have put forward. Sir, I want to be brief and in the time at my disposal wish to mention just a few aspects. I want to start with the hon. the Minister of Transport. I want to remind him what happened three years ago in this House when he was asked to abolish the means test for Railway pensioners. When asked to do so by this side of the House, the hon. the Minister said that it was a ridiculous suggestion, that it would cost millions. The next year however, he took the advice of this side of the House. He did it but wanted the kudos for himself, and for the Government, as being his original thinking and original acting. The hon. the Minister knows what he has done to the labour laws of his Cabinet when it comes to the need for Bantu labour. He goes ahead and says: I need the workers and I’ll take the responsibility.

Is that supposed to be a compliment?

I am complimenting him. It is only a pity that he is so slow in following the advice which is given to him.

Now, Sir, let us look at the development of the homelands. What has been the attitude of this side of the House? It is that real development will not take place without White capital, White know-how and White initiative in those homelands. But for years and years this Government has rejected that approach to the problem. But they have had to find some way around the direct acceptance of the views of this side of the House, at least in part. So they now establish the agency basis. You know, Mr. Shaker. I enquired recently of one of the White agents who has now been permitted to establish a business in the Transkei, purely temporarily, and I said: How [one can that factory stay there? “Up to 50 years”, was the answer that I received. But that, Mr. Speaker, in the eyes of the hon. gentleman opposite—but they cannot bluff the public any more on this—is not using White initiative, White capital and White know-how. It is purely an agency basis for a temporary period and on a casual basis for up to 50 years.

Let us look at other aspects where I say that this Government is now being forced to adopt the views which we have held. There was the speech of the hon. the Minister of Coloured Affairs in regard to equal pay in respect of equal work by persons holding equal qualifications. There was an uproar in this House last year when that was suggested, an attempt to establish that we on this side were divided in our views and that some of us were in favour and others were not. This month the hon. the Minister of Coloured Affairs said that that principle will now be adopted by this Government. Where is this opposition that was there twelve months ago, less than twelve months ago? Where are the principles that motivated the opposition to equal pay six or seven months ago? Those have now all disappeared. There is a new set of principles and at last this Government has realized that we have been correct on this side of the House.

Now we come to the question of passports and visas. After years and years of bungling, ineptitude and faux pas on that side of the House the hon. Minister of the Interior has given us an assurance that he will personally handle all these applications in future. How long has he been in office? The first time that he should have acted if his machinery was efficient was in the Venter case. That is when he should have withheld a passport. That is the case where he failed to do so. Perhaps he was too busy searching his soul during the six months that he has been there as to whether Athol Fugard should get his passport back or not. But he lets Venter out. Where is the efficiency? Where is the competence?

Earlier this session we had to deal with the question of censorship. We on this side of the House had been accused of being permissive and of being in favour of a permissive society. But what does the hon. member for Prinshof say five months later? Facts of life are facts! The children know about them; why therefore are we so touchy about censorship? He is slowly beginning to see the light. This is not because there is a change in his approach, but because he is realizing that the South African electorate is rejecting the views of the Government more and more.

I would now like to say a few words in regard to housing. The hon. the Minister of Community Development is in the House. Before I do that, I want to put some questions to the hon. the Minister of Finance. These questions, which I have asked before during this session, I want to put to him pertinently. I do hope that the hon. the Minister will give this House and the country a reply to those questions.

I want to refer to the burden of direct taxation, the result of the imposition of transfer and stamp duties in regard to the purchase of houses. We have asked for a revision of this rate of taxation. It imposes an extremely heavy burden on the people. The direct taxation on a house costing R20 000 is R1 000, or 5 per cent. I want to ask the hon. the Minister again whether the Government is giving consideration to the adjustment of transfer and stamp duties and particularly with regard to the person acquiring a home for purposes of personal occupation. I believe that the burden on young couples is intolerably heavy. Linked with what I have just mentioned, there is another point I want to put to the hon. the Minister. I refer to a scheme which has been suggested over and over by this side of the House and which, I see from the press has now been adopted in the United Kingdom under the new Government, namely a provision whereby. in the first five years of home ownership authority is given to the building societies and they are in fact encouraged to accept interest only on the capital debt for the first five years, whereafter the scheme of capital redemption applies. I believe that with regard to this matter again, the hon. the Minister can show some consideration and some concern for the would-be home-owner.

The hon. the Minister of Community Development has over the months and over the years given figures in respect of what has been done with regard to housing. I want to refer pertinently to only two matters today. Firstly the House will remember that the hon. the Minister said: “If any member of this House needs a home for anybody, write to me; I will provide the home”. He did not say that once, but he said it frequently. I took the hon. the Minister at face value and wrote to him this year. I received the following reply from his Regional Representative—

Then comes the piece de resistance—

So what!

This hon. Minister says there is no housing shortage. His department says that one must take a lucky dip with every one of the local authorities and that one might then get oneself a house.

It is their duty under the law. Where is this chap living now?

I think that the answer to the hon. the Minister appeared in a paper which supports his Government, namely Die Transvaler of 12th March, 1971. The heading to this article is: “Vergeet tog van huisbou”. The article reads as follows—

That is the response to this hon. Minister’s Budget.

In conclusion I want to say that—and the public outside know it—we on this side of the House can advise the Government as to what we believe should be done in the administration of this country. We can establish, as my hon. Leader has done, the standards which we believe should apply and which he will apply as Prime Minister of this country, in so far as the shareholdings of Cabinet Ministers are concerned, in so far as the responsibility of Ministers for the discharge of their duties is concerned. But there is one thing which the public is beginning to realize. Although we can offer these policies, these standards, there is one thing which the members of the Cabinet unfortunately cannot absorb from whatever directions and advice we give, and that is the degree of competency which warrants that they remain in Government. That is what the country is now accepting. That is what the country now realizes is the position.

Mr. Speaker, may I ask the hon. member a question? All right, I see he has finished.

Mr. Speaker, we have now come to the end of one of the most distateful debates I have ever experienced in my whole career as a Minister and as a member of Parliament. Fortunately I need not give a long reply to this debate, because from that side of this House very little which was directed at me was worth while listening to, expect the castles in the air which the hon. the Leader of the Opposition and the hon. member for Hillbrow built. This debate was one of the most distasteful debates ever conducted by an Opposition. One asks oneself now: How irresponsible can one be? How irresponsible can an Opposition be, for example, to make such a fuss about the Agliotti case, which is a difficult one, in the highest chamber of this country, merely for political gain. The hon. members of the Opposition must have known that unfortunate incidents of this kind can occur. They occurred under their regime. They can occur in any business undertaking, factory and bank. Every day our newspapers are full of reports about theft and fraud which take place in the largest companies, and the chairmen of those companies are not discharged as a result of that. Now the hon. members come along and want to attack a Minister in an unfair way, a Minister who has to control an extremely difficult and comprehensive department, who cannot possibly control everything in that department, and who has to delegate functions. It is merely for party political gain. But that side of the House will not benefit from this at all.

What did Die Burger say? *

Order! The hon. member for Durban Point must contain himself.

Of course, the irresponsibility of those hon. members arises from the fact that none of them has ever had any experience of political administration, national administration and Cabinet administration. They do not know what the responsibility of a Cabinet Minister and of a Government is. Not one of them sitting there knows this. Now they, who know nothing about it and who will never know anything about it either, want to dictate to us from their ivory tower, if I may call it that, how we, who bear the responsibility, who have the experience and who have to bear the burdens every day and night, should govern the country.

A terrible fuss has been kicked up about a cheque which my hon. collague the Minister of Agriculture could not stop in time. Whether he did so or not, what difference does it make, since the Government of which he is a member announced at the first opportunity that it would have the matter investigated, since a police inquiry was ordered and since the Prime Minister announced that he would introduce legislation to rectify the matter if it appears to be necessary? The hon. member is shaking his head in vain. Not only did the Government succeed in retrieving R5 million by its actions, but the Government has stated that if it was found that it should do more in regard to the matter and if legislation was required, it would pass the necessary legislation. Everything has been done, but those hon. members come here and launch an irresponsible attack which I think is a reflection on the political mentality of my hon. friends on the other side of this House.

Sir, that irresponsibility was reflected by the hon. member for Durban Point, for example, who virtually said here that when he goes overseas, he is ashamed of being a South African. He said that when you went overseas in the past, everybody would rush to you, shake your hand, and congratulate you on being a South African, but look at our position now. Now we have demonstrations against South African Ministers. Sir, I think of all the members of the Cabinet I am the Minister who has attended the most international conferences, who has paid the most visits to other countries and who has made the most speeches in various parts of the world; I know the outside world, and during none of my numerous visits over the past 13 years have I detected the slightest unpleasantness on the part of any person. It did happen once or twice that where I had to speak at an international conference, such as at the I.M.F. or at G.A.T.T., representatives of the Black nations or of the communistic nations walked out; this has happened once or twice, but what happened in most cases was that the representatives of those same nations who had walked out, went to stand up on the gallery in order to listen to what South Africa said.

Sir, who are the people who hold demonstrations against our Ministers? They are the “hippies”, the long-haired people, the leftists, the Maoists and the communists. Does the hon. member want to suggest that if his Government were in power and he went overseas, those people would welcome him with open arms? Sir, I think it is an irresponsible, outrageous statement which that hon. member made. I would have gained respect for him had he risen here and condemned those long-haired creatures in other countries who protest against our visiting Ministers, but he did not condemn them; no, he condemned the South African Ministers, not those creatures. This is the standpoint of hon. members on that side of this House.

Sir, I want to say to you that never in my whole life, on my tours abroad, have I come across those things of which the hon. member spoke. When this type of thing did in fact occur, it came from that type of rabble, those hippie-like creatures, and if the hon. member wants them as friends, he can have them with pleasure. I can tell the hon. member that I have occupied this type of post for 13 years, first as Minister of Economic Affairs and now as Minister of Finance…

Too long. *

… and this period, the sixties, was the greatest boom period in the history of South Africa. This is acknowledged by the whole world. I do not want to repeat here what I said before; we have spoken about this a great deal, but the skulls of my hon. friends are so thick that nothing can penetrate. Even a publication such as the Financial Mail has referred to the “fabulous sixties”; the wonderful decade under the régime of the National Party. But I travel overseas. You can accept my word or not, it does not matter. Every year I come into contact with the foremost financiers, bankers, industrialists and businessmen in all Western countries, and I now what they think of South Africa. I know what they think of South Africa at present. In the past few weeks I have had various bankers and investors here in my office—I cannot mention their names—who came to invest in South Africa. They say they will invest in no country but South Africa. Sir. do you know how much capital has entered South Africa in recent months? Id the first quarter R200 million entered South Africa. This is what the outside world thinks of us. [Interjections.]

Order! The hon. member for Port Elizabeth Central and the other members near him must observe the order.

We are in fact embarrassed by the offers of money. [Interjections.]

Order! The hon. member for Carletonville must also contain himself.

We are almost embarrassed by the offers of money. Hardly a day goes by without some or other foreign concern offering money to the Government. This proves the tremendous confidence foreign countries at present have in South Africa and in our economy, in spite of the criticism of the inexperienced members opposite. Today I received a letter from one of the most prominent men in Switzerland, a famous person in Switzerland, the director of one of the largest banks in the world. This person visited South Africa two weeks ago. I just want to quote what he wrote to me in a letter I received yesterday without asking for it—

[Laughter.] He continued—

I can understand why hon. members opposite are laughing so self-consciously.

Will the hon. the Minister give us the name of the writer of the letter?

As I have said, Sir. I do not think it is right to divulge the name of a man who wrote a private letter to me. [interjections.]

Was it Venter?

Order! The hon. the Minister may continue.

Sir, this is an indication of the weakness of those members. I really do take it amiss of that hon. member that he does not accept my word here that this is one of the most prominent personalities in Europe and the director of one of the largest banks in the world. This shows the weakness of the hon. members. They do not like it if something is brought against them from outside, [Interjections.]

Order! I have asked the hon. member for Port Elizabeth Central to cease interjecting. If he continues to do so, I will have to ask him to leave the Chamber.

In their irresponsibility, the hon. members over there are taking advantage of a difficult position in which the Government is in fact finding itself. We are honest enough to admit that in the economic sphere we are in a somewhat difficult position today, but we are not the only ones in this position. The hon. the Leader of the Opposition, who was building such castles in the air about the things he would do if he were ever to come into power, did not take the realities of the world into account. This wonderful United Party is wearing blinkers. They see only right in front of them. They cannot see far ahead into the future. They cannot see the world as a whole. They cannot see our economy as part of the world economy. They are limited to seeing their immediate surroundings. Never before have I seen such a limited and shortsighted Opposition as this one. Do they not know that there is inflation throughout the world? Do they not know that throughout the world governments are having economic problems? Mention one single country in Western Europe or in North America which does not have economic problems today as a result of inflation. I cannot get a single reply, because hon. members over there know that inflation is a world problem. But if they know anything, they ought to know that our position is much better than that of most countries in the world.

In order to embarrass me, the hon. member for Hillbrow gave certain replies here which had been furnished by the Bureau for Economic Research in Stellenbosch. In the first place he alleged that I had been reported in a newspaper as having said: “The position is serious but not desperate”. When did I say that? If I used those words, it is because those hon. members and their kindred spirits are always describing the position in South Africa as desperate. They tell the whole world that we have sunk into the depths of misery and that there is no future for us. The speech made by the hon. member for Hillbrow and other speeches made by hon. members on that side of this House testify to that. When they talk about economic affairs, they say that there is no future. The hon. member who has just spoken, the hon. member for Green Point, is a responsible member, but in spite of that he said various things at the end of his speech which create the impression that we have reached the end of our economic development. He spoke as if only darkness awaited us in the future. Hon. members on that side of this House say that the economic position is desperate, and that is why I reacted realistically by saying that the situation was not desperate, although it was in fact difficult. I am not going to conceal the fact that there are difficulties, because we know there are. I do not conceal such difficulties as we have from my Prime Minister and his Cabinet, nor from the public.

We do have problems, but thank heaven we have fewer problems in South Africa than most countries have. Hon. members need only go to the United States if they want to see what problems are. They can go to Britain to see what problems exist there. I now ask them please to make a study of the position before they want to discuss it again in a Budget debate next year. The hon. friends should please make a study of the conditions in other countries before they come to this House. I also want to ask the hon. the Leader of the Opposition please to study the economy of the world before he and his people belittle South Africa. What they are doing is to belittle South Africa in the eyes of the rest of the world. They kick up a fuss about it.

The hon. member for Hillbrow referred to the Bureau for Economic Research at the University of Stellenbosch. He said there was pessimism in the air. What did the Bureau for Economic Research of Stellenbosch in fact say? They said that a net 17 per cent of the manufacturers had stated that conditions were worse than last year; 58½ per cent had stated that last year’s conditions were worse than those of this year, while 41½ per cent had stated that conditions were better than last year. This means a net difference of 17 per cent. That small difference is now causing pessimism!

A small difference!

It is a very small difference and in the light of the action taken by and the policy of the Government to bring about a gradual cooling off of the economy, it is perfectly understandable that for the immediate future—and I want to repeat the words “immediate future” — conditions will not be as favourable as they were last year. This is to be expected, but to sow pessimism merely shows that this pessimism comes from the hearts of those hon. friends themselves.

We are only saying that we would do better.

Yes, I know hon. members say this and we have heard it for a long time in this House. Hon. members say they would do better, but nobody believes them. In every economy there are fluctuations and upward and downward movements. What economy of today or of the past, of whatever country, does not show those cyclical fluctuations? What economy in the free Western world does not also show those upward and downward movements? Those fluctuations of prosperity and adversity are the price we have to pay for the fact that we have free enterprise and a capitalistic economy. We could eliminate these movements, if the hon. members would only agree to our exercising more and more control, as is done in communist countries. In a free economy neither we nor those hon. members would ever be able to eliminate the upward and downward movements from the economy.

Does communism have more restrictions than we have?

That is of course another one of those irresponsible questions to which one does not reply.

The hon. the Leader of the Opposition mentioned certain figures here. I do not know where he obtained the figures from. He mentioned figures in respect of our cost of living. We call it the consumer price index. No, he did not mention the figures here. The hon. member spoke about the rising cost of living in South Africa. Yes, the way rising costs were increasing the cost of living in South Africa, was continually discussed here.

I quoted completely different figures.

Yes, you quoted other figures as well, and I shall come to that. Let us draw a few comparisons for the hon. members who continually complain about the rising cost of living. Let us compare our figures with those of other countries. I am taking the figures for 1965 to 1969, which we have available. Over this period the cost of living in South Africa rose by 12,8 per cent, that of Germany by 9,4—theirs is lower than ours— that of France by 17,3, that of the United Kingdom by 17,6 and that of Japan by 21,5. The figure for South Africa is 12,8 per cent. In spite of this, hon. members opposite attack us as though we alone are responsible for the galloping inflation and the tremendous increase in the cost of living. They say we will not attract more immigrants because of the rising cost of living, which is rising much more sharply in other countries than here. I do not have time to analyze the figures, but I can tell hon. members that the figures are already showing a downward tendency. New factors have of course been added, like the sales duty, the increase of tariffs in the Railways and in the postal service and the increase of the price of petrol, which are non recurrent increases. The hon. member for Parktown will understand that these are non-recurrent increases. [Interjections.] The hon. member says they predicted these things. These are non-recurrent increases, and one can expect the cost of living to start levelling off now. It is very difficult to say. but within the next two or three months, when these factors have had their effect on the economy, we may possibly expect this. I want to say that most of the increases in the cost of living are due to services, and not to factors we control. The factors which gave rise to an increase in the cost of living are mainly factors such as increased doctors’ fees, dry-cleaning prices and all the services rendered throughout the country, for example in the labour sphere.

Now hon. members want to say there is great alarm in the country, “disquiet everywhere”. Perhaps there was a short time when some of our people felt a little concerned. Perhaps this feeling has abated among our people; but I want to say to hon. members that that time is past and that there is a new solid and stronger revival among the Nationalists; the National Party is again on the point of growing to such an extent that hon. members opposite will be completely over-shadowed. Why have the hon. members for Hillbrow and Florida, who speak so much about the youth and the policy of the party, not given us a reply in respect of what happened to them the other day when they stated their colour policy to the youth of their party, who then wanted nothing to do with it? I want to tell hon. members that we know what we are talking about. In the past few months we have held information conferences in various parts of the country. The leaders of the constituencies of our party were present at those conferences. There were hundreds and hundreds of people present at each conference. At those meetings we found the finest spirit one could wish to have in any party.

Was it when Rezelman was still with you?

No, Sir, it may have been in the time when Dr. Van Biljon was still the manager of that party. [Interjections.] Yes, the hon. the Leader of the Opposition and the other members opposite have probably forgotten already…

That was almost 20 years ago. *

Yes, almost 20 years ago, and at present the weakness of the United Party is worse than it was at that time. Years ago Dr. Van Biljon was appointed as the manager of the United Party, and he only remained here for a short while; then he could not take it any more.

Just like Rezelman.

Sir, that is quite a different matter.

I want to tell hon. members about the conferences we held. Hon. members opposite are now talking about economic affairs, but I wish they knew what had been said at those conferences about economic affairs and finance. At one of the meetings an explanation was requested in regard to sales tax. My people in my constituency told me: “We accept sales tax. We know it is a good thing, and we know that it is necessary for_ our country.” At another meeting questions were put on sales duty and on the motor industry. Do hon. members know what was asked in regard to economic affairs at yet another meeting? The only question put there in regard to economic affairs, dealt with the profits derived from the petrol pipeline to Natal. That is the “disquiet” to which hon. members opposite have been referring.

Now I come to the hon. member for Gardens and what he had to say about the motor industry. I have always regarded the hon. member as a very sober minded economist, and his first speech impressed me, but since then the hon. member has been infected by the frustration prevailing on that side of the House. He has now completely forgotten these sober-minded economics. He is referring to the motor manufacturing industry as if this Government wants to destroy the motor manufacturing industry. Sir, I was Minister of Economic Affairs when we started with the motor manufacturing industry in South Africa for the first time. I am grateful for and proud of the fact that I can claim to be the father of this policy of the local manufacture of South African cars in South Africa. I can tell hon. members that I shall adhere to that policy as long as I have any say in politics. South Africa will not leave the motor industry in the lurch. To listen to that hon. member speaking, one would think that they were the fathers of the manufacturing industry in South Africa. Now they are the great protectors.

When, over the past ten years, was any word of encouragement to this industry heard from that side of the House? Not a single word of encouragement was ever heard from them. I have had to endure criticism from that side because of the so- called high cost of motor cars, the poor quality of motor cars, etc., and never was a single word of encouragement heard from them. The hon. member for Gardens has only been in this House for a short time; of course, he is not very familiar with these things, but now he presents his party as being the great protectors and the great benefactors of the motor industry in South Africa. The hon. member also referred to the downward trend in the sales of passenger motor cars since April. I agree with him. There has been a very marked downward trend, but was that not to be expected? In the previous year there was a very marked upward trend in the sales of passenger motor cars, and after such a marked upward trend a saturation point had to be reached somewhere. That saturation point was in fact reflected this year.

Hon. members are aware that during the first three months of this year, up to the end of March, there were record sales of passenger motor cars. People bought cars before the Budget, “to beat the gun”. It is self-evident that the sales of cars had to drop after the Budget. But what happened subsequently? For this I blame those hon. members and their Press. A tremendous Press campaign was launched by them. Reference was made to a “crisis” in the motor industry. The Government was blamed for the downward trend in the sales. It was said that the Government had to intervene. That is the greatest psychological blunder that has ever been made. For instance, if a clothing factory tells one that its sales have been dropping and that nobody wants to buy its clothes, would one go and buy clothes there? If an industry says that people no longer want to buy its cars, do you think that such a statement would entice people to buy cars? What is more, in large black banner headlines they proclaimed everywhere that the Government had to put these things right. The prospect that was held out to the buying public was that the State would be called in and that it would grant assistance. If I want to buy a car and can wait for it, do you think that I will buy one if there is a possibility of steps being taken by the Government to reduce the prices of cars? After all, it is another factor that has been handicapping car sales over the past few months. This Press propaganda, irrespective of whether it was made by the motor manufacturers, by the United Party or by the Press itself, has been one of the strongest reasons for the downward trend in car sales.

What about your taxation measures?

The major part of the taxation measures took effect in February and even before February. The hire- purchase measures were introduced before February. During those months, before March, 1971, many sales were still being made.

The hon. member for Gardens also made an astonishing statement. He wanted to know whether we should proceed with the third phase of the motor manufacturing policy. Almost R200 or R300 million has already been invested in the third phase. Are these investments simply to lie idle there if we are not to proceed with the third phase? The hon. member said a strange thing. He wanted to know whether in these times of ” shortage of labour and capital and scarce raw materials” it was not unwise of a Government to proceed with manufacturing local components for motor cars. Can you imagine that? This is the party which never fails 10 take every opportunity to attack this Government for not encouraging industrial investment at a fast enough rate in these times of “scarce labour and capital and raw materials”. That is what they have been telling us every day. Now the hon. member advances the same argument and wants to know why we are proceeding with it in these times of “scarce labour and capital and raw materials”. This is the same argument which we always used. This he now wants to turn against us. The hon. member said he could not understand “how a Cabinet can make such conflicting resolutions”. I can only say: How can a party make such conflicting resolutions!

The hon. member wanted to know why we were proceeding with a third phase and furthermore, why we did not proceed with a third phase in regard to the clothing industry and the mining industry as well. Can hon. members imagine that an economist can ask us such things? We are proceeding with a third phase in the motor industry in order to promote the South African content of the motor industry, as it has always been a foreign industry. We want to South Africanize it. Now the hon. member wants to know from me why we do not have a third phase for the mining industry and the clothing industry as well.

Then the hon. member put a question in regard to commercial vehicles. He is correct in saying that the increase in the sales of commercial vehicles was a very large one. Now the hon. member wants to know from me what the Government is going to do about it. The hon. member knows that if we were to levy a sufficient tax on that light truck, be it in the form of purchase tax, excise or import duty, so that it would increase the price of the light truck, it would also increase production and distribution costs. If there happens to be a cost increase as a result of such steps being taken, can he give me the assurance that his party will not attack the Government again for the steps which it takes and which cause cost increases? They will be the first ones to attack us. I want to ask the hon. member a question. Those light trucks are used in commerce and by the farmers. The hon. member’s complaint was that many of those light trucks were well-appointed, and that one could sit comfortably in them. I want to ask the hon. member whether the farmers are not entitled to some comfort while driving along unmade roads and through the veld on their farms? Because the hon. member lives in the city, he drives in his sedan along tarred roads from his home to his place of work, but the poor farmer, because he is a farmer and uses a light truck, may he not have some comfort?

Methinks you protesteth too much!

The whole attitude adopted by hon. members opposite was simply a protestation without any success. The attitude of hon. members opposite Proves to me that they will never come into power; also that they do not even expect to come into power. If one does not expect to come into power, one acts the way hon. members opposite do. They are making great play of the Nationalists who are, for instance, as they say, uncertain at the moment. We cannot deny that there was an element of uncertainty amongst Nationalists. There was some confusion in connection with the business when a part of this party seceded. We do not deny that, but I want to tell the hon. the Leader of the Opposition that those Nationalists are not going to vote for the United Party.

The verligtes are going to vote for us.

The verligtes are going to vote for you? I grant that the National Party went through a valley, but it is in the process of getting out of it. I have every proof that the National Party is getting stronger and stronger. The National Party will he towering above the rest, while the United Party will have been divided up into its liberal and conservative elements. They do not have a policy. To mention an example: In previous debates and in the course of the present debate my hon. friends the Minister of Bantu Administration and his Deputy Minister repeatedly challenged the United Party to discuss the Bantu in the cities. Last night both of them challenged the United Party again, but since then they have not said a word about this matter. The reason is simply that they cannot reply because they do not have a policy.

In conclusion I come to the hon. the Leader of the Opposition. It gives me great pleasure to listen to the hon. the Leader of the Opposition, because he can speak so well. Unfortunately it is just talk. The hon. the Leader of the Opposition can build such wonderful castles in the air. He has pipe-dreams. He already foresees that when he is in power, the growth rate of South Africa will simply soar. He foresees the growth rate soaring sky-high. He foresees here some of the most impossible things, things which no country in the world has ever achieved. But that hon. Leader and his economists, whoever they are, are supposedly going to achieve this.

Just take my advice.

Surely I have too much experience to do that. The hon. the Leader of the Opposition said here that a growth rate of 5½ per cent was far too low for South Africa. Does the hon. the Leader not know that for many years some of the best economists were engaged in preparing a thick book, i.e. the Economic Development Programme? After years of thorough economic research they arrived at the conclusion that the 5½ per cent growth rate was the optimum growth for South Africa.

Do you not know that there are many economists, who are just as prominent, who do not agree with them?

I have heard of people, who, like the hon. member, say that they do not agree. But the hon. the Leader of the Opposition and the other people have yet to furnish one grain of proof in this regard. They spoke in general, but it is nice to speak that way. I also want to ask my hon. friend to present us next year, if he has the time, with an economic analysis of all the relevant facts. I want him to give me a detailed economic programme, in which all the facts will have been taken into account. The hon. the Leader of the Opposition should not merely say here that the growth rate can and must be higher than 5½ per cent. In fact, South Africa’s growth rate was higher than 5½ per cent. The 5½ per cent is the average growth rate. It can rise or drop. Two years ago that growth rate was 7½ per cent, but now it is dropping again. The hon. the Leader of the Opposition said that our growth rate was dropping. If there is a temporary drop in our growth rate this year, what of it? No, I shall not take fright at it at all, for it lays the foundation…

You know it is coming.

Even if it is, I say, it is nothing. I am afraid now that hon. members opposite will say things outside which will differ from what I said here. But I want to say that if our economic growth rate were to drop temporarily to a growth rate lower than 5½ per cent, it would not alarm me, for one of our major tasks is to curb consumer spending in this country. If we have a lower growth rate as a result of having curbed consumer spending, that forms the basis on which we can achieve to a much higher growth rate in years to come. The hon. the Leader knows that economics rise and drop. [Interjections.] I know the hon. the Leader does not agree. That is why he is sitting on that side of the House.

And if Mr. Oppenheimer is correct?

Well, Oppenheimer has his point of view. But hon. members should take a look at what happened throughout the economic history in other parts of the world. I have already mentioned it in this House. I am not going to repeat it. But I want to say that there is not one country in the West or in North America whose economic growth rate did not reach a low during the past ten years. In some cases the economy dropped to a negative growth rate, but it rose again to a higher growth rate.

There is no other country with a labour supply such as that of South Africa. There is no other country in the world with such a supply. You are not making use of it.

I do not have the time to go into the whole labour position. The hon. the Leader of the Opposition has never replied to my statements that labour alone is not the solution here. I mentioned Italy, which has an abundance of labour, but which also has inflation. America has unemployment, but it has inflation as well. Britain has unemployment, and it also has inflation. Labour is not the only solution.

You are not making use of our labour.

In every country of the world there are times of recession. That is the nature of the capitalistic economy—it drops and rises. Even if the economy were to show a downward trend this year, especially as a result of the drop in consumer spending, we would by those means be laying the foundation for major economic growth, which I foresee for my country in the future, economic growth which will be even greater than that of the sixties.

The hon. the Leader also said that our growth rate was very low. I just want to mention a few figures. I do not know where he gets his figures from, but I have here the average annual real growth rate figures for the period from 1964 to 1969, for six countries. These are official figures. For Japan it was 6,9; for the United Kingdom. 2,2; for the Netherlands 5,5; for France, 5,7; for Germany, 5,1 and for South Africa, 6,1. With the exception of Japan the figure for South Africa is the highest of all these countries. These are the comparative figures for the period from 1964 to 1969.

But our population growth is so much faster that our standard of living cannot keep pace.

The hon. the Leader of the Opposition referred to education. I quite agree with him that a great deal should be done for education. But now I want to make the statement that this Government has done a tremendous deal for education. Now the hon. the Leader of the Opposition should not take fright at figures again. During the period 1948-'49 the United Party spent R47,4 million on education. During the year 1971-’72, i.e. this year, we are going to spend R398.4 million, almost R400 million.

What proportion is that of the gross national product?

I cannot give the hon. member the proportion now, but I can tell her that there was an increase of 740 per cent in the education costs incurred by this Government as against the amount spent by the United Party Government. But, Sir, let me mention to you another figure as far as our universities are concerned: In 1948 the United Party spent R2,4 million on our universities; this year this Government is not spending R2,4 million, but R64,6 million.

That has happened in all countries.

The hon. the Leader of the Opposition and other hon. members opposite have been referring to castles in the air and pipe-dreams, but their party never did these things; we are the people who are doing these things.

Mr. Speaker, I want to conclude with these words: This debate, which is now coming to an end, has been one of the most unedifying debates that we in this House have ever known. This debate is a black page, not only in the history of budget debates in this Parliament, but also in the history of the United Party.

Motion put and agreed to. Bill read a Third Time,

Mr. Chairman, the Schedule with which we are now dealing brings the hon. the Minister of Finance back out of the orbit in which he has been circling for the last half-hour to the practical issue of what the people of South Africa are being asked to pay. I want to start immediately by moving the two amendments standing in my name on the Order Paper—

Sir, at the Second Reading of this measure we took the unusual step of opposing the Second Reading. The principle of the increased sales taxes was repugnant to us, and now we take the unusual step, in order to re-emphasize our opposition, of moving the total deletion of all the sales tax proposals in this measure. We believe that many of the original taxes should go and we would move their deletion if it were competent to do so—taxes on essentials like soap and cosmetics, the luxuries of the Nationalist Party, but the essentials of the people of South Africa. But there are two reasons why we move the total deletion of this measure. The first is that this is not just a tax. It is the last straw added to the burdens of the housewife who is trying to balance her budget, the last straw added to the burden of the young couple trying to start a home.

Shame!

It is not “Shame”, as the hon. member for Paarl says, showing his contempt for the burdens laid on the people. This brings many of these taxes to the point where they in themselves become a real burden. When you have a tax of 30 per cent on an item, levied at source, this means a tax paid by the ultimate purchaser of between 50 per cent and 72 per cent. I also want to emphasize that when we dealt with this tax in principle at the Second Reading, we had in this House a number of Ministers who treated it as a joke. They laughed about it, as the hon. member for Paarl did.

No, we are only laughing at you.

But it was significant then that when we voted on this Schedule and this Bill at the Second Reading, there were only 66 Nationalists who cast their vote in favour of this measure. Over 50 members of the Government did not have the courage to oppose it, but they abstained and I say they deliberately abstained. [Interjections.]

Order! The hon. member should come back to the details and not make a Second Reading speech.

Sir, I am dealing with the burden imposed and the unwillingness of Government members to support this burden, as evidenced by their voting, but I will leave that. We will see how they vote on this amendment. Because this Schedule, and the sales tax in particular, imposes on ordinary people a price which it is unfair to ask them to pay. I want to give an example. In the hotel industry—and I have here the latest Hotelier and Caterer of May, 1971—there is a report of a statement by the chairman of the Holiday Inns organization, in which they have calculated that every bedroom costs them R1 000 per room more just because of sales tax. This is what we are being asked to vote for: This measure, the deletion of which we have moved, which in the case of one bedroom adds R1 000 to the cost of that room. Government members can treat it as lightly as they wish, but I want to say that when all the words have been recorded in Hansard, as this session dies, it will not be the ideological histrionics which will be remembered, but this Schedule which we want to delete. All the clap-trap that has been spoken and all the high-falutin nonsense will be meaningless words. What remains are these taxes, which people will not pay in the form of words but which for the next twelve months, day in and day out, week, in and week out, they will be paying as the result of this measure. Sir, Government members treat it lightly: At the Second Reading there were 10 members present,—but at the moment I would say there are twelve members who are interested in what the people are being asked to pay in terms of Schedule No 1, setting out the increased sales tax to the people of South Africa. That is what the people will remember.

What are they being asked to pay? R47 million, incorporated in these pages which we want to delete, R47 million which I say become the symbol of the price that we are asked to vote. This is the price which this sales tax will impose on the people of South Africa. It is not a mock debate; it is not a joke, but a serious issue which remains with us for the next 12 months. I challenge the Government and I challenge the few members who have taken an interest to say, when they come before the electorate, that they voted for this extra burden to be placed on the people of South Africa when the division is called. I challenge them to tell the people of South Africa why they are being told to pay an extra tax which covers every aspect of their lives. In the field of production, we find that vehicles are being taxed. Further more petrol is taxed, office equipment is taxed to the last pin and typewriters to the last ribbon. Cheque machines are taxed but the Government gets exemption on cheque-writing machines because it is one of the rebates in the Schedules. They get exemption so that they can get cheque-writing machines, especially those which write cheques for R7 500 000. The ordinary person, however, who wants to buy a machine to run his office will have to pay an extra duty on such a machine.

Then this Government taxes our pleasures and our hobbies, such as the cigarettes we smoke and the drinks we drink. They tax the music we listen to and the radios whereby we listen to that music. They tax the toys with which our children play and the sport we participate in. For example they tax the boats in which we sail: all these items are being additionally taxed in this schedule. They tax our cleanliness and our appearance. It goes down even to the powder puff in the compact. That is how deeply the Government must seek for things which they can tax. They have to tax the cleanliness and the appearance of people to be able to do so. It taxes mirrors because it cannot look at its own image in a mirror. It cannot even face its own image, and therefore it places a tax on mirrors. [Time expired.]

The hon. member for Durban Point has certainly tried to outdo the hon. member for Parktown. All he had to do was to go a little further and tell us that his proposal was that we abolish all duties from A to Z.

Yes, we would like to.

It is of course quite popular to tell the taxpayer that he is paying too much tax, but if we were to accept this amendment moved by the hon. member for Durban Point, it would simply mean that we would have to cut down considerably on our national expenditure. I now want to ask the hon. member for Durban Point where we should start to cut down on our national expenditure. Furthermore, the hon. member says that we are taxing the essentials of the housewife. He mentioned articles such as soap, cosmetics of the ladies, and so forth. If we were to forfeit this tax, as is suggested by the hon. member in his amendment, we would immediately have to start reducing the necessary expenditure. We would then have to cut down when it comes to the essentials. The very first thing that would probably be abolished is the high expenditure in respect of education. If we do not start saving on some of the items, we will not be able to forfeit these taxes. For that reason there is no question of our conceding to the amendment moved by the hon. member for Durban Point. We do not see our way clear to save on those necessary expenditure which are needed to build a future for this nation. For that reason I oppose the amendment.

Mr. Chairman, the hon. member who has just spoken, has put forward an incredible argument. He represents a government and is supporting a taxation measure which adds to the surpluses with which the people are overtaxed year after year. It is part of the R1 400 million which his Government has taken unnecessarily in taxation. He says “What are we going to do if we do not have this tax? We are going to have to cut our services”. I can suggest to him services to cut but this is not the occasion to do it. What I can say is that this money which is required through the taxes, the deletion of which we move, is not necessary, because there are adequate surpluses and reserves. That hon. member has obviously not done his homework.

However, I want to go on and finish what I was saying in regard to what this schedule asks us to pay tax on. I have dealt with cleanliness and appearance. I want to deal with homes, the homes which people cannot afford today, the homes reflected in the article I quoted slating that it costs R1 000 more to build and equip one bedroom because of this tax for which the hon. the Minister is asking. I ask, where are the young couple who want to marry and set up a home, going to find that extra R1 000. It may not be R1 000 in their home; it was R1 000 in the hotel report. But say it will be R500 per room. By the time they have paid for their furniture, their carpets, their curtains, their crockery and cutlery, every single thing they need to establish a home…

I think the hon. member must come back to the items under discussion. The hon. member is making a Second Reading speech. He can speak again at the Third Reading stage.

Mr. Chairman, I am arguing why we want to delete the specific items the deletion of which we propose. I am arguing why we do not believe these items should be taxed.

The hon. member is talking in general; he is not specific about the items.

Mr. Chairman, I am talking now specifically of furniture.

Order! The hon. member must abide by my ruling, otherwise he must sit down.

I will follow your ruling, Mr. Chairman, but I mentioned furniture, I mentioned curtains, carpets, cutlery and crockery. Every one is an item on these pages. I cannot read every item by name, but I am mentioning the groups to which we object.

That is just the trouble.

I have proposed the deletion of these items and the taxation to which we object.

But let me move on to my other amendment, which moves the deletion of the additional tax on beer. I want to start by asking what sort of Government is this which proposes an additional tax on beer calculated in cents per gallon, when the hon. the Deputy Minister knows that the beer brewing industry metricated in January of this year. So now we have a proposed tax calculated on gallonage of beer, but the industry is metric. So, first of all they have to recalculate every single millilitre as opposed to pints and quarts and gallons and recalculate it before they can work out what the tax is.

That is a simple matter.

The hon. member says it is simple. Sir, this is typical of the inefficiency of the Government. Here they are creating additional work and expense for people. Let us assume that we have converted gallons to litres and that we have worked out what we have to pay. We find now an additional tax of 22 cents per gallon. The hon. the Minister and the Government know that every time a tax is imposed, it leads to a drop in consumption and therefore a drop in production. To compensate for that drop, the Government has imposed a tax of 22 cents, but had there been no drop in consumption, six cents per gallon would have given the Government what it wanted, namely RI2 million. This RI2 million is being sought by the increase which is now being levied, but six cents per gallon, one cent per quart bottle, or half a cent per pint, which the industry could have absorbed, would have provided the R12 million which the Government wants. Instead of increasing the price by six cents per gallon, the Government works on a basis of 22 cents per gallon, causing the consumption to drop and the income from tax with it. Therefore, to compensate for this drop, they have to increase the tax per gallon. This is the sort of logic one finds from that Government. I want to point out too that in the process capital expenditure of R50 million has been postponed. Two border industries, which would have provided 2 000 jobs for the Bantu, are now not being established. Where are the Ministers of Bantu Administration? Two thousand jobs for Bamu in border industries have been postponed because of this unnecessary blunder in overtaxing beer. Then the Government, with its tongue in its cheek, speaks of light alcohol, light wine and beer as being desirable. Yet when it comes to encouraging the light alcohol drinks, the Government imposes a tax which in fact encourages young people to drink hard tack. One must bear in mind that for every pint of beer 200 per cent of the cost of that beer goes to that Minister’s Government. Four times the price which is paid to the brewery goes to the Government. Sir, this drives people to drinking hard tack.

And so, Sir, I should like to move the deletion of this beer tax, because this is another example of robbing the pennies from the purses of the poor. By taxing the items which appear in this Schedule the poor are being robbed. The Government is taking money from the poor. This is daylight robbery. Sir, done under the cloak of legislation, and we are not prepared to be party to the robbery of the poor. We do not believe that the poor should have to encourage and pay for the inefficiency of this Government, and therefore we move the deletion of the whole sales schedule and the beer schedule.

Mr. Chairman, I should like to move the following amendment standing in my name on page 419 of the Order Paper—

Mr. Chairman, there are several reasons for my moving this amendment. In the first instance, in looking at the Revenue Budget of the Government for the year 1971-'72, we shall see that the excise on wine will show an increase of R2 400 000. In the case of spirits there will be a considerable increase, from R80 million in the previous year to R133 million this year. This amounts to an increase of R53 million in one year’s time. In looking at the figures furnished by the hon. the Minister of Finance when he originally put forward his proposals, we find that they sound much worse still. In terms of those proposals the increase in Item 104.20 in the case of wine spirits is 1 423 cents per gallon of absolute alcohol. This is now being increased to 2 123 cents; in other words, an increase of roughly 50 per cent in one year’s time, I want to ask the hon. members for Paarl, Stellenbosch, Malmesbury and Swellendam whether they think that this increase in excise could be to the advantage of the wine farmers of the Western Province, During the Second Reading debate the hon. member for Paarl expressed not so much his dissatisfaction with but actually his disappointment at such a considerable increase in the case of wine spirits having been proposed by the hon. the Minister, I want to ask that hon. member and his colleague the hon. member for Worcester, who adopted the same attitude, whereas they now have the opportunity of really showing the wine farmers of South Africa that their disappointment does mean something, whether they will now have the courage of their convictions to vote for this amendment of mine. The hon. member for Paarl and the hon. member for Worcester know what the increase in the excise will imply to the wine farmer. Hon. members opposite know that the distilling wine industry represents a considerable part of the South African wine industry as a whole.

What do you know about it?

I shall tell the hon. member what I know about it. I am at least prepared to do a great deal of reading on a particular matter. However, that hon. member is not even prepared to give this House the benefit of the experience he has in regard to this matter. In any case, that will be precious little. I want to ask the hon. member whether he knows that of our entire vintage in 1965 no less than R13 million was in respect of distilling wine. As against that our good wine vintage was only in the region of R15 million. In 1968 this was roughly R16 million in the case of distilling wine, and roughly R18½ million in the case of good wine. The distilling wine industry is so important to the wine farmer of South Africa that a considerable part of his income is derived from this branch of his wine industry. The hon. member ought to know that in the past the wine farmer received approximately R40 per leaguer of distilling wine. The excise duty on that was approximately R206. But as a result of the increases introduced by this hon. Minister, it is now roughly R306 per leaguer. I want to ask the hon. members for Paarl and Stellenbosch, both of whom are wine farmers, whether this could be to the advantage of the wine industry of the Western Province.

This merely depends on how much you drink,

The hon. member has just told me that this merely depends on how much I drink. Of course, the question put to me by the hon. member is a most personal one. Let me tell the hon. member that there are already indications that, as a result of the increase in the excise duty, there has been a slight downward trend in the consumption of brandy, and so forth. Therefore, if I am consuming less, I believe that the hon. member for Stellenbosch will also be consuming less. I want to point out to the hon. members for Paarl and Stellenbosch what Mr. Andre du Toit, the chairman of the K.W.V., recently said according to a report in The Argus on the 10th of this month. He said that the farmers were even thinking of arranging a demonstration because of their opposition to the implementation of these increased excise duties. The Argus mentioned the example, which I presume they heard from Mr. Du Toit, that they were even thinking or could even think of blocking the main roads with their tractors, etc., in order to bring the traffic to a standstill.

I do not think that the wine farmers would be as ridiculous as that. The wine farmers have more sense than that.

Wait a minute!

Hennie is not a wine farmer.

Is he a raisin farmer?

He farms with lean sheep.

At the meeting they adopted a resolution, in which they totally rejected the increased excise duty. They resolved that it would be detrimental to the industry; that they would ask the representatives of the K.W.V. to enter into negotiations in order that that increased duty might be reduced: that they also deplored the fact that all the attempts they had made up to that stage to have these duties reduced, had proved to be completely futile. It is, therefore, not only the hon. members for Worcester and Paarl who expressed their disappointment, but the chairman of the K.W.V. also pointed out that these duties complicated the matter a great deal. If the consumption of brandy and wine, for instance, were to drop considerably in South Africa, it would simply mean that the K.W.V. would have to find better markets abroad for its surplus. What is the present state of affairs abroad? Over the past five years sales abroad dropped from R4 million to R2,8 million. Mr. Du Toit also pointed out that at present the excise duty had not only been increased by 50 per cent, but, if one reduced this further, down to the production of grapes, one found that the excise duty on a basket of grapes, which weighs approximately 18,144 kg., was no less than R7-50 today. [Time expired.]

Mr. Chairman, the hon. member for Newton Park asked me a very definite question, to which I should like to reply. He wanted to know whether I thought that the imposition of this excise duty of spirits was to the advantage of the wine industry. I want to reply to that unambiguously by saying that to my mind this is not the case. The hon. member challenged me, in view of the fact that I had expressed my disappointment at this excise duty during the Second Reading debate, to support him when he proposed that it should be abolished.

Not abolished; one should merely revert to the old basis.

Well then, that it should be brought back to the old basis. It is very easy to propose nothing but the abolition of taxes all the time. But, as I told the hon. member for Durban Point, if this is done, a saving must be effected somewhere. That argument of his, i.e. that the people are being overtaxed by so much, simply does not hold water, because surely that money has not been wasted; after all, it was utilized in the interests of this country. Now I should very much like to put a very direct question to the hon. member for Newton Park. May I have the attention of the hon. member for Newton Park? If the Government were to abolish this excise duty on spirits, would he then be prepared to propose that the R7 million plus the R1½ million tax money spent on the wool industry, should be abolished as well?

Mr. Chairman, the hon. member has indeed put a very ridiculous question to me. He wants to know whether I am in favour of this amount of R7 million for the wool industry…

… having to be exchanged for R50 million.

That is just the point. That hon. member wants to give R7 million to the wool industry. This is appreciated. But when it comes to the wine industry, he does not take R7 million from the wine farmers in order to give R7 million to the wool farmers. No, in this respect there is an increase of R53 million. Now he puts the ridiculous question to me of whether I should like to see the R7 million given to the wool farmers, being done away with. No, surely the hon. member for Paarl cannot really think that we have absolutely no sense in this respect. The hon. member need not listen to me. Why does he want to listen to me now? Why does the hon. member not listen to his fellow- wine farmers? Why does the hon. member for Paarl not listen to Mr. Du Toit, the chairman of the K.W.V. and a voter in his constituency? After all, these are people whose guidance one should accept. Why does the hon. member not listen to Mr. De Villiers, the general manager of the K.W.V? Surely, these people have closer ties with this industry than I, for instance, have. What is more, they have much closer ties with the industry than the hon. member for Paarl has. These people are concerned about the future of the wine industry in South Africa. This year they deemed it fit to pay the wine farmers of South Africa a better price for their products in the new season, which commences shortly. Now hon. members opposite are increasing the excise duty by 50 per cent, and they think that the market will remain the same. After all, that is simply impossible. This Government made an appeal to the people of South Africa to spend less. In other words, an appeal has also been made for the consumption of liquor to be reduced. How can the hon. member expect the difficulties of the wine industry not to become greater and greater in the future? In other words, it will become more and more difficult for, for instance, the K.W.V. to dispose of its surpluses. That hon. member knows that the K.W.V. may not compete with the domestic market when it comes to surpluses. It has to seek new markets overseas. At present it has to rely on the United Kingdom and countries such as Denmark, etc. Then there is also the possibility that Britain may join the E.E.C., and then the future of the wine industry will become more and more difficult. That is why I do not find it astonishing that at present the K.W.V. has to seek markets in countries such as America for disposing of its surplus.

Sir, I want to make an appeal here to the hon. member for Paarl and the hon. member for Swellendam, who is absent at the moment. They intimated in this House that they were disappointed too, and the hon. member for Worcester also did so. Sir, since that is the case, why do these hon. gentlemen not have the courage of their convictions to vote with the United Party in this case, for this affects their own industry? They now have the opportunity to show their people whether they are really on their side. If they do not do so, I want to tell the hon. member for Paarl that his own people will bring him to book, without any propaganda being made by the United Party. At present the wine farmers are experiencing exactly the same other problems as do the ordinary fanners. There has been a tremendous increase in their production costs and, what is more, last year they had to contend with plasmopara viticola, which caused them tremendous damage. The interest rates they have to pay, are increasing all the time. These people are therefore entitled, when they have received an increase in the price of their products, to expect the State not to place any dampers on the consumption of their product.

Sir, now I want to mention to the hon. member the most important argument in this regard: We have only discussed the matter in terms of the person who produces the product, but what about the person who buys it? Sir, the hon. member for Paarl also has many consumers in his constituency. I want to ask him not only to think of the farmers, but also of the person who has to buy a bottle of brandy or a bottle of wine or a tot at a time. Is it in the hon. member’s opinion a good thing that in one year’s time the retail price of brandy increased from more or less R1-65 per bottle to R2-79 per bottle? The hon. member for Paarl expects the man in the street to buy his product. This increase is not attributable to the fact that the wine farmer received such an increase in his price; it is not attributable to the fact that the retailer or the wholesaler received such a tremendous increase in his price. No, Sir, this increase is attributable to the fact that the Minister of Finance decided that this product of the farmer had to be taxed.

And now I come back to the hon. member’s original question. I want to tell him that if the Minister of Finance taxed my product, wool, the way he taxed the product of that hon. member, I would at least have had the courage of my convictions to express my opposition to such a step. This is my reply to that hon. member.

Sir, I rise to move the amendment standing in my name, as follows—

Before dealing with my amendment, I would like, on behalf of this side of the House, to welcome Mr. Venter to the Table of this House. We hope that his period of service in this House will be a happy one.

Sir. my amendment seeks to do away with the increased excise and customs duty on petrol and diesel oils. [Interjections.] No, I am not talking for the garage man; I am talking for the man in the street, the user. This increased duty, which might be called a delayed action duty, was referred to by the hon. the Minister of Finance in his Budget speech in the following words—

The only rebate on this duty is on the kerosene” and diesel fuel used by fanners. Sir, this is not an irresponsible movement on this side of the House. We do it to highlight that extra taxation which has been placed by the Government on the public. We know that the Government taxes diesel fuel and petrol because it is one of the easiest taxes to collect, but we know full well what the chain reaction will be of the increased taxation on any fuel in costs to the consumer. Everything goes up. The cost of transport and costs all along the line go up. The customer in the shop finds things going up for the simple reason that the shopkeeper has to pay more for transport. I do not think the Government thinks about these things when they apply these taxes. It is all very well for the Government to say they must find the money somewhere, but they must think of the user, the man in the street, the person who has to pay tax every time he puts a gallon of fuel into his car, or litres, although the taxation is still on gallons. As the hon. member for Durban Point has said, we have not got down to metrication yet as far as that is concerned. It is all right for the Minister to tell us that the money is wanted to build national roads, but the man in the street also uses the bus to go to work, and he uses his car to go to work. We know from legislation we have passed through this House that the money for the national roads is not going to be spent in the Roads, in the cities; so where is the money going to come from to build these roads? The motorist today is being taxed in the cities, and he will have to be taxed further to provide the necessary facilities. Furthermore, we notice as far as public transport is concerned that the cost is going up day by day, and they invariably give the excuse that fuel costs have gone up. The Minister of Transport, in introducing his Budget, was clever crough not to increase the tariffs on fuel carried by rail from the ports, but harbour charges have gone up and those costs will be reflected in the fuel price. We have not got it yet, but it is coming. It is an item that the public has to pay. Asking the public to pay this extra 1,363 cents per gallon is iniquitous, I think. I think it is out on this, as I said before, just because it is an easy tax to collect.

The Ministers have told us that we require to spend R90 million on national roads, but if you look at the Schedule, Sir, you will see that the Government collects taxation on tyres and you have to pay sales duty on motor-car batteries and even on motor-car pumps to pump up your tyres. I do not know who uses a pump to pump up their tyres with the modern car, but nevertheless there is a sales tax on it. All along the line the motorist is being asked to pay a little bit more, and I think it is time we protested on their behalf. The Government are hitting the people at the lowest level, because people have to use cars to go to work and they have to use public transport, and they are being asked to pay all along the line. And not only do they have to pay for their fuel, they have to license their cars, and if the battery goes, they have to buy a new battery and pay extra for it. If a man wants a sports model car and wants to put a few extra parts into it to hot it up, he has to pay an extra tax on those parts. All along the line the motorist is being hit; it is the last straw that breaks the camel's back, I want to warn the Government not to kill the goose that lays the golden egg, because they will find that there will be a resistance to this taxation. I know from my own experience what resistance there is against paying the extra high cost of the new fuel. We can see that it is not selling as well as we have expected. The resistance is there and people do not have unlimited funds. They like their motoring but they are not going to pay this extra money that the Government requires from them. I think that the Government should take note of the fact that it cannot hammer the motorist all the time. When you come to the person who uses public transport, you cannot hammer him cither. The Government is collecting money from the cities as well, but it does not provide funds for new freeways. We in Cape Town are in the fortunate position that we can provide funds to build our new freeways. The City of Johannesburg will have to provide funds for a possible underground. In other cities also money for these services is required, but the Government is doing nothing. This money is going to be spent on national roads outside the large cities.

Mr. Chairman. I want to support the amendment of both the hon. members for Salt River and Durban Point. I think it is time that the hon. the Minister told the House what the motorist is paying today to the Government by way of taxes and duties and all the other things he has to pay for. A few years ago it was of the order of R400 million per year. That was what the motorist was contributing towards the coffers of the fiscus. What is it costing him today? I think the public is entitled to know this seeing that we have to pay this additional duty on petrol. A little earlier on in this House the hon. the Minister of Finance said that one of the major factors in the increase in the cost of living was not to be found with commodities but with services. What creates the rise in the cost of living when it comes to services? Such things as the rise in the cost of petrol are causing the rise in the cost of services. He talked about the doctors for example. Why are doctors’ fees going up? This is part of the services the Minister talked about. It is going up because everything he has to use and buy to provide the service to us is being taxed more and more each year. That is the reason why services are going up. They do not go up by themselves. It is no good to isolate items and say…

What is the income of those doctors?

What has that got to do with the doctor’s income? Does the hon. member think that doctors are earning too much? The hon. member is not sure; I do not know either. I shall have to ask the hon. member for Rosettenville.

They are earning far too little.

Is R40 000 or R50 000 too little?

I do not know what doctors are earning, but from figures I have seen, they earn far less than most people. This does not only apply to doctors. Every time we put on a new sales tax and a new excise tax, it goes into the cost of services. It is no good for the hon. the Minister of Finance telling us that only the cost of services is going up.

I want to come back to the question of wine, because the situation is completely and utterly inexplicable, as I said during the Second Reading debate. I want to ask the hon. the Deputy Minister of Finance whether he has asked the hon. the Minister of Economic Affairs what he thinks about the imposition of this excise duty on wine? Three years ago Britain devalued. The Government came to this House and said that because of the devaluation of the pound the Government felt obliged to protect the farmer in regard to his exports. Therefore we found an item in the Budget—I cannot remember the figure—involving at least a couple of million rand which was used to assist the farmers who were exporting fruit to Britain. The hon. Minister of Economic Affairs and the hon. the Deputy Minister of Economic Affairs are well aware of what is happening in regard to our exports. We are faced with the problem that in the not too distant future, our major buyer of wine is going to become a member of the European Economic Community. There are going to be tariff hedges against us and our wine farmers are going to go through an extremely difficult time. How can we help the wine farmer? We can help him in two ways. We can help him in his exports, but we can also help him by making the sale of his wine easier locally by reducing the excise duty. It is utter madness to increase the excise duty when the wine farmer is faced with a position where he knows that his exports are going to be cut. What is going to happen? Is the hon. the Deputy Minister coming back to the House, saying “Well, Britain has now gone into the E.E.C.; the tariffs on our wines have risen enormously; I now want to subsidize the export of those wines”. Is this what he is going to do while he is at the same time imposing a local excise tax higher than it is at the present time? What is the Government trying to do? What is its policy? What line is it taking? What is its objectives? Ever since I have been in this House, the hon. the Minister of Finance does one thing, and the hon. the Minister of Economic Affairs does exactly the opposite. This is what is happening here. The hon. the Minister of Finance says: “I need the money to balance my Budget; I shall tax the wine farmer”. The hon. the Minister of Economic Affairs says “I am going to have to help the wine farmer, because he is going to be in trouble when Britain joins the Common Market”. Where are we going. Sir?

The hon. the Deputy Minister is in a very enviable position. He is both the hon. the Deputy Minister of Finance and the Deputy Minister of Economic Affairs. I should like to know what his reconciliation of this very strange situation is.

Mr. Chairman, I want to support the amendment moved by the hon. member for Salt River. I want to point out to this Committee just what this tax on petrol means today. According to R.P. 6 of 1971. “The estimate of the revenue to be received during the year ending 31st March, 1972”, the excise tax to be received on petrol totals R145 500 000. Surely, this is a shocking amount to take out of the pockets of the motorists, transport carriers, and so on. It is because of this tremendous amount that the Government is taking that increases have come to the housewife in this country. The increased transport costs have caused an increase in foodstuffs which is not because of the increase in the cost of food.

Coupled with that, is the amendment of my hon. friend from Durban Point. I want to support him, too. because we find in all the supermarkets that since March, when this Budget was announced, the cost of every item of foodstuffs has gone up by half a cent, one cent or two cents. I want to repeat, it is not the cost of the food which has increased; it is the cost of transport, packing, printing of the labels, the containers, tinning, painting, etc. All this is a direct result of the increases in the customs, excise and sales taxes which were announced by the hon. the Minister of Finance on 31st March. It is for this reason that we are opposed to it, because once again we are hitting at the person in South Africa who counts first of all. namely the housewife, who is being forced to pay more for her food. She is getting no more food for her money, and it is not the cost of the food which has increased. It is these incidentals which have been increased by the acts of this particular Government.

Sir. when we look further into the question of the sales tax, we find a very interesting feature. I am only sorry that it is the hon. the Deputy Minister and not the Minister himself who is going to have to bear the brunt of what I am about to say. For two years at least, since the introduction of this sales tax, we on this side of the House have pleaded that a particular item should be excluded. I am referring to Flanders poppies, the paper poppies that are used to commemorate those who fell in Flanders. We have pleaded for this exclusion, and what has the answer of the hon. the Minister been on every occasion? He has answered: “It cannot be done. It is not practicable. I cannot exclude one item like that from a particular head.” Sir, what do we find in the Schedule this year? At last we have got through to the mind of the hon. the Minister. We find that there is an item which has in brackets after it the words “specifically excluding poppies made of paper, such as Flanders poppies”. Sir, I am not going to thank the hon. the Minister. I am just going to say that I am glad to see that some sense has at last got through to the Government, in that they have at last excluded this item.

Sir, we also find that other items for which we have pleaded, have been specifically excluded. Knitting needles and crochet hooks have also been specifically excluded. although the hon. the Minister told us before that these items could not be specifically excluded. But what do we find? The hon. the Minister gives with the one hand and takes with the other, because on the other hand he increases the tax on knitting machines and sewing machines. The poor old housewife therefore still gets socked anyway, even though he has granted concessions in respect of knitting needles and crocket hooks.

Sir, I now want to move the amendment standing in my name on page 419 of the Order Paper, as follows—

The hon. the Deputy Minister will know that the items I am asking to be deleted are the increases in customs and excise duties on tobaccos and cigarettes. In the case of imported tobacco, we find that almost half of what the consumer will now have to pay in customs and excise duties will go to the Government.

It is not a necessity of life.

In the case of locally produced cigarettes…

Is it a necessity of life?

Mr. Chairman, if this hon. member on my left must make such a noise, why does he not get up and speak? Or will his Whips not allow him to speak? There is a continuous barrage in my left ear. The hon. member has nothing to say, anyway; so why does he not keep quiet now. He can get up and speak after I sit down, if his Whips will allow him to do so.

Order!

Mr. Chairman, this is the most annoying thing. We have to speak under extreme provocation; yet we are the ones who are always pulled up. I see that the hon. member’s Chief Whip is not here. I wanted to speak to him too. Perhaps the hon. member’s Chief Whip will allow him to get up just now and say something. Perhaps this will keep him quiet when somebody else is talking.

Sir, I was saying that the tax on imported tobaccos amounts to almost half of what the consumer has to pay. What do we find when we come to cigarettes? The new tax that is going to have to be paid on locally produced cigarettes is more than half of what the consumer has to pay. This last comfort which has been left to the poor man in this country, this solace to the poor man when he comes home and has to face up to the headaches of increased food bills, etc., is now being taxed to the extent of 53 per cent. This goes to the Government. On every packet of 20 cigarettes. 13,26 cents goes to the Government in excise tax. On average a packet of 20 cigarettes sells for 26 cents. At discount houses the price is 24 cents, and then the percentage becomes even higher A tax of 13,26 cents on an average price of 25 cents means that 53 per cent of the purchase price goes to the Government. For a packet of 30 cigarettes, the tax is 19,89 cents. On average a packet of 30 cigarettes sells for 38 cents, and this therefore also works out at 53 per cent. More than half of what the person is paying for this solace which he uses is being taken by this Government. Is it necessary that the Government takes all this amount of money?

They give it back.

I do not believe that it was necessary. They do not give it back. In what way do they give it back? This Government uses that money for ideological nonsense. It also goes into this General Revenue Fund that I referred to earlier. It goes into the General Revenue Fund from which all things are paid for including land deals, Cadillacs for Ministers, repairs and maintenance and extensions to Ministers’ houses. This is where this money goes and, of course, for the running of the country. What do we find from this R.P. 6 of 1971 in respect of this amount of 53 per cent which is being taken by the Government? What is the amount that this Government is going to take? In respect of cigarettes and cigarette tobacco, the Government is going to take this year R111½ million. On pipe tobacco and cigars the Government is going to take R12,3 million. This represents an increase, this year alone, of R23,9 million in excise tax which is being taken by the Government on the sale of tobacco and cigarettes. That is the position if we compare this year with last year. But the interesting thing is that at the time the hon. the Minister of Finance drew up his Budget, he did not work on receiving an extra amount of R23,9 million. According to this Budget speech, he said when dealing with the question of tobacco—

But now we get a paper which tells us that the hon. the Minister is going to receive R23,9 million and not R18,6 million. [Time expired.]

Mr. Chairman. I see the hon. members for Paarl and Stellenbosch are back in the House. I also see the hon. member for Sweden dam is here The hon. member for Malmesbury is not. To tell the truth, I was sorry to see the members from the wine-growing districts attending this debate so poorly. I am sorry because I realize what difficulty they find themselves in. We are dealing here with an industry which supplies the State with more income than any other industry I know of. If we look at the schedule, we shall see that beer does not supply even half the income that wine spirits does. In this connection cigarettes, tobacco, petrol, quite a number of other items, even the mines, could be mentioned. Now the specific industry of a tiny district in the Boland, perhaps one of the oldest cultural districts in the Boland, is today being requested to pay the greatest amount of money into the State coffers. I want to plead with the hon. the Minister not to kill the goose that lays the golden eggs. Few of those hon. members are wine farmers. I know them all. But they represent wine farmers.

Speak to any wine farmer and he will tell you that the position of the wine farmer in the Western Province, particularly as a result of labour and other circumstances, is slowly becoming quite impossible. Ask any one of those hon. members who represent wine-growing districts, and they will be able to tell you what is happening to the production costs of wine. We in the wine industry have most certainly done our duty to South Africa. Do not destroy us. We are on the verge of the possible entry of England to the European Common Market. The hon. member knows what consequences that may possibly have for the wine industry in the Western Province. Do not destroy us first and then try to revive us with subsidies. I am asking the hon. the Minister to give this entire matter serious consideration. If the hon. member for Stellenbosch and Swellendam would take an interest and would not sit there discussing a game of billiards they want to go and play, I would be pleased, because this is a serious matter. I hope that they too will regard it as a serious matter. Those two members will recall that a few years ago a motion was introduced…

What about the hon. member for Worcester.

He does not even count. He falls under the palm oil section, i.e. yellow margarine. I just want to remind the hon. the Minister that a few years ago—I think it was three or four years ago—it was found necessary to impose an additional excise duty on cane spirits in order to help the wine farmers. At the time the hon. Minister realized the difficulties in which the wine industry had found itself. On the recommendation of the Board of Trade and Industries, provision was made allowing the Minister to levy a duty of R1 per proof gallon on cane spirits. As far as I know, that full amount has never been levied. I think that at the moment a duty of 75 cents per gallon is being levied. I want to make a very reasonable request to the hon. the Minister—and I am certain that the hon. members who represent wine districts here will agree with me—to levy the full amount on that, through the powers he has today. If it is necessary, the hon. the Minister must double the levy to R2, as the K.W.V. requested. I think the hon. the Minister will find that he will be able to obtain all the money he is at present looking for from wine and fortified wines in that way.

I want to warn the hon. the Minister once again not to destroy an industry which has for all these years been standing on its own feet without subsidies or State aid and which has been the greatest source of income for the State of any farming industry. The hon. the Minister must not destroy the industry for the sake of a mere R22 million.

[Inaudible.]

What do you know?

Mr. Chairman, I wonder whether the wine farmers should not stop fighting with the hon. members for Natal? All they have to do is listen. Perhaps a few of them support me. I hope that the hon. member for Swellendam and the hon. member for Stellenbosch will support me. I know that they do not know very much about these matters, but if they keep quiet, they will learn and they will get to know what is going on. They will not always be able to rely on the voting fodder in their constituencies. Sooner or later they will have to wake up to reality and realize that the wine farmer also has a say in the government of this country.

We have the responsibility.

Yes, we will speak to each other again about that point. All I want to ask is whether this matter cannot be referred back to the Board of Trade and Industries. I want to ask the hon. the Minister please, before he makes this duly final, to allow it to stand over. Nothing can happen to South Africa in the meantime. Cannot this duty stand over until the hon. the Minister considers the possibility of increasing the excise on cane spirits from R1 to R2 or at least using the full authorization he has to levy a full rand instead of the 75 per cent which it is at the moment? hon. members must remember that the freight charges on wine have been increased three times during the last year. The freight charges have now been increased by a further 12 per cent. Not only have our labourers’ wages been increased, but labourers have in fact become scarcer. The hon. Minister can ask any hon. member who represents a wine district here about this. Our water and our implements have become more expensive. Our entire position has not improved but deteriorated. The export of wine, spirits and fortified wine is 10 per cent, I think, of the entire production. We must look for new markets, because we could lose the existing markets. Hon. members must remember that our local consumption is for the most part of unfortified wine. Where is the hon. the Minister taking us?

The hon. the Minister must not destroy us and later give us artificial respiration. I am asking the hon. the Minister to give this matter serious consideration and please to hold the increase in the duty on wine, spirits and fortified wines in abeyance. It is not yet too late. The hon. the Minister must please hold it in abeyance and have the matter investigated by the Board of Trade and Industries, as the hon. the Minister did a few years ago. I think the hon. the Minister will discover that our fears and concern were not unfounded. We are not asking the hon. the Minister for assistance; we are asking him not to deliberately destroy us.

Mr. Chairman, for the second year in succession I want to come to the rescue of the fair sex and, in support of the hon. member for Durban Point, make reference to what I regard as the excessive sales duty on cosmetics and perfumes. Last year I gave the hon. the Minister credit for having a considerable following amongst the fair sex. However, I find now that the taxation of personal attire used by women throughout the country is so severe that it is affecting their social customs. The heavy taxation on their apparel has resulted in their going topless and braless. They have to resort to hotpants, mini-skirts and bikinis in order to defeat the Government in its excessive taxation on clothing. All that they have now left to clothe their modesty seems to remain in cosmetics and perfumes. Yet we find that these articles are taxed to the extent of 30 per cent. There is a revolution amongst the women of South Africa today and as was the case in the peasant revolution in France, heads will roll. Unfortunately this hon. Deputy Minister sits in two portfolios and his heads will roll into both baskets. I would appeal to him to be more humane, to be more considerate to the women who, after all, are the largest proportion of our voters and have the most import influence on the future of this country.

In that case, why are you not putting up a candidate in Waterberg?

Then, Sir, I make a more serious appeal to the hon. the Minister to review his taxation on boats and yachts. Here we have a sport which has a large following and which can help us to fight the tendency of our youth towards drug addiction and to create a better South Africa for the young people. I put this plea particularly because I feel that one point has been missed. The sales duty on most sporting articles is 30 per cent. The hon. the Deputy Minister may be a golf player, he may play bowls or tennis, 30 per cent on the cost of a golf ball, a tennis ball or a bowling set is neither here nor there, but the young South African who is yachting is involved today in owning a yacht, of any kind in the dinghy class, which runs from R300 to R1 000. 30 per cent on that figure is a considerable figure and is killing not only the industry, but also our youth's interest in yachting. Then in the major industry, the deep sea yachting industry, boats will run from R10 000 to R200 000. Again, these yachts are being sailed overseas to create an image for this country, which we want to protect and maintain. It is impossible to have races such as the Rio Race, the Admiral's Cup Race in Britain and other races if we are going to have this particular sport taxed to the extent of 30 per cent on the yachts that are necessary if youth is going to indulge in this sport. This is serious for our country. It was realized in Brazil only last year that you can tax an industry into the ground and lose the revenue from that industry altogether. Brazil removed all taxes from racing and sporting yachts and created a new industry which resulted in their being able to export both sailing yachts and deep sea yachts. In Holland where they had a sales on yachts of 40 per cent, they killed the industry entirely and it moved to Belgium, France and Germany. They then removed the tax and are now struggling to re-establish their boat industry. I would ask the hon. the Minister to remember that in the area of Muizenberg a large land development corporation is planning to have a marina where they hope to house some 1 400 yachts up to 50 and 60 foot. This will never come about if this tax is left in its present form. But the logic is that it is one thing to tax a sport where the overall investment is R10, R15 or R20 and another to apply the same tax to a sport which is usually conducted by persons who do not have so much money and to tax items which cost R300, R3 000 and R30 000 by the same 30 per cent.

Sir, I do not want to blame the Opposition for having chosen one item after another which was politically very convenient; people are as sensitive about their pockets as they are about their sentiments. Let us now consider what proposals the hon. members made. Except for the fact that the hon. member for Durban Point wants to scrap all sales duties and that he even wanted to scrap the concessions which have been made…

No, those we want to remedy.

There is a whole series of concessions he wants to scrap. In the first place it is beer; in the second place it is soap, which involves the cleanliness of the body. We have heard this soap story often, but there are all kinds of soap; there is soap which is quite effective for ablutional purposes, and there is soap which is very expensive and unnecessarily luxurious, and cleansing substances, etc., which fall into the same category. We then come to wine and spirits and the customs and excise duties on petrol, which is partially a luxury item and partially not. The hon. member for Parktown put certain questions here to which I shall reply later. Then we come to cigarettes and tobacco. We then come to the hon. member for Sea Point—again in connection with wine— and then we come to the hon. member for Gardens—cosmetics and perfumes. He came to the conclusion that our women are on the verge of, as I interpret it, going through life without clothing, without colour and without perfume. It seems to me that this is a case here of the Opposition wanting to play on the feelings of the public to see what can be gained by that, politically-speaking.

Sir, what I found interesting was what appeared from the standpoint adopted here today by the Opposition, and I am referring in particular to the standpoint adopted by the hon. member for Durban Point. Their standpoint is that the income of the Government should be reduced and that its total expenditure should be reduced, but that on the other hand its expenditure in respect of every vote should be increased. Then we find the position which we had here yesterday when on two occasions— it was only yesterday; I am not talking about the entire debate—increased expenditure was advocated. Yesterday we had two such pleas here, and today we had a plea to the effect that the income of the State should be reduced by something like R50 million or more. And then the hon. member for Durban Point comes along with what he regards as great wisdom, i.e. that all the money should be taken from the Reserve Fund. If those funds were so readily available, would the hon. member for Parktown agree with him that in these times in which we are living, these funds, should be taken from such a Reserve Fund, where they are so readily available? Would the hon. member for Parktown accept that this is not the proper time for that type of proposal made by the hon. member for Durban Point? I am certain the hon. member for Parktown would not agree with it.

Your whole basis of your taxation and economic policy is wrong.

From what has become apparent here today in the debate on customs and excise, no case whatsoever has been made out here that the entire basis of the proposals before the House, is wrong.

The hon. member for Durban Point became very melancholy about the excise duties on beer. He said it was the poor man we are robbing here. But it is not only the poor man who drinks beer. It is not only the rich man who drinks whisky or brandy. In any case, South Africa has reached that level of living standard today where one finds that all layers of one's community are drinking all types of liquor. This has been my experience in practice. To put it mildly, it is completely wrong to allege that beer is the poor man’s drink. Beer is an occasional drink, and when a duty of this nature is imposed, it is borne in mind what this source you are going to tax, can reasonably bear. I have already referred to soap. The hon. member became melancholy in regard to the young couples and the sales duty on household appliances. Apart from the fact that this is non-recurrent expenditure, it is also true that, quite apart from young couples, excessive spending in this direction of household requirements of alt kinds developed. This is how matters stood, and it was unfortunate that steps had to be taken in this way which affected young couples as well. But would it not be more sensible for young couples, since they now have to spend more as a result of these duties which have been imposed, perhaps to furnish that flat or the house they are going to move into a little less luxuriously?

Where would they find a house?

We are not completely out of touch with what is happening today. After all, we on this side of the House and those hon. members on the Opposite side of the House know, when a young couple get married today and move into a flat—if the hon. member then wants to allege that there are no houses for them —what the expectations are and the requirements which are set in regard to how that flat is to be furnished. I have experienced this myself. I think these problems which couples have can be overcome simply by exercising a little more caution.

In the course of his speech the hon. member complained about this escalation. So much has already been said about this. This was considered when a decision was reached in that regard. I have here a long exposition of what the considerations are, but I do not want to quote it all. If it had been imposed on the retail trade, the information here is that the number of licenced persons would, it is estimated, have totalled between 125 000 and 150 000 persons, while according to the existing system the number of licenced persons amounts to approximately 5 500. The hon. member can probably realize what additional expenses and staff would have been necessary to exercise this supervision. We can realize what additional costs would also have had to be incurred by the retailer, who would then be responsible for the levy, costs with which he would in his turn have to recover and which could quite easily have affected other goods which are not subject to sales duty.

What are you replying to now?

I am replying to the hon. member for Durban Point, who spoke about escalation. He even went so far as to complain that the Government was receiving exemptions from sales duty on office equipment. If this would make him happy, it could perhaps even be considered that the Government should take the money from its own pocket and put it into another. It would make not the least difference to the Minister’s Budget and there I cannot see any reason why the hon. member should have referred to this. It would merely mean that the Government would have to take the money and spend it on the one hand and recover on the other.

I was referring to cheque-writing machines for Agliotti cheques.

Agliotti is not under discussion now. If that hon. member has staked his entire political future on Agliotti now, he can, as far as I am concerned, do so with the greatest of pleasure.

The hon. member for Newton Park made a plea in respect of wine and wine spirits. The hon. member for Sea Point made a similar plea. I want to say that no Government in its right mind would be out to destroy an industry.

Why should it then be increased by 50 per cent in one year?

Because the Minister was of the opinion that this source would be able to bear it. If it is proved that the wine farmer cannot, as a result of that, sell his product at normal, prevailing prices or that he cannot sell all his products as a result of a decrease in demand for it, it is only logical that the Government will, on its part, reconsider the matter. Up to now there has in any case been no indication that this is the case and no indications to that effect have come to my attention.

The hon. member for Sea Point mentioned the matter of cane spirits. He referred to a duty margin which is applicable to that commodity. This is so and I think the duty margin is approximately 25 cents. That margin can be reconsidered, but the board of Trade and Industries has already investigated this matter. Cane spirit is in line with other spirits. It is only logical that before steps are taken in respect of cane spirits and the adjustments, as suggested by the hon. member, are made, that the Board of Trade and Industries should investigate this matter again. Representations in this regard will have to be made to the Board. It is not only the wine fanner, the wine and spirit producer and the dealer who is involved in this, but also the people who have invested money in cane spirit. They cannot merely be pushed to one side. Attention must also be given to their side of the matter.

Mr. Chairman, may I ask the hon. the Minister a question? If it already appears, at an early stage, that this tax on wine spirits and on fortified wine is causing a decrease in the consumption, will the Minister act at once, or will he wait until next year?

One must study a situation like this. It is a general phenomenon that there is an immediate reaction. Within a month or two sales recover. I want to give the hon. member for Sea Point a very practical example. I am a smoker, and I smoke cigarettes. When the excise duty on cigarettes is increased, one usually finds that the immediate reaction is that smokers buy themselves pipes. One then finds that everyone is walking around with a huge tobacco pouch and a huge pipe. He says that he is no longer going to smoke cigarettes. After a month one finds that he is smoking cigarettes again, as always, and that he has left his pipe and tobacco pouch at home. This is an example of what normally happens, The situation will have to be studied. However, when it appears—this is after all the Government pattern—that any measure which we have taken is unnecessarily hurting. or oppressing or damaging an industry in an undesirable way. something which we do not want, corrective measures are taken. That is also the reason why that clause is in the Bill, because new commodities have been included. The clause is making corrective measures in respect of sales duty goods possible. There is an annual opportunity to make revisions and adjustments. There are the continual recommendations of the Board of Trade and Industries which are submitted to the House in the Bill. These are continual amendments which are being effected to make adjustments where it has become clear that measures are proving more restrictive than was intended, where industries are being hurt although there was no intention to do so.

I think that also deals with the ideas expressed by the hon. member for Parktown. We have not yet reached the E.E.C. situation. This will develop during the next few years—that is clear to us—but at the moment we are not yet in that position. When problems crop up in that connection they will be dealt with. I know that this may require adjustments, particularly as far as agricultural products in their final form on the E.E.C. market and in England is concerned. It is perhaps sensible of the hon. member for Parktown to raise this matter today, but I adopt the altitude that it is not yet a real problem. I think the hon. member knows that when it proves to be a real problem the Government will find ways and means of making the necessary adjustments.

The hon. member for Salt River mentioned the customs and excise duty on petrol and oil. I can inform him that the amount which is being levied is 1,363 cents. The amount which is being paid over to the Road Fund is 2 cents. In other words, there is in addition a contribution on the part of the Government to the Road Fund.

The hon. member then raised an argument which I really do not regard as a worthwhile one. He said that the funds of the Road Fund are not being spent in the cities; they are all being spent in the rural areas. Has the hon. member ever calculated what a city-dweller driving from Cape Town to Johannesburg on a good road would save as compared to what it would cost him if he had to drive that distance along a bad road, full of potholes and so on? What is more, did the hon. member take into account that better roads, better communications, have always resulted in greater prosperity? These moneys are being spent with a view to greater prosperity.

May I ask the Deputy Minister a question?

Let me deal with this point first. That greater prosperity is to the advantage of the urban dwellers, as much as to the person in the rural areas who may make more use of those roads.

Will the cities be able to apply to the National Roads Board for moneys from this particular fund?

That is not my province, but as far as I know, the reply is no. However, I may be wrong. This is a question which should be put to the Minister of Transport.

The hon. member for Parktown also put certain questions to me in regard to what the motorist has to pay. I am afraid that I do not have that information at my disposal. However, I want to tell him that the significance of good means of communication, including good roads, cannot be underestimated. I come from a region where one has to cover tremendous distances, but the various parts are linked to one another, and I know that one cannot underestimate what one saves in respect of your vehicle.

The hon. member for Pietermaritzburg District complained about the excise duty on cigarettes and tobacco. As far as I could establish, he did not bring this point home to the tobacco farmer. He did not say that the tobacco fanner would not be able to dispose of his produce. He approached the matter from the point of view of the smoker. He played on the smoker’s feelings a little, so that every time he lights up a cigarette or his pipe, he must remember that he is paying so much more to the Government for what he is smoking. Sir, if one wants to slake one’s political future on that, there is probably not much future for you.

The hon. member also raised the matter of poppies. I think that in this connection a degree of criticism has been levelled at me. Last year I told the hon. member for Durban Point that it was unrealistic not to accept the proposals as they were made at the time. The hon. member can consult my Hansard if he likes and he will see that I said that the ideas expressed here in respect of certain commodities which may possibly be taxed too heavily are on record and are receiving attention. There he now has proof of what I said last year not only in respect of poppies but in respect of various other items as well. The Secretary for Customs and Excise told me that they had gone into the question of poppies and although it was in fact unpractical to separate this from other artificial flowers they nevertheless found that it could be done. Consequently the separation was effected. What on earth is wrong with that now? If it is found that there is a bottleneck which is causing unpleasantness and if it is possible to omit the item without any appreciable results it is done.

As I said last year I hope the hon. members will understand that it is not realistic for me to stand here and accept amendments. However as I said I shall consider all proposals and ideas which are aimed at improvement and bringing relief. Those ideas and proposals will be put through the mill. That is why we have an expert Public Service. That is why we have officials dealing with all these practical problems. After such proposals have been put through the mill and it is found that a suggestion is a sensible one it is implemented.

Mr. Chairman, the hon. the Deputy Minister has accused speakers on this side of the House of playing on the sentiments of consumers. What speakers on this side of the House have been doing is bringing to the attention of this House the hard facts of life as far as sales duties are concerned; the hard facts of having to pay 5 per cent, 10 per cent, 15 per cent, 20 per cent or 30 per cent more for goods. These are hard facts which in many cases cause hardship to people.

I should like to support the amendment of the hon. member for Durban Point who proposed that all the items of sales tax on the schedule should be omitted. I want to support that proposal for rather different reasons from those already advanced. Nearly all the items that are involved in this amendment are those items that were referred to by the hon. the Minister of Finance in his Second Reading speech on the Part Appropriation Bill in February of this year when he introduced these additional taxes amounting to R47 million as an anti-inflationary measure. When these increases in sales tax were announced they were represented by the hon. the Minister of Finance as a measure to supplement those measures already taken by the Government. These were measures taken through the Reserve Bank to control credit and the measures taken by the hon. the Minister of Economic Affairs through hire purchase regulations as anti-inflationary measures. In other words, these increases as announced by the hon. the Minister in his Part Appropriation speech were primarily intended to reduce consumer spending and so to help in the fight against inflation. The fact that in the process of fighting inflation these additional sales taxes would bring in this R47 million to the fiscus, was not regarded by the hon. the Minister in that speech as being very important. It appears to have been regarded rather as a side effect of these proposals. In fact he said that this additional revenue would help the Government to finance its expenditure in a noninflationary manner. Personally, I questioned the merit of the thinking, that if these taxes are taken from the public on the one hand and spent by the Government on the other, they are non-inflationary.

A few weeks after the Part Appropriation speech of the hon. the Minister we had his Budget speech from which it clearly emerged that these increases in sales taxes were being used as part of the fiscal scene to help balance the Budget and that they were necessary if we were to have a balanced Budget this year. My fear now is, Mr. Chairman, that these increases in sales tax have now become part and parcel of our tax structure. Far from being temporary measures designed to fight inflation, they are taxes which are likely to be with us to stay. Though the hon. the Minister gave out that die purpose of these additional sales taxes was to fight inflation, in fact these taxes in themselves are highly inflationary.

They are inflationary first of all because they cannot be regarded as temporary taxes. The Government is using the proceeds of these taxes to finance its spending. Had these taxes been temporary, or had they been seen to be temporary, the effect might possibly have been to induce consumers to delay spending on the items affected by the sales taxes until the sales taxes were taken off. So consumer spending would have been cut down. As it has been more and more realized that these are not temporary but permanent impositions, consumers have begun to realize that they must either pay these taxes or they must do without the goods altogether. In many cases, of course, they have to do without the goods altogether as a result of these taxes.

Secondly, these taxes are inflationary because they embrace such a wide spectrum of articles. They embrace articles from those which are luxuries, right down to non-luxuries or necessities. The housewife or householder has to pay more for such items as crockery, kitchenware, stoves, glassware, electric lamps, electric appliances, cutlery, furniture, bedding, mattresses, paint, wallpaper, carpets, luggage, toys, vacuum flasks and so on. I would say that the items I have mentioned can by no stretch of the imagination be regarded as luxuries. They are necessities, unless we are going back to living a more or less stone-age, primitive existence. It seems to me that, in selecting these items, very scant attention has been paid to the hardships the ordinary man is going to suffer as a result of these taxes. Otherwise less essential items would have been chosen.

Thirdly, these taxes are inflationary because of the manner in which they are applied or levied at source, that is when the goods leave the factory or immediately when the goods are imported. The result is that tills sales tax has a cascading or escalating effect. The consumer is paying more by way of increased prices than the State is getting by way of increased taxes. It seems to me that no attention whatever has been paid, in selecting the items to be taxed, to the effect this cascading might have. There has been no attempt to minimize the effect of this cascading in regard to the choice of the items to be taxed. All the items I have mentioned carry ample and, in many cases, more than average markups tooth at wholesale and at retail levels. These mark-ups are added to the sales tax and are included in the price the consumer must pay for these goods.

I think the public should realize what the position really is with regard to these sales taxes. These taxes are not anti-inflationary taxes, but they are real taxes needed to finance Government spending. They are therefore being applied to necessities as well as luxuries to make sure that the consumer will pay so that the Government will get its money.

Mr. Chairman, I rise to support the amendment moved by my hon. friend, the member for Durban Point, because this was indeed a barren session for the voters of South Africa. I think that the taxpayers have found “Naught for their Comfort”, to quote the favourite book of the hon. the Leader of the House. In considering these proposals before the House today, we are staggered on going through the list, to see the items on which this Government proposes to increase taxation: beer, wine, tobacco, petrol, stationery, a nearly endless list of household requirements, e.g. kitchen hand tools, cutlery, fridges, wall paper and stoves. You can imagine the shattering impact that these taxes will have on the following classes of people: Firstly, the lower income groups, especially those with large families and, secondly, all categories of pensioners, especially our old-age pensioners. Does the hon. the Deputy Minister think that the R3 increase was adequate to cover the increased cost of living? Then there are thirdly the newly married couples who have to put up houses, who have to buy every household requirement, and the bare necessities and, fourthly, there are the large mass of non-Europeans who subsist on or just below the poverty line.

We on this side of the House, have made it clear that we in principle accept a sales tax, but never ever are we in favour of the principle applied by the hon. the Minister, of taxing essentials and every day requirements. I want to plead with the hon. the Minister, even at this very late stage, on behalf of the have-nots and the have-littles in this country of ours, to reconsider his proposals. A little while ago in his reply, he said that it was impossible. However, I should like to point out that in his Budget Speech the hon. the Minister of Finance said that he was expecting R1,4 million in revenue from wine, whereas according to the Estimates it will be R2,4 million. In the case of spirits he said that he was expecting R42 million, but the Estimates show R53 million. He said that R18,6 million will be gained from tax on tobacco but the Estimates now show that that amount will be R23,9 million. Surely it is possible for him to give relief to the poor people.

The hon. the Minister knows full well that a sales tax, if levied on essentials and every day requirements, is a cruel tax, an unfair tax which cripples the lower income groups. The hon. the Minister knows full well, too, that the ultimate absurdity of Government policy is the argument that inflation in South Africa can be curbed through indiscriminate increased taxation. He knows that increased taxation can lead to escalating inflation if the increased revenue is not employed by Government agencies in productive infrastructure improvements.

I want to stress that a people can be pushed only so far and no further. I personally find it gratifying that the revolt of the ordinary people in France against their oppressors which had its beginning in the storming of the Bastille, has its echo today in South Africa in the revolt of the ordinary people against this callous, this arrogant and this oppressive Government, I want to tell you, Sir, that the revolt of the housewives, of the breadwinners, of the young couples of South Africa, is going to culminate in the storming of the polls at the next election, and the voters will smite this Nat Government as Samson smote the Philistines.

Mr. Speaker, I move—

The Select Committee on Public Accounts, 1971, recommended in its Third Report for this year that an amount of R25 207 incurred by the Department of Water Affairs as a liability against its Loan Vote during the financial year 1968-’69, should be regarded as unauthorized expenditure requiring specific Parliamentary authorization. The recommendation of the Committee concerned has been passed by this House. Consequently the only object of this Bill is to obtain the necessary Parliamentary authorization for the spending of the funds. As full particulars of the circumstances which gave rise to the unauthorized expenditure have been given in the Annual Report of the Controller and Auditor- General and in the report referred to above, I do not want to take up any more of the time of this House by elaborating on this matter.

Motion put and agreed to.

Hill read a Second Time.

Bill not committed.

Bill read a Third Time.

Mr. Speaker, I move—

As is customary, this Bill deals with miscellaneous matters affecting the Consolidated Revenue Fund and the Railway and Harbour Fund.

As the various clauses are explained in the Explanatory Memorandum (White Paper) which hon. members have before them, I do not deem it necessary to deal with every clause in detail.

If an hon. member desires more information on some aspect or other, I shall furnish further particulars to the best of my ability.

Mr. Speaker, this Bill is one of the usual end-of-the-session cleaning up Bills. It gives effect to decisions arising out of the Budget. Furthermore it deals with procedural changes which are found necessary from time to time. The hon. the Minister has given us an explanatory memorandum for which we are grateful and which has been of considerable help to us. This year, however, there is one very interesting feature in this Bill. Clause 2 provides for a transfer of R39,9 million from Revenue Account to Loan Account. In no less than five clauses in the Bill provision is made for the borrowing of moneys outside the Republic. Clause 5, for example, deals with borrowing by the Rand Water Board and, a new feature, local authorities, and it asks for authority for the Government to be able to guarantee these loans. Clause 6 deals with borrowings by the South African Railways and Harbours were promissory notes having a maturity of five years have been issued and guaranteed by the Reserve Bank the Government now asks for authority to indemnify the Reserve Bank against any possible losses. I would like to ask the hon. the Deputy Minister to tell us what rates of interest these promissory notes are carrying. Clause 11 deals with the Rand Water Board and it asks for authority for the Rand Water Board to issue bearer certificates, because bearer certificates are far more easily sold on the Continent than other types of certificates. Clause 13 deals with registered stock in the United Kingdom and provides for the transfer of this sock to South African registers. Clause 14, which is a very important clause, provides for a fund to be established so that we can control to some extent the price of South African sureties abroad. It is true, and this is a common procedure in stocks and shares, that when there are too many sellers of a particular stock, you become buyers, and buy them. We do not object to this fund being provided for market operations, but it is an indication of what is happening in regard to our capital requirements. This is so, because two things are apparent from this Bill. The first is that the hon. Minister of Finance is obviously in trouble regarding the funding of his capital accounts from local sources. He is just not able to get the funds he wants from local sources so that he can fund his Capital Account. In future we shall have to rely more and more on overseas borrowings. I am referring to this year. I am talking about loans which are made to the Governments and loans which are made to institutions such as Iscor, Escom, the Water Board and local authorities. We may be borrowing abroad something of the order of R200 to R300 million. What concerns me most is whether we are going to borrow in the best market. We have to watch not only the rates and the terms of loans but today we have to watch the currencies which we are borrowing. Earlier this session I asked the hon. the Minister of Finance whether he was happy to borrow in Euro-dollars. He said “yes”. Prophetically he said, “Of course you know, there might be a revaluation of Deutsche mark or Swiss francs and so on”. This has happened before. Such revaluation has cost us money. At the present moment, our main sources of supply of overseas currency seems to be Germany and France. We also deal with Switzerland, but other sources are becoming available. I understand for instance that Japan is coming into the market as an overseas lender. While it is true that we are getting the best terms we can from local overseas banks, and I believe that some 17 are registered in South Africa today, I would like to know from the hon. the Deputy Minister whether our ambassadors in our embassies abroad are keeping their eye on the gilt market. If we are going to borrow to the extent of R200 to R300 million per year, we have to ensure that we borrow on the best terms. We have to he geared for this, because this then becomes a regular operation. In the past we have borrowed spasmodically in the main. We have borrowed through institutions with whom we have dealt in the past and on terms that have been satisfactory. When we go into the market to the extent that it looks as if we will have to, we are entitled to ask the hon. the Deputy Minister for an assurance that we will be geared to get the best terms in the best currency that the world’s financial markets can offer.

Mr. Speaker, in actual fact the hon. member for Parktown put two questions to me, apart from general observations, to which I want to reply in brief. For example, as far as clause 2 is concerned, I think it is very wise to withdraw as much money as possible from our own resources, for example from the Loan Account, rather than to borrow it. However, when circumstances so require, borrowing must necessarily take place, particularly when it concerns the infrastructure in the present circumstances we are experiencing.

Now, the hon. member asked me what rates of interest were applicable to the loans. Unfortunately I cannot give him a definite reply to this. Actually, it goes without saying that one will look for the most advantageous rates of interest, coupled with other considerations which are associated with such a loan. These will usually be prevailing rates of interest at that level. I cannot give the hon. member a definite reply in this regard.

Then he referred to the part our ambassadors abroad could possibly play in ensuring that the department would receive the best advice which might be available to it there. As far as my experience of this matter goes, I think I may give the hon. member the assurance that as far as they are able to play any part, they actually do so.

Mr. Chairman, this clause gives effect to the announcement that was made during the Budget debate by the Minister of Finance, indicating the increase to be paid as far as pneumoconiosis compensation is concerned. This is a matter which always requires some investigation, in view of the fact that there are persons who are receiving pneumoconiosis compensation, but who are also receiving social pensions which are subject to the means test. In the past, in some of these instances whereby persons were receiving both types of pensions, where the increase of pneumoconiosis compensation came about, it resulted in a reduction in the social and old age pensions, particularly as far as the widows were concerned.

In terms of the clause that is before us, there is to be an increase of R10 per month, in terms of paragraph (a) of subsection (2) of this clause, as far as the widows of deceased miners are concerned. This is applicable to the White persons who are widows and are receiving the extra R10 per month. Previously this amount was R50 per month, and the increase therefore means that there will he an aggregate of R60 per month for this type of widow. However, in the past the hon. the Minister of Mines has indicated, when a previous increase was granted, that it would not in any way affect the means test as applied to the social pensioner. Now, the enhancement of this amount of compensation to R60 per month, of course places the persons who are also receiving social pensions beyond the means test. There are cases where this could result in the widow being worse off, unless the amount of R60 per month is further supplemented, I presume that the hon. the Minister of Mines will be responsible for this particular clause. I should therefore like to ask him whether he can give us an indication whether this new amount of R60, after the increase of R10 a month has been added in terms of this clause, can be further increased in certain cases where persons are in receipt of social pensions. It is possible that some of these persons who were receiving R50 per month were also being paid R15 per month in the form of an old age pension. They were therefore being paid R65 per month, but in terms of the clause as it now stands, there will merely be an increase from R50 to R60 a month in the case of pneumoconiosis compensation payments. Does this mean that certain persons may, in fact, be R5 per month worse off than they were before? I do hope the hon. the Minister can give us an indication whether there will be some means of supplementing this amount of compensation. As the clause now reads, it would appear that there is no means of further supplementing these payments.

There is also the question of what basis should be used for the granting of these increases. Subsection (2) (b) states that the widow of a deceased Coloured labourer whose monthly earnings amounted to less than R24, will be granted an increase of R3, and subsection (2) (c) states that the widow of a deceased Coloured labourer whose monthly earnings amounted to more than R24 per month will be granted an increase of R1 per month. As the White Paper indicates, this will mean that the widow of a Coloured labourer will receive R14 per month after the increase has been granted, and that a widow falling into the higher income group will receive R23 per month. Now my question is: On what basis is this ratio devised, and how is it calculated? The question of the ratio is particularly important, in view of the fact that it is the stated policy of the hon. the Minister of Coloured Affairs to close the gap between the Coloureds and the Whites. It would appear here that the ratio which existed previously is not even being maintained as far as social pensions are concerned. The ratio used to be 4, 2 and 1 for Whiles, Coloureds and Bantu respectively. In fact, when the other pensions have been increased. the ratio will have been maintained at 4 to 2 as far as the Coloureds are concerned, but in this particular instance the increase granted to the widow of a White miner is R10 per month, as against R3 in the case of the widow of a deceased Coloured labourer whose monthly earnings amounted to less than R24, and R1 in the case of a widow of a deceased Coloured labourer whose monthly earnings amounted to more than R24. I should like to know on what basis this ratio is devised, and whether it is the policy of the Government and the responsible Minister to adopt a basis which is at variance with the basis adopted in regard to other pensions, and which is certainly at variance with the statement of the hon. the Minister of Coloured Affairs a few days ago in this House. I do hope that the hon. the Minister can give us some indication as to whether it is also to be the policy of the Government to close the gap rather than widen the gap between Whites and Coloureds, as is envisaged by this clause as it now stands.

Mr. Chairman, hon. members will know that there are three kinds of pensions for the Whites. There was, in the first instance, a pension of R50 per month. Those who were over 60 years of age, obtained R9. Then there is another category which received R65. From the nature of the case one cannot reduce a pension. Those who received R65, therefore, retain that amount.

Do they not obtain an increase?

No, in this case they do not. The anomaly of having these various categories has been brought to our attention. Those who received R50. will now receive R60. In other words, they are obtaining an increase of R10. Those who received R59, will now receive an increase of only R1, as the hon. member also rightly said. This is to place the various categories on a par. I may just say that the overall majority fall into the R50 category, in other words they are obtaining an increase of R10. There is, however, another fact I want to bring to the attention of hon. members. In respect of each dependent child these widows obtain a further R25. This makes their situation quite different from that of an ordinary pensioner. I shall now deal with the position of the Coloureds. I said under my Vote, as did the hon. the Minister of Coloured Affairs, that the gap between the wages and pensions of Writes, Coloureds, Indians and Bantu would be parrowed. Naturally this cannot be done immediately. This was worked out for us by the Department of Social Welfare and Pensions. It was not done by the Department of Mines. Where Coloured workers previously obtained R11, they now obtain R14 per month. But when the monthly earnings of a Coloured labourer amount to less than R24, the widow also obtains R7 in pension for every dependent child. In a case where the monthly earnings exceed R24, they receive a pension of, I think, R11 per month. The R7 pension was previously R6 and the R11 pension was previously R9-25. This matter must be seen in perspective, in other words with respect to the additional amount that is being received in the case where there are dependent children.

The hon. member spoke of a ratio of 4:1. We have never worked on a fixed ratio. No such policy exists. We may do so approximately. However, no policy has been laid down for a ratio between the various earnings.

As close as one can get it.

Yes, as close as possible. I just want to state very clearly that no policy has been laid down to the effect that this must be the ratio between the various race groups. I think this also holds good for what I said when my Vote was discussed, and for what my colleague said. When the gap is narrowed in the future, one does not want to bind oneself to a ratio. This never was the case. and neither is it the case at present.

Does this mean then that these sums that are now going to be voted, are on a temporary basis until the hon. the Minister of Coloured Affairs and the hon. the Minister of Mines can get together to see how the gap can be closed? Is that what I understood the Minister to say?

No. Mr. Chairman. The hon. the Minister of the Interior clearly announced that the Public Service Commission would take care of this colossal task involving the complete calculation of the ratio between White and non-White wages. It is not a matter between myself and the hon. the Minister of Planning. As far as pensions are concerned, the position is static, as hon. members know, up to and including the following budget, if any change were to be effected. The provision is being made in the present Budget. Whether this would apply to the next Budget, I cannot say at all.

I do not know whether anyone has answered the point made by the hon. member for Umbilo, namely the effect it will have on the social pensions. I refer to the question of compensation. From what I understand, the social pensions may drop because of the increased phthisis pension.

It will be supplementary.

Will it be supplementary?

Yes.

Clause put and agreed to.

Mr. Speaker, I move—

Just as was done in the past, an explanatory memorandum has been made available to hon. members, and therefore I shall only elaborate on the more important provisions of this Bill.

Tax rates and rebates:

The tax structure is being changed in two important respects. Firstly, a tax rate is being introduced which will take the place of all the taxes levied on the incomes of individuals up to now, namely normal income tax, provincial income tax and provincial personal tax. Secondly, the existing system of tax rebates in respect of children, dependants, etc., is being replaced by a system of income abatements.

The new tax rate prescribed in the Schedule to this Bill, is as close as possible to the average of the rates applicable in the respective provinces at the moment. The abatements are prescribed in clause 6 of the Bill, and have been explained in detail in the explanatory memorandum. The requirements for allowing these abatements remain unchanged, except as far as the abatement for dependants is concerned. In this respect the taxpayer has to contribute R80 towards the support of the dependant, instead of R60, as it is at the moment. The surcharge on individuals is being increased from 5 per cent to 10 per cent, and a graduated rate for loan levies, which increases in proportion to increases in income and which varies from 12½ per cent to 20 per cent of the tax, is being introduced. Neither the surcharge nor the loan levy will be payable in cases where the normal tax is less than R150, i.e. where, in the case of a married person without children the income does not exceed R2 750, in the case of a married person with two children the income does not exceed R3 650, and in the case of an unmarried person the income does not exceed R1 925.

As a result of the change-over to the system of income abatements, it was necessary to draft a new formula for the calculation of the concessional tax rates applicable to the special remuneration which mineworkers receive as members of proto teams, the remuneration which farmers receive in respect of the disposal of plantations or the damage caused by fire to sugar cane fields, and lump sum benefits derived from certain funds. This new formula is being prescribed in clause 5 (10). In principle it does not differ from the existing formula.

Companies:

The tax rates for companies remain unchanged, but in the case of companies other than gold and diamond mining companies, the loan levy is being increased from per cent to 7½ per cent of the normal tax. In addition to this a loan levy of 7½ per cent is being introduced on income derived in the form of dividends from both South African and foreign companies. In order to prevent any detrimental effect on the liquidity of groups of interlinked companies, inter-company dividends are being excluded from this levy. Although this concession is only meant to assist the said groups, clause 17 of the Bill, which makes provision for this exemption, has been drafted in very broad terms, and any company will be entitled to deduct from its dividend income any dividends distributed in the same year of assessment to other South African companies, but an onus rests on the paying company to ensure that the company to which the dividends are paid, is the real owner of the shares. In cases where uncertainty exists, the exemption should not be claimed. Dividend income is brought into account in determining the taxable income of long-term insurance companies. Accordingly such companies are being exempted from the loan levy on dividends received to the extent to which such dividends are subject to normal income tax. In a case where a dividend is subject to both the loan levy and the South African tax on non-resident shareholders, the latter tax will be allowed as a credit against the loan levy. Clause 50 makes provision for this. It may happen that dividends received by a South-West African company, are subject to the loan levy as well as the South-West African tax on non-resident shareholders. At the Committee Stage I shall move an amendment so that a credit of the tax on non-resident shareholders may also be allowed in such cases.

Unit Trusts:

The unit trusts, which were established in terms of the United Trust Control Act, 1947, and which are for income tax purposes regarded as companies, are also being exempted from the loan levy on income derived in the form of dividends. Consequently it will not be possible for financial companies to deduct such dividends as they may distribute to the unit trusts, from their dividend income for the purpose of the calculation of tile loan levy. The reason for the exemption in the case of the unit trusts, is that they serve only as conduits. They hold the underlying securities in trust for the holders of the unit certificates, to whom the income does therefore accrue. Up to now the unit trusts have been assessed for normal tax on the income they derive in the form of interest, but as a result of representations made to me by the Association of Unit Trusts, it was decided to recognize their conduit function for normal tax purposes as well, and as from the years of assessment ending on or after 1st April, 1971, unit trusts will no longer be assessed on their interest income for normal tax purposes. Legislation in this regard will be introduced next year, with retrospective effect. The unit trusts have undertaken to inform holders of unit certificates about what portion of the amount which they receive from the unit trust as an annual payment, represents interest and what portion represents dividends, and holders of sub-units will have to declare them in that way in their personal returns.

Concession to aged taxpayers:

The Bill also makes provision for several concessions which are granted to elderly taxpayers in the lower income groups, and which I mentioned in my Budget speech. Firstly, persons, married or unmarried, who are over the age of 65 years and whose taxable income does not exceed R5 000, are exempted from the loan levy. In my Budget speech I said that this exemption would apply to persons over the age of 70, but after further consideration I am of the opinion that 65 years—a popular age for retiring on pension—is preferable. Secondly, the deduction in respect of medical expenses for persons above the age of 60 years, is being increased from R150 to R250 in the case of married persons, and from R75 to R125 in the case of unmarried persons. The third concession is a special abatement of R350 for both married and unmarried persons over the age of 60 years. This abatement is reduced by R1 for every completed R10 by which the taxpayer’s taxable income exceeds R1 500, if he is married, or R1 000, if he is unmarried. The effect of this abatement, along with the primary abatement and the medical abatement, is that persons over the age of 60 years are exempted from tax if their taxable income does not exceed R1 590, if married, or R1 069, if unmarried. Under the existing system the exemption limits are R1 500 and R1 000, respectively, but as soon as a person’s taxable income exceeds the prescribed limits, he has to pay tax on his full income. On the new basis this marginal leap is tempered, and the special abatement of R350 is being reduced so gradually that it only disappears at the level of a taxable income of R5 000 in the case of married persons and R4 500 in the case of unmarried persons.

Lump sum benefits:

Lump sum benefits derived from pension, provident and retirement annuity funds, are payable after deducting from them an amount calculated in accordance with a formula defined in the Second Schedule to the Income Tax Act. The amount which is deductible in this way, is limited, on the one hand, to a maximum of R20 000 and, on the other hand, it may not be less than R4 000 in the event of the benefits accruing upon retirement from a provident fund, or R10 000 in the event of the benefit accruing upon death from a pension, provident or retirement annuity fund. Furthermore, the highest average salary of the member over a period of five years, which is brought into account in determining the exempted amount, is also being limited to R10 000. On the recommendation of the Franzsen Commission all these prescribed limits are being raised by 50 per cent.

In order to prevent discrimination against those employees who receive their retirement benefits directly from their employers, the maximum exemption in such cases, for which provision is being made in section 10 (1) (x) of the principal Act, is also being raised by 50 per cent, i.e. from R6 000 to R9 000.

Annuities, legal expenses, entertainment expenses and proceeds under certain insurance policies:

The provisions relating to the following matters are also being amended—

1. (i) the tax on annuities (clause 17 (1) (c), 23 and 26 (b));
2. (ii) the tax on benefits derived by employers under insurance policies on the lives of employees (clause 4 (1) (d));
3. (iii) the deduction of legal expenses (clause 10 (1) (a)); and
4. (iv) the deduction of entertainment expenses (clause 10 (1) (b)).

These amendments are necessary for obtaining clarity and eliminating difficulties experienced in the interpretation of the provisions concerned.

Taxable income from farming:

There are several provisions affecting the determination of taxable income from fanning. Clause 9 (e) introduces an exemption into the principal Act in respect of State subsidies received on interest on mortgages utilized for farming purposes. In terms of the amendments effected by clause 30, the purchase price of livestock purchased for breeding purposes may be written off over four years, instead of 10 years, as is the case at present. As a result of the change-over to the system of abatements, it was necessary to draft a new formula for calculating levelled tax rates (clause 33 (a)), but the principles of levelling remain unchanged.

Industries in the border areas and homelands:

The amendment effected by clause 18, gives effect to two of the recommendations made by the Riekert Committee in regard to tax concessions to industries in the border areas and the homelands, concessions to which in fact I referred in my Budget speech. They are as follows—

1. (i) The tax holiday may be utilized in regard to the industrialists’s income derived from other sources if the undertaking in the economic development area did not yield any profits, and in the case of an undertaking in the homelands it may even be utilized by the parent company if the undertaking is a wholly-owned subsidiary of that company.
2. (ii) The period during which an industry has to utilize its tax holiday, is being extended from five years to seven years, or 10 years in the case of an industry situated in the homelands, which periods may even be extended further in meritorious cases.

However, the amount of the pre-determined tax relinquishment cannot be increased, and at the Committee Stage I shall move an amendment which will eliminate any uncertainty in this regard.

Last year provision was made for investment allowances of 15 per cent and 10 per cent in respect of factory machinery and factory buildings, respectively. In order to retain the differentiation between tax concessions in metropolitan areas and the economic development areas, the maximum investment allowances for industries are being increased in the latter areas from 35 per cent to 50 per cent for machinery, and from 25 per cent to 35 per cent for buildings.

Industrial buildings:

The provisions relating to the depreciation allowance of 2 per cent on industrial buildings, are being amended by clause 13 (I) (a), and from now on this allowance will also be applicable to improvements effected to industrial buildings after 1st April, 1971, notwithstanding the fact that the buildings themselves may not qualify for this allowance, provided that such improvements enhance or improve the capacity of the undertaking. As the Act reads at the moment, this allowance is limited to improvements to buildings which in themselves qualify for this allowance.

Long-term insurance business:

Because of the special nature of long-term insurance business, its taxable income cannot be determined in the normal manner, Consequently investment income is being used as a criterion, and taxable income is considered to be equal to 30 per cent of gross income derived from the investment of long-term insurance funds, with the exception of one-third of the income in the form of dividends. The Franzsen Commission investigated this matter, and are convinced that this basis of taxation combines equity and simplicity. However, the commission is of the opinion that the exclusion of one-third of the dividends from the basis of taxation, tends to stimulate investment in shares as against investment in fixed interest-bearing loans, and that it is therefore desirable to obtain tax neutrality in respect of alternative forms of investment by including in full dividend income in investment income. Furthermore, the commission recommended that, in view of the tendency on the part of certain insurance companies to hold a large portion of their investments in subsidiaries, the tax formula be broadened in order that managerial and secretarial fees received from subsidiaries and other companies in which 10 per cent or more of the ordinary shares are held, may also be included in investment income. Both recommendations were accepted, except that managerial fees received from a subsidiary, the only and main function of which is rendering services to the parent company, are being excluded. However, interest on the loan levy is tax-free, and will therefore not be included in the formula. The necessary amendments are inserted in terms of clause 21.

As the Act reads at present, long-term insurance companies and their wholly- owned subsidiaries are exempt from the undistributed profits tax. The exemption in the case of insurance companies is a sound one, but in view of the marked increase in investments, especially the holding of fixed property through subsidiaries, it is desirable for the exemption in the case of the subsidiaries to be withdrawn so as to ensure that a reasonable portion of the profits of the subsidiaries will flow to the insurance companies and be taxed there. Clause 25 (1) (b) effects the necessary amendment.

Undistributed profits tax:

As hon. members know, the undistributed profits tax is aimed at counteracting the excessive holding hack of profits by companies. At present a distinction is being drawn between public and private companies in the levying of this tax. The former are allowed to plough back 100 per cent of their South African source profits and 25 per cent of their dividends received and foreign source profits. On the other hand, private companies may only plough back 45 per cent of their source profits, both South African and foreign, and no portion of their dividend income. The Franzsen Commission recommended that a uniform undistributed profits tax be introduced on all companies. As I stated in my Budget speech, I concur with the recommendation that the source profits of public companies be brought into the net as well, but I cannot agree to private companies being allowed to plough back 25 per cent of the dividends received. The reason for this is that such a concession will encourage big investors to have their share investments held by private companies. where the dividends received may be hoarded without tax being paid on them. Consequently the Act is being amended so that the tax will be applicable to the total income of all companies. Public companies will be entitled to a plough-back of 45 per cent of source profits and 25 per cent of dividends received, and in the case of private companies the plough-back will be 45 per cent of source profits only. Furthermore, the deduction from distributable profits of expenditure on new factory machinery will be applicable in the case of both public and private companies.

In order to encourage the important search for mineral deposits, a further concession is being made, and companies, both public and private, may reduce their distributable income to 50 per cent by deducting from it the exploration and prospecting expenditure incurred by them, whether directly or indirectly by means of investments in another company. This concession is applicable in respect of exploration in the Republic and such other territories as the State President may approve.

At the moment there is a basic exemption from the undistributed profits tax until such time as the reserves of a company, with the exception of a financial company, has reached the R100 000 mark or an amount equal to 40 per cent of its paid- up capital. This exemption has given rise to tax avoidance. It has been found that companies transfer their undertakings to new companies as soon as their reserves reach the R100 000 mark, and as a result the exemption limit is being reduced to R20 000. The exemption limit of R20 000 is being retained merely for the purpose of eliminating work involved in small assessments.

Reconstruction and amalgamation of companies:

It may happen that a reconstruction or amalgamation of companies in terms of the provisions of section 103bis of the Companies Act, 1926, may imply a loss of tax to the Treasury. In such cases the undertaking or property is transferred from one company (the transferor company) to another company (the transferee company). The former is then dissolved without liquidation, and its shareholders are compensated for the loss of their shares by the transferee company, usually on the basis of the market value of the property acquired. The state of affairs that develops in such a case, is that the transferee company receives no income for the alienation of its property, and if the property is trading stock, the Treasury therefore loses the tax on the taxable profit which would have resulted if that trading stock had been sold to the transferee company in the usual manner. A new section 22A is now being inserted into the Act, and this section provides that in these cases the transferee company must, for tax purposes, bring into account the trading stock it acquires at the price paid for it by the transferor company. It is by no means my intention to discourage the reconstruction or amalgamation of companies, for which section 103bis of the Companies Act makes provision, but I am nevertheless of the opinion that the Treasury should not simply surrender tax which legitimately accrues to it.

Clause 26 (a) makes provision for an exemption from interest tax on non-residents in respect of interest on certain foreign loans used for long-term industrial development in the Republic. At the Committee Stage I shall move an amendment to this clause, in terms of which interest on loans used for long-term development in the mining industry, may also be eligible for this concession.

In conclusion I should like to refer to clause 27, in terms of which the period allowed for rendering annual income tax returns is extended from 30 to 60 days. This is an amendment which will certainly be welcomed by taxpayers and accountants. The other provisions of the Bill are of an administrative nature and have been dealt with fully in the explanatory memorandum.

Mr. Speaker, the hon. the Minister has given us a fairly lengthy explanation of the Bill and of many of its technical details. In addition, we have had the benefit of the explanatory memorandum, for which we thank the Minister, This is a Bill which has many faces. I cannot mention them all, but I want to deal with some of them.

One face attempts to minimize the increase in tax and loan levies in the lower income groups. For example, taxpayers in the Transvaal with two children whose incomes do not exceed R5 500 will face reasonable increases of up to R20 in direct taxation. They will, of course, have to bear the increased sales duties which the hon. the Minister imposed with his Customs and Excise Amendment Bill.

The second face, I suggest, hides itself in shame, because it has broken faith with the taxpayers in the middle and upper income groups. These are the taxpayers to whom the hon. the Minister, in the economic interests of the country made concessions in direct taxation in 1969. The hon. the Minister must not forget that at the same time that he made these concessions in direct taxation, he for the first time imposed sales duties, which brought him in an extra R100 million. This was more than the value of the concessions he had made to the taxpayers.

The third face is a face of ignorance, because this face ignores the current economic climate in South Africa, and retards expansion and production in the industrial sector by reducing the availability of capital. This it does through further taxation and higher loan levies on companies, which now have to face the position where their total taxation and loan levies have risen from 41 per cent of income to 43 per cent of taxable income.

The fourth face is the benign face. It does give some concession to the older taxpayers and taxpayers in the lower income groups. I was glad to hear this evening from the hon. the Minister that he has dropped the age level from 70 to 65 for concessions in the case of loan levies. It is against this background that we now have to consider the Bill in some detail, and this I should like to do after dinner, with your permission, Mr. Speaker.

Mr. Speaker, this year we had a fundamental change in our whole tax system. Provincial income tax and personal taxes have, in terms of the Financial Relations Bill, which we passed this session, now been abolished and instead we have incorporated these and have consolidated them with normal tax. This change makes very little difference to the taxpayer. His position is pretty well as much as it was before. But this is only the beginning of the story. Last year we had a surcharge of 5 per cent on normal tax after the deduction of any rebates. This year the surcharge has been increased from 5 per cent to 10 per cent. Last year we paid the surcharge only on normal tax which then excluded provincial tax; this year we have doubled the surcharge on the new normal tax, which now includes the old provincial tax. We are therefore paying twice as much on a third more. What the position therefore boils down to is that the increase from 5 per cent to 10 per cent is not an increase of 100 per cent but because of the new format of including provincial tax with normal tax, the increase is now 166⅔ per cent. This is what the additional 5 per cent surcharge means. Where you paid R1 surcharge last year you are going to pay a surcharge of R2,66 this year. Then we have the increase from 10 per cent to 20 per cent of normal tax on the loan levy. Fortunately this is a graduated scale from 12½ per cent at the normal tax level of R150 to 20 per cent where the tax is R5 000 or more. But this levy, in exactly the same way as the surcharge, is calculated and payable on the normal tax, that now includes the old provincial tax. Here again we have the situation that when you come to pay maximum tax, you do not pay R2 instead of R1 because of the doubling of the loan levy, but in actual fact you pay R2.66. Another effect of the merging of provincial lax with normal tax is an increase in the non-residents’ tax. It seems to me that in a young developing country like South Africa we should be very wary indeed of increasing taxation for non-residents. We still need the know-how and the knowledge of people from abroad. If you look at the income tax report of April, 1971, one sees on page 46 that according to their calculations, in so far as non-residents is concerned, a non-resident who had a taxable income of R6 000 last year paid R425, but will this year pay R579. On an income of R15 000 per annum he used to pay R2 126, but now he will have to pay R3 102. On R25 000 per annum he paid R5 512 last year and he will now have to pay R7 832. These are considerable increases and it seems to me that this will have a serious effect on overseas investment in South Africa. The net effect of the consolidation of the provincial income tax with normal tax and the increases we have had in the surcharges and in the loan levy, is to change very radically the quantum of the tax incidence and particularly the marginal rate. On a taxable income of R5 000, the percentage increase in the marginal rate is 11.71 per cent. On R8 000 it is 13,51 per cent: on R12 000 it is 15,32 per cent and on R24 000, 17.12 per cent. These increases are never ending. These figures do not take into account another change in the Bill, the change that the hon. the Minister dealt with, the change from rebates to the principle of reducing abatements. We are all taxpayers and we all know that for many years taxpayers have enjoyed these rebates which are deducted from the tax for which they are liable. There has always been a deduction. We have had, for a married man, a primary rebate of R50; a child rebate of R35 for the first two children and thereafter R45 for any additional children; a rebate of R6 for each dependant, which in special circumstances would go up R10 and an insurance rebate which went up to a maximum of R30. These rebates were all deductable without any reduction from the actual amount of tax that was payable. We followed a principle which we have accepted for many years, that irrespective of one’s income or of the amount of tax that one paid, the fiscus recognized that these deductions for children, dependants or insurance were not only logical but desirable. This principle has been completely abandoned and instead we have the system of abatements.

For a married taxpayer we now have a primary abatement of R1 000. We have a child abatement of R450 for each of the first two children and R550 for every additional child, plus a further R100 in any year in which a child is born. We have a dependant’s abatement of R80, which under certain circumstances can go up to R200. Then we have an insurance abatement up to a maximum of R400. These abatements are deducted from taxable income to determine the taxable amount. This is the amount on which tax is payable.

There are two further changes. At present there is a deduction from taxable income for medical expenses whether the amount is actually spent or not. This was a recommendation of the Franzsen Commission. The amount was fixed at R150 for a married person plus an additional amount of R100 in any year that a child is born. At present this abatement is not subject to any reduction whatsoever. And what is happening now? All the abatements, the primary abatement, the children’s abatement, the insurance abatement, the dependants’ abatement and the medical abatement will now reduce by R2 for every completed R10 by which the tax-payer’s taxable income exceeds R5 000. The effect of this change from rebate to reducing abatements varies according to the income and to the number of children of the taxpayer.

They do not want us to have children any more.

With no children, a tax payer starts paying more this year at the income level of approximately R3 000. With one child or two children the level varies. With the block table you get the situation where increases on smaller incomes can be higher than increases on larger incomes. There is actually one case quoted where in so far as the levy is concerned if you have R1 income less you pay R100 levy more. The hon. the Minister knows about it.

Let us take an average case, namely the case of a married man in the Transvaal with two children and see what the situation is this year. On an income of R4 000, a man would have paid R201 last year. This year he pays R226. On R5 000 last year he paid R335; this year he pays R348 On R8 000 he paid R854; this year he pays R926. On R10 000 he paid R1 312; this year he pays R1 499. On R12 000 he paid R1 856; this year he pays R2 241. On R15 000 he paid R2 837, now he pays R3 588. On R20 000 he paid R4 900; now he pays R6 014. On R30 000 he paid R10 708; now he pays R13 000. Here however is the rub: if you have no children, or your children no longer qualify for the child's allowance, there is a much heavier impact. One must not forget that one usually moves into the higher middle income group at the time of life when one’s children have already grown up and no longer qualify for the child’s allowance. This is the group that is being hit. Last year, on an income of R9 000, for a man who had no children or whose children did not qualify him for a rebate of tax, the tax would have been R1 175; this year it has gone up to R1 423. On R10 000 the tax payable was R1 414; this year it is R1 746, which is over R300 more. On R20 000—when we say R20 000 it sounds like an awful lot of money, but when one converts it to the old currency it is only £10 000, which sounds half as much—the tax payable last year would have been R5 020: this year it is going to be R6 041. That is an increase of R1 000. Last year the maximum marginal rate at R28 000 was 66.6 per cent. I see that the hon. Minister called it 66,8 per cent, but my text books say 66,6 per cent. This rate is now going to be 78 per cent. On every rand one is fortunate enough to earn over R28 000, the hon. the Minister is going to take 78 cents. That is not bad! I wish I had a business like that! The hon. the Minister and I discussed this matter in his Budget debate. I believe that he has misunderstood our complaint with regard to this matter.

May I ask the hon. member a question?

Not now. Yet the hon. the Minister’s statement of 1969 on the philosophy of not overtaxing the upper middle and higher income groups still holds good, and if the findings of the Franzsen Commission report are still valid, then the hon. the Minister has made some very wrong calculations. Because it was decided in 1969 that these groups were being overtaxed. The comparison made by the hon. the Minister that the marginal rate of 66,6 per cent at the income level of R18 000 before 1969 compared favourably with 41,8 per cent now is completely meaningless. The whole objective in 1969 was to reduce the income tax of those people who belonged to the middle and higher income groups. It is no good comparing what happened before 1969 with what is happening this year. We must compare what happened post 1969, that is last year and the year before, with what is happening this year. What is happening this year is simple: Before 1969 the marginal rate was too high. The hon. the Minister and the Franzsen Commission said the reason for the reductions was not only based on a regard for the taxpayer, but the reason was, firstly, that the tax was killing incentive. In other words, the taxpayer was not earning sufficient income or the maximum income, which the hon. the Minister could tax. So the hon. the Minister decided to give them that incentive so that he could take it away from them. He said that this was creating tax avoidance. It was indeed creating legal tax avoidance. Everybody was running to a lawyer, accountant or tax expert to try and avoid tax. The hon. the Minister said that this must stop. By this means he would get his tax and everyone would be happy. The high rate was also creating inflation, according to the hon. the Minister. I want to quote what the hon. the Minister said, and I refer to column 3241 of the Hansard of 1969.

Will you also quote what you said at the time?

Yes, I said it was a champagne Budget. I admit that I said that. You gave nothing to the poor people that year. To sum up, we wanted incentive, we wanted no tax avoidance and we wanted to curtail abatement. The hon. the Minister said that we also wanted to do something else, which is still his biggest problem today. The hon. the Minister said (column 3241)—

All the things we wanted to achieve in 1969 have now suddenly gone right out of the window. They are of no consequence anymore.

Harold Wilson would give him a job tomorrow.

The hon. the Minister put the matter right by reducing taxation in 1969. At the same time, of course, he introduced his sales tax which gave him R100 million to balance what he had lost by these concessions. He did not only get back what he lost, but he also got a little more besides. If the hon. the Minister wants to be fair in this matter, he must compare his post 1969 rates with the present rates.

With the surcharge increasing from five to ten per cent, with the doubling of the loan levy from 10 to 20 per cent and with the change from deductible rebates to reducing abatements, we believe that too much is being asked for from the taxpayer. To alleviate this position somewhat, although not in full, we propose to move an amendment in the Committee Stage to increase the point at which the abatements start to reduce up from R5 000 to R10 000. We regard this amendment as being more than reasonable. When the Franzsen Commission suggested the change from rebates to abatements, they suggested that the cutoff point should appear at R6 000, but with the difference that there should be a reduction of not R2 per every R10, but R1 for every R10. This is a big difference. We are taking the middle-course in the hope that the hon. the Minister will see his way clear to accept this proposal. It will give some modicum of relief to the taxpayer, who is being very heavily pushed. Otherwise we are going back to the old days of the bulge, something which we discussed so much here. We are going to remove the incentive the hon. the Minister wanted. We are going back to tax avoidance as fast we can. I cannot understand the hon. the Minister, who spoke so eloquently about his philosophy of 1969, now changing, so to speak, almost overnight.

The most contentious matter we have in this Bill is the question of the proposed 7½ per cent loan levy on dividends received from companies. The hon. the Minister put this right to some extent in his reply to the Budget debate. The Bill clarifies the position further. However, we still do not like it at all. Dividends received are now taxable unless they are redistributed to another company and provided such dividends are income in the hands of the second company. But a company has no legal means of going behind the registers to discover whether the registered shareholders are nominees or not. Nor has it the means to discover, whether in the hands of the recipient company, the dividend constitutes income. It seems to us that to require proof from the taxpayer of something outside his knowledge and outside his legal right to acquire this knowledge, is completely bad in principle.

There is a further point, namely what will constitute acceptable proof to the Minister. I hope the hon. the Minister will tell us, because in the Bill mention is made of ” proof acceptable to the Minister”. I do not believe the hon. the Minister likes this situation any more than we do. I believe that somebody blundered somewhere along the line in this issue. When this idea was originally conceived, somebody had not done his homework properly and I believe that the hon. the Minister with his new proposals is just covering up the situation; he likes it no more than we like it, and I believe that experience is going to show that this thing is not going to work. It is going to be too difficult administratively; it is going to give too many people too much trouble. Fortunately the provisions in regard to this dividend and the taxation of it by way of loan levy will only apply this year, so I hope that we can confidently expect that next year we will not see it again. In the meantime we are going to help the Minister; we are going to move an amendment at the Committee Stage to do away with it now; that will help him for the future. Sir, there are one or two things that I want to clarify.

When will the Committee Stage be taken? When can I have your amendments?

I will let the Minister have them. Sir, the Bill does not indicate the basis of any apportionment where the taxable income of a company comprises source income and dividend income. Are we to assume that this is to be on a pro rata basis in respect of the dividends distributed by the company? Does clause 17 (1) (b) of the Bill mean that the total dividends distributed by a company have to be taken into account, or merely the portion of the dividend attributable to the inclusion of the dividends received? I hope that the hon. the Minister will clarify this point when he comes to reply to the debate.

Sir, there are a few other things that we need to take a look at, and one is this question in regard to insurance policies. Why, if a person leaves a firm and keeps up the payment of the premiums on the policy, should these premiums no longer be deductible as the Act now provides? As long as you stay with the firm, the premiums are deductible, but once you leave, whoever pays the premiums, those premiums are not deductible, but the proceeds of the policy are taxable. Why then are the premiums not deductible?

Then we have a number of provisions regarding development areas and I do not want to deal with these in any detail except to say that we welcome them. We hope that they will work. But there is one issue that concerns us and that is the rights which are given to the hon. the Minister to extend periods of time. I think this is wrong. I think it creates uncertainty again and I think we should have certainty on this issue.

There is another clause, Sir, that deals with legal expenses. The Bill limits, as a tax deduction, only the legal expenses of an action and excludes any other payment that might flow from such action, for example damages. This amendment follows three legal decisions against the Secretary for Inland Revenue. But I question the whole principle involved here that when you have a legal action, which you lose, which is in the interest of your business and which in effect is for the production of your income, only the legal expenses are deductible. The damages, for example, that you might have to pay as a result of the action should also be deductible.

Sir, there is another matter that I want to raise. The interesting thing is that sometimes when you read some of the references in the explanatory memorandum it seems that the hon. the Minister is conceding something. The wording proposed in the one clause reads—

When you read the explanatory memorandum, it would appear that the position is better today than it was before, but of course it is not. The hon. the Minister has lost another case, so now, if you have a policy which you do not pledge, as you had to do before, and it is merely used to obtain credit, you are no longer able to deduct the premiums. There seems to be a running fight going on between the Receiver and the insurance companies, and I am afraid the Receiver is losing out in most of these matters.

Mr. Speaker, I have only a few moments left at my disposal. I want to say “Thank you” to the Minister for the few benefits that have been given. There is one other matter that worries us, and that is the question of pensions. We are going to move an amendment so that the first R1 200 of pensionable income that any taxpayer receives shall be an abatement in the same way as other abatements.

Mr. Speaker, here towards the end of the session the hon. member for Parktown tried to make a last ditch rescue attempt. He tried to do this so as to give this poor, lost, bruised, tattered and confused Opposition a semblance of prestige. However, the attempt he made was a very poor one.

Why do you not reply to his questions?

I shall come to all that if the hon. member would be courteous enough to give me a chance to speak. At the outset the hon. member for Parktown made four statements. I want to mention two of the statements he made. He said that this law of the National Party had four aspects. The one aspect was that of breach of faith and the other was one of ignorance. Now I want to ask the hon. member for Parktown where the United Party gets the right from to talk about breach of faith. He said here that the hon. the Minister and the National Party were committing a breach of faith for the following reason. He said that after the bulge had been ironed out and after sales duty had been introduced and we consequently had a scale, the Minister changed the scale. When did the Minister ever undertake never to change the scale? When did he give the undertaking that he was bound to that scale? Surely he never did that.

Now you have both.

No, the hon. Minister did not change the scale drastically, and this I shall indicate later on. The basic tax scales are still the same, and the Minister did this owing to certain economic circumstances. Let us consider this matter a little further. The Opposition, through its previous speaker on financial matters, the former hon. member for Constantia, asked for the introduction of sales duties. Hon. members will recall the lamentations which went up from the Opposition and hon. members will recall how they asked for sales duty to be introduced. Hon. members will recall that they said that our direct taxation was out of balance. In addition to that they said that there should he more indirect taxation. The Minister said that he would do that, but that he would do so in his own time. Subsequently a commission, the Franszen Commission, was appointed and brought out a report in this connection. A calculation was made and a new scale followed. In this way the bulge in the tax scale was ironed out. Sales duties were introduced, but the day these were introduced, what did that same Opposition say? They then did an about-turn and opposed it on the basis on which it was being introduced.

That is untrue.

No, the hon. members opposed it on the grounds that they wanted to introduce it at the terminal point, and not at the beginning. However, they were basically in agreement with it.

May I ask the hon. member a question? I want to ask the hon. member whether it is correct or incorrect that we accepted the principle that it should be introduced on luxury and durable goods and not on ordinary every-day consumer goods?

The principle was accepted on that side, and when we introduced it, they opposed it. I want to go further. The hon. members no longer accept the principle. Sales duties were not only imposed on the necessities of life, but have been imposed on luxury articles and other articles.

Like soap.

Yes, but it has not been imposed on the necessities of life. I want to go further. The hon. member for Durban Point comes along here today, seconded by the hon. member for Parktown, and moves an amendment to the effect that sales duty should be abolished completely.

Only the increase; not everything.

Get your facts right.

The hon. member's amendment states that it should be omitted from the legislation altogether. That is what I call breach of faith Those hon. members never kept their word, because today they are opposing sales duty. Then the hon. member for Parktown accuses us of ignorance. Who can tell us more about ignorance than that very hon. Party? Are these duties being imposed for the fun of it? Does the hon. member think that the hon. the Prime Minister wants to impose something like this as a joke? Does he not realize that the increases have been introduced in order to save the economic situation in the country? Do those hon. members not realize that we have inflation in this country? No, Sir, when we talk about inflation, they talk about labour.

Just to pay for…

Order! No, the hon. member for Durban Point may not carry on like this. He must give hon. members a chance to make their speeches.

These duties have been imposed for the specific reason of combating excessive consumer spending. That money is being used to create an infrastructure to encourage greater productivity and in that way break the back of inflation. Sir, if the National Party had not taken these steps and had not levied these duties to break the back of inflation in this country, the National Party would have been committing a breach of faith towards the people of South Africa. But it would never do that. It is those hon. members who are committing a breach of faith.

Last year and the year before that we heard those hon. members talking about the man in the street. They shouted and complained about the man in the street and said that he was paying far too many taxes. What happened this year? This year they are concerned about the higher income groups. They are concerned about the rich people in this country. Last year we heard the hon. member for Parktown say that the Minister was soaking the rich. And that was all they were concerned about. I shall tell you, Sir, what they are concerned about. You see, the election is over. They need not talk about the man in the street any more. They must now collect more money for that party. Now the man with the money, is their hero again. Now they are talking on his behalf. That is the great problem. When one takes steps to break the back of inflation, this Opposition tells you: “No, those measures will not work. We can forget about them. The labour pattern must be changed. We must grow more rapidly. We must have more inflation”. When the measures begin to work and inflation is being checked and when there is a cooling-off in the economy as at present, they shout “depression!”. That is their modus operandi.

I want to refer to the hon. member for Parktown. who referred to the amendment he was going to move during the Committee Stage. As I said, he came forward with the old story, to shift the decrease in allowances from the R5 000 income group to the R10 000 income group. Again, he is concerned about the higher income group.

We are worried about the higher income group. That is why we are going to…

This is only one single factor. Why is this tax being increased? Because of a very important principle. Our tax system is based on taxes being paid according to one’s means. Now I want to say that I went and worked out the position of the high income groups. The hon. member for Park town did the ground work before the time. He waved the flag and gave The Argus a statement setting out what he was going to do, so that he could at least catch a few political flies before Parliament rises. In that article he stated that he was going to move this amendment. Let us consider for a moment what this amendment really comprises. I took the example of a married person who has three children, who pays insurance premiums totalling R400 and is entitled to the medical allowance. I worked out what that person would pay under the present Act with an income of R10 000, and what he would pay in terms of the amendment of that hon. member. The hon. member can work it out if he wants to while I tell him what it is. The total deductions which will be deducted from the salary of such a person, if he has three children, is R3 000, which has to be deducted from R10 000. He will then be taxed on R7 000, according to the hon. member’s system. On R7 000 he will pay R820 in tax.

No.

Yes, you can work it out for yourself.

You are quite wrong.

No, I am not wrong; the hon. member can work it out for himself if he likes. Under the present Act he will be taxed at R8 000 because he loses a R1 000 deduction benefit. The tax he will pay under the present Act, will be R1 000. There is therefore a difference of R180, which is an additional amount he will now have to pay in terms of the proposal of the hon. the Minister. Does the hon. member agree with me? Yes, he agrees with me. The hon. member and the United Party are now concerned about the fact that a person who earns R10 000 now has to pay R180 more, that amounts to 1. 8 per cent of his income. That is what hon. members on the opposite side are concerned about. I do not think it is worthwhile kicking up such a fuss about it.

You mean it does not matter?

A man who earns R10 000 or more per annum, can afford to pay that 1,8 per cent of his income for the sake of his country and the strength of his economy. That is what the National Party requires of him and I know he will pay it.

And if he has a family?

Order!

It is very clear to me that the wits of the hon. member for Durban Point are so befuddled that he only follows every tenth word one says. He follows nothing in between, and therefore does not know what is going on. [Interjections.]

Order! I have asked the hon. member for Durban Point to give the hon. member a chance to make his speech, and I hope he shall now do so. The hon. member may proceed.

I want to proceed. I come now to the story of “soaking the rich man”. It is now being said that the poor people who have a high income, are having such a hard time of it. I did not investigate the situation in other countries, but I want to tell the hon. member for Parktown that I will bet him a bottle of whisky any time…

Order!

I withdraw that, Mr. Speaker. The two of us can at any time investigate the situation in any comparable country in the world. I then want to tell him what the well-off man in South Africa can invest and what part of his income will be free of taxation I worked out that there are approximately 12 kinds of investments in state securities, the Bantu Investment Corporation, and building societies where such a person can invest his money. In South Africa a person can acquire a tax-free income of R 17 800. This represents an investment of more or less R277 000. Hon. members can work it out themselves if they want to. Provision is also being made in the Bill for new investments. This is the amount which a well- to-do person in South Africa can invest without paying taxes on it. Now I want to ask hon. members opposite whether the poor rich people are not having such a terrible time of it in South Africa! A poor man cannot invest this amount.

The hon. member also spoke about the loan levy of 7,5 per cent which companies have to pay. In general, companies are usually a problem. They are not only a problem in so far as taxes are concerned in South Africa, but also throughout the world. There is a common interest between the taxpayer and the company itself in regard to company profits. In this country a company is subject to two forms of normal taxation. It is, personally, subject to its own normal taxation, that is the source taxation. Then, too, its dividends are subject to normal taxation in the hands of the taxpayer. But the taxpayer is exempted in respect of dividends from that income to an amount of R2 600 per year. In other words, if one has no other income apart from dividends, one can have an investment of between R30 000 and R32 000, at approximately 8 per cent, and that will give one an exempted income of R2 600 per annum. After that a sliding scale is applied, but whatever one’s income, one will always be exempted in respect of a third of one’s dividend income. Now the Government has a difficult task of ensuring that the profits are properly distributed and that there is no tax evasion by companies. It must also ensure that shareholders receive their dividends. That is why tax in respect of undistributed profits is introduced. I do not want to go into this, but I want to add that dividends paid out to companies are not taxable. Strangely enough, it is virtually only South Africa where that income is not taxable. I think that this is a very sensible step, and I agree with it. In other countries, however, it is in fact taxable.

I also want to agree with the 7½ per cent levy. This is a loan levy which has been introduced in respect of the dividends paid out by companies, provided those dividends are distributed to non-companies. In other words, if the source company makes a profit of R1 000 and it pays R600 in dividends to another company, the 7½ per cent would only be levied on the remaining R400. I want to agree with that. I think that the legislation is very clear, and I do not think the hon. member for Park town ought to have great difficulty in this connection. I think that the Department will be very clear in its actions. I realize that problems can arise as far as nominees are concerned, but I think that the Department will always give the benefit of the doubt. I think that the Minister will deal with that aspect himself.

I should like to mention a few other positive features of this Bill which I find to be important. Firstly, I want to mention the question of the premium bonds, for which provision is being made in this Bill. These are the new premium bonds which are now going to be issued. I really do welcome these premium bonds. In the first instance I want to say that these bonds are now being introduced for the first time. Nor do I think that this will be the end of it. These bonds are aimed at encouraging saving in this country. One invests in them for a period of seven years. Different interest rates apply in regard to them, and an income of R2 800 is exempted from tax. After the seven-year period has elapsed, a premium of 4½ per cent is paid out. The maximum investment one may take out, is R40 000, and on that a premium of R1 800 is paid out, which is equivalent to 4½ per cent. I think that that 41- per cent really represents a growth in one’s capital. This is a method which could be applied by persons who do not invest in fixed property in order to ensure that the decrease in the buying power of their monetary unit is to a certain extent compensated for. I want this evening to say in this connection that I think that this kind of investment will find its place in the economic and the business world. Mortgage bonds, etc., may also be granted on that basis. I therefore want to recommend that if this kind of investment is used in the business world, the premiums on such investments should not be taxable. I think that this will encourage saving tremendously, and in addition I want to recommend that the entire amount, i.e. the capital and the premium should be paid out at the end of the period in one capital amount. This is one of the features of this legislation which, in my opinion, is very important.

I then want to refer to the comprehensive scale which is now being established for the first time and which the hon. member for Parktown also discussed. I think this is a wonderful step toward. Now there is only one scale. We all know what it is and how it works. It is not a matter of having different factors. This facilitates the administration of this matter throughout the country. I think the hon. member for Park town ought to accept it and try to defend it instead of complaining about it.

Then there is the idea of rebates. Hon. members will agree with me that the old methods were incomprehensible to the layman. He did not know how the system worked. Now he does know. For example, if a person has a taxable income of R5 000, then he knows that primarily he receives R1 000 and he deducts this. He knows how much he receives for his children, for insurance and for medical expenses. He deducts those items and the difference is taxable. I think this, too, is a step forward. I think this is a better method and that it should meet with much approval among the people outside. It must be remembered that it is not only accountants and people in practice who work with those things. The man in the street also wants to know how he must work out his tax. This is the easiest method one can find, and it is a step forward.

I note in the Bill that the period in which the tax returns have to be sent back has been extended from 30 to 60 days. I think that this, too, is a step forward. It will facilitate administration and it will also help those people who struggle for hours to fill in their forms. Then there are the steps which are being taken in this Bill to encourage decentralization in the country. This is a great step forward. It is in accordance with the White Paper published by the Government. I just want to mention that the tax reductions in the economic development areas for machinery have now been increased from 35 per cent to 50 per cent. The building improvement reduction has been increased from 25 per cent to 35 per cent. Then there is another very important aspect which is also receiving recognition. It is that factories which are being constructed within a Bantu area also receive these benefits now. The development reduction also applies to that now and it can now be extended from five to ten years. Outside the Bantu area it can be extended from five years to seven years. The most important factor is the fact that the recognition is being given to persons for development, even if they have other income greater than what their industrial profits were. In other words, even if a person has other income over and above the income from the factories, he can be now exempted completely from any normal taxation.

There is another factor which is also very important, and will be to our benefit, i.e. the fact that if a company now constructs a factory within a Bantu area and that factory is a full subsidiary which cannot for some reason or another derive the full benefit, those benefits will apply to the parent company which is established within the Republic. These steps are major steps. It will assist in developing decentralization to great heights. I think that it will encourage the second phase of decentralization, and change the face of South Africa within the next few years.

At the beginning of the session when the taxation measures were announced, we heard from that side of the House how ineffective they were. It was said that they would not help. Now it has been proved that the fiscal measures which have so far been taken have had their effect on the economy. I think that after these new tariffs have come into operation they will have a greater effect and that they will contribute to breaking the back of the present inflation we have within three months so that we can once again continue on a normal level.

Mr. Speaker, the hon. member who has just sat down, suggested to the House that the hon. the Minister’s explanation was quite simple. He said that there was really nothing in the case advanced by the hon. the Minister and that the act was legally understood and quite clear. I would like to suggest to the hon. member that he might explain to us the formula which appears in clause 5. I am quite sure that the hon. member understands it and can give this House a lucid explanation of what it means.

To suggest at the Second Reading of this Bill, that it is simple and easily understood, is wasting the time of this House, I do not suppose that more than a half a dozen people in this House understand the Bill. Taxation is a complicated matter and each year it becomes more so. One of the most difficult matters we have to face is that we find great difficulty in accepting what the hon. the Minister of Finance says. I am not suggesting that the hon. the Minister does not tell the truth. Two years ago the hon. the Minister of Finance suggested that he was taking a new direction with regard to taxation and that, having had the Franzsen Commission report, it was in the interests of the country that there should be a new thinking on taxation. At the time he laid before the House Budget proposals providing for the introduction of sales tax and a considerable lowering of the income tax. In doing so the hon. the Minister raised hopes of all industrialists, professional men and entrepreneurs that, at last, the Government was taking a sensible line and, having had the benefits of the Franzsen Commission report, was prepared to think again with regard to income tax. Indeed we had substantial reductions in taxation. A new formula was applied which gave the country hope. On the conditions indicated by the hon. the Minister that he was prepared to remove the bulge, the House reluctantly accepted sales tax, on condition that the sales tax so accepted was not levied on essentials but only on luxuries. We have seen to our cost what has happened over the last two years. It is not proper to discuss the sales tax at this stage; as far as income tax is concerned, our case is that the hon. the Minister has broken faith. He came to the House with an increased sales tax and, in the interim, with a formula which had the effect of reducing income tax, but we have seen in how far that formula has failed. As the Budget was introduced on the 31st March, and as it is only a fortnight ago that we received the hon. the Minister’s explanatory memorandum and an advance copy of the Bill, we do not agree that the time given for the study of this taxation has been adequate. In the dying hours of the session a complicated taxation has to be considered by many of us while we have not had the opportunity of discussing it at full length with all the persons whom we would like to consult. The hon. the Minister has shown us the courtesy of giving us an advance copy of the Bill and of the explanatory memorandum. Consequently we have had an opportunity of discussing these with his officials, but we have not had an opportunity of making this Bill widely known so that all points of view could be canvassed. Here we have a complicated matter, which was dealt with in detail by the hon. member for Parktown, while the hon. member for Pietersburg dismisses all the details and suggests that the Bill is not a difficult one, that the hon. member for Parktown was unreasonable and that we should also accept the suggestion that the loan levy should be accepted by this side of the House. He said that it was essential and in the interests of the country that we should save money. Who knows best how to save, the individual or the Government? I suggest that, when it comes to saving, the ordinary individual should be able to test himself as to whether he should save and that we should avoid as far as possible compulsory saving.

The report of the Franzsen Commission recommends a system of abatement reducing by 10 per cent of income over a certain level. Paragraph 85 of that report states—

That matter has been examined in some detail by the hon. member for Parktown. The suggested 10 per cent deduction in abatements does not recognize this argument. While the reduction may be fair in so far as the primary abatement and perhaps the insurance and medical benefits are concerned, the policy of the country is to encourage the population growth of the more skilled section of the community. Surely, what we need today is the efforts of the entrepreneur, the efforts of the professional man and the efforts of the managerial class. The very people whom we should be encouraging to earn more are being discouraged from earning more by reason of the tax proposed by the hon. the Minister during this session of Parliament. This Bill discourages big incomes and it discourages people from earning more. It encourages them to take things easily. Too many of our professional men are not doing as well as they might do because the argument is why must they try to earn more while they are discouraged from doing so by the tax authorities. The effect of this is shown clearly in the case which I have before me now. The 10 per cent reduction in the abatement will also have the effect of making the maximum rate of tax unduly harsh. For example, a person paying the maximum rate of tax, namely 78 per cent, 60 per cent plus surcharge of 6 per cent, plus levy of 12 per cent, who in addition loses the R100 in abatements under the final R1 000 of taxable income, will in effect be paying a rate of 85,8 per cent, that is 78 per cent plus 7,8 per cent. Furthermore, with the tax scale, a bulge in the tax rate is being created at a level where a person’s abatements disappear. For instance, if a person's abatements disappear at R16 999 the effective rate of tax payable at that level would be 50,688 per cent, that is 36 per cent plus 3,6 per cent plus 6,48 per cent plus abatements less 4,608 per cent whereas the tax rate at the next level of taxation, R17 000 to R17 999, is only 48,6 per cent. Therefore, the person on an income of below R17 000 is worse off than the person in the bracket of R17 000 to R17 999. It is this fixing of the blocks with different rates of taxation which has had the effect of increasing the taxation in those blocks. Surely, that does not encourage saving. It does not encourage the managerial class to put greater effort into their work because the greater effort they exert, the more they are discouraged from earning more.

We would also like to draw the attention of the hon. the Minister to the donations tax. In his Budget proposals it has been the custom in the past to equate donations tax to the estate duty tax. We should like the hon. the Minister to explain why in this Income Tax Bill there has been no readjustment of the donations tax having regard to the fact that he has already given recognition to adjustments in the estate duty tax. I suggest that this is an oversight on the part of the hon. the Minister. It will have the effect of creating anomalies which will create further difficulties in the tax department.

Then I should also like to refer to clause 9 (b) of the Bill by which it is proposed to amend section 10 (1) (k) (i). The wording of proviso (bb) of clause 9 (b) excludes dividends received by a company for the year ending 31st March, 1972. Is this to be a permanent basis or should the last words “ending on the thirty-first day of March. 1972” read “after the thirty-first day of March, 1971”?

To which clause are you referring?

I am referring to clause 9 (b) in which it is proposed to amend section 10 (1) (k) (i) of the principal Act. We should like to know from the hon. the Minister what the position is with regard to dividends received by companies. The position is not clear with regard to dividends received by companies. There is a per cent loan levy. The Minister expects the loan levy to realize some R20 million. It appears to us that this is going to create anomalies because what is the position with regard to companies which have interests in subsidiary companies and where dividends are passed down the line? Take the case of a dividend in a subsidiary company which is declared to another company in the same group. That company in turn may declare its dividends to the principal company. This could create anomalies because the first dividend could be taxed; the dividend in the case of the second company could be taxed and then the dividend could be taxed again when it comes to the third company. The position is not clear from the Act and it appears to us that, although this is called a loan levy and although it is regarded as a saving, it can in effect be taken out of the pocket of the taxpayer and withdrawn from circulation so far as the country is concerned, and it may amount to a levy on a dividend which has already been subject to the levy. This creates a series of anomalies which has created embarrassment throughout the whole of the commercial world.

We suggest, Sir, that insufficient thought has been given to this and that it is creating difficulties and embarrassment for companies because they do not know how to arrange their dividend policy. They do not know how they stand; they do not know how far this 7½ per cent levy is going to be absorbed between one company and another. These are anomalies which should be cleared up. It appears to us that insufficient time and insufficient care has been given to the incidence of the 7½ per cent levy. I would refer the hon. the Minister also to clause 10 (2) which appears to us to be retrospective legislation which will cause hardship for the companies concerned.

As far as clause 17 (2) (b) is concerned, insufficient thought seems to have been given to this amendment, and in practice it will be found that numerous anomalies and difficulties will arise: (a) How can the taxpayer company prove that the dividends are “income in the hands of such other company”? In practice all dividends paid to another company will be claimed as deductible, but the “taxpayer company” will not know (i) if the shares have been sold ex-dividend by the other company; (ii) whether that company is holding such shares as a nominee for an individual; (iii) who the beneficial owner is in the case of shares registered in the case of “a nominee” company; (b) The Receiver of Revenue will be unable to trace the beneficial ownership of all dividends paid by a company; (c) Unfairness could occur where a private company, which is a wholly owned subsidiary to a public company, makes a bonus issue of shares; (d) It is common practice for most companies only to declare a dividend after their final accounts have been prepared. The suggested legislation could well create hardships. Sir, these and other matters are matters which show the difficulties which have arisen as a result of the Minister’s proposal to impose a 7½ per cent savings levy on dividends declared. This is the first time that this innovation has been introduced. Although the Minister calls it a savings levy, as far as companies are concerned they regard it as a tax. They have to help to provide the funds. As dividends are passed in big conglomerates from one company to another all sorts of anomalies and difficulties can arise. I suggest that this aspect of the income tax proposals for this year has not been given adequate attention by the Minister’s department. The difficulty has been created as a result of the last minute rush at the end of the session to provide a Tax Bill which attempts to implement the hon. the Minister’s Budget proposals, a Tax Bill which does not take into account the many practical difficulties of implementing the Minister’s proposals. Although we are supporting the second reading, we do feel that insufficient time has been given to consider these proposals and that it would be better if the Minister in future could introduce the Bill at least a month earlier than he did this year, This is particularly so when he introduces new principles, new taxes and new proposals. When these new proposals are introduced we find the anomalies in the Bill. the anomalies which add to the Minister's difficulties in subsequent years. Although we support the Second Reading of this Bill, we do it reluctantly because we do feel that taxation proposals which were introduced this year will inhibit enterprise and will discourage hard work in the very section of the community from whom we should expect better efforts.

Mr. Speaker, I would like to add a few remarks to those made by the hon. member for Parktown and the hon. member for Pinetown on the subject of this 7½ per cent loan levy on so much of a company’s income as is derived from dividends. This is a proposal that translates into effect the recommendation contained in paragraph 215 of the third report of the Franzsen commission. This paragraph recommended that the base on which the loan levy is levied on companies should be broadened and it went on to say that the more inclusive base which the commission wished to recommend was taxable income plus dividend receipts, plus capital gains.

This is a proposal that introduces an entirely new principle into the taxation of companies in this country. Previously dividends in the hands of companies have not been directly taxed. They have only been indirectly taxed or taxed as a sort of residual amount in certain circumstances through the medium of the undistributed profits tax. In this context I would like to say that on this side of the House we regard the loan levy as taxation and not as a loan. It is taxation in that it represents a payment to be made by a taxpayer or by a company which that taxpayer or company would not be making unless it was compelled to do so. In that context it must be regarded as taxation. I consider that the reasoning of the Franzsen Commission that the loan levy on dividends in the hands of companies will broaden the base of taxation, is certainly open to argument, open to objection and I think open to criticism. Surely, there is only one base upon which taxation of companies can ultimately rest, and that is the source profits from which the company gets its income, whether it gets that income directly or by way of dividends. Dividends themselves are not original income; they are merely income being transferred in one way or another. The declaration and payment of a dividend is merely a mechanical operation for the distribution of source profits from one ownership to another. Dividends in themselves do not affect the size of the source profits, and therefore they do not broaden the base on which this loan levy can be imposed. In most cases, unless there are source profits, there can be no dividends. In other words I consider that the Franzsen Commission was wrong in suggesting that to have a loan levy on dividends in the hands of companies, would have the effect of broadening the taxation base. It will only expand that base if the dividends received by companies are being received out of non-current source profits, in other words, out of reserves which are past profits, or out of non-taxable profits, such as capital profits. Unless dividends are paid out of those sources, the base on which the loan levy can be imposed, remains the same. All this proposed 7½ per cent levy is doing, is taxing the same source profits at a different and additional stage of their distribution.

I, therefore, disagree strongly with the conclusion of the Franzsen Commission in this regard. I do agree that the base of our income tax and also the base upon which loan levies are imposed, is a narrow one But it is a narrow base not for the reason that the Franzsen Commission deduced; but because we have too few taxpayers. What we need in this country, is to encourage growth of income, so that there will be more income to tax and more taxpayers earning sufficient income to tax. That is how to broaden the base and not by levying this tax at an additional stage of the distribution of the same profits.

In addition to this argument, I consider that this particular loan levy on dividend receipts of companies has very real practical disadvantages. In the first place, it is a costly tax for companies to calculate. In order to ascertain how much they may Set off against their dividend receipts in respect of dividends paid to other companies, they have to find out each time they pay a dividend which of their shareholders are companies and which are individuals. That is not always easy to find out, as other speakers on this side have already said. They have to find out whether the dividends they have paid to other companies constitute income to those companies. They have to find out what the position is in regard to nominee shareholders. It may even require, in the case of large companies, that they will have to keep two separate share registers—one for companies and one for non-companies. Then there is the requirement that, in order to be allowed as an offset, a dividend paid to other companies, must be paid in the same tax year as that in which dividends are received by the taxed company. That creates difficulties for many companies, because businesses like to find out what their profits for the year are before they pay their dividends. In other words, they pay their dividends after the end of their tax year. Having to pay during the same year as dividends are received creates difficulties. All this means additional work at a time when additional work is not needed, and at a time when staff is in short supply and expensive. This is something that we should be avoiding. No tax system on companies is simple, hut there is no excuse for making it more complicated than is necessary.

I would suggest that this imposition of 7,5 per cent on dividend receipts by companies bears unevenly on different types of organizations, and in this regard want to quote two different examples. Let us take a company which operates through a series of branches, like a chain store, each branch of which is an integral part of the company and is not a separate company. The profits made by the branches which are the operating units of such an organization flow to the head office of that organization without any dividend having been paid. That organization, therefore, avoids this impost altogether. But had exactly the same organization formed each of its branches into a subsidiary company, which is an equally usual form of organization, the profits of those subsidiary companies, when they are declared to the parent company, would attract this loan levy. I think it is a fundamental requirement of any tax system that it should be fair and that it should bear evenly on different taxpayers who are in similar circumstances. This proposal does not measure up to that requirement.

Then it is also a tenet of a good taxation system that it does not cause businesses to change their financial structure on account of a particular tax. In my view, there is no question that if this loan levy were to be repeated for the second time, it would be a very strong inducement to holding companies to organize their affairs to minimize inter-company dividend payments. They can obviously do that by concentrating their profit retentions and building up their reserves in the subsidiary companies which produce their source profits. They can do that even under the new undistributed profits tax formula to quite a large extent. The point is. I think, that the proposed loan levy is going to force companies to conduct their financial arrangements and affairs in a way different from what they would normally do, and in the process of doing so no one is going to benefit. They are not going to benefit, and the discus is not going to benefit. I can see no merit whatsoever in this 7,5 per cent loan levy on dividends in the hands of companies. If loan funds have to be obtained in this manner, namely by way of a loan levy on companies—although I would prefer to see them obtained in the open market on a voluntary basis—it would, in my view, be far better to levy the source profits as is already done than to have an import of this nature, I hope that this loan levy is not going to be repeated in future years.

Mr. Speaker, there is another aspect of the tax proposals that worries me, and that is the effect that the proposed tax rates and loan levy rates on individuals is going to have on marginal rates of taxation. Two new factors have been introduced into the tax proposals this year. The first is that there is a rising scale of loan levy, after a certain point, and the second is that there is a sliding scale, sliding downwards, as far as income abatements are concerned. This has the effect of making the marginal rates of taxation very much steeper than they were last year, before these two new elements were introduced into the tax system. For instance, last year the marginal tax in the Cape for a married man with two children, with an income of R5 000, was 13 per cent. It is now 16 per cent. On R10 000 it was 23 per cent and it is now 33 per cent. On R15 000 it was 34 per cent and it is now 45 per cent. On R20 000 it was 45 per cent and it is now 56 per cent. In the top grades it has increased from 67 per cent to 78 per cent. I think that this is an aspect of taxation which will have to be watched very carefully, because we need every incentive in South Africa to ensure that people want to work hard and want to produce more. Human nature being what it is, it is what a person gets out of the next rand or the next R10 or the next R100 of income that has a direct bearing on his inclination to do more work for that additional money. It is the marginal rate of taxation which determines how much a person will receive out of that additional amount. I suggest that the marginal rates proposed in this Bill are too high. In conclusion I want to say that I hope that we are not going to reach the same position which has existed in the United Kingdom, where a surgeon preferred to accept a case of whisky as a donation rather than a fee of 500 guineas for performing an operation.

Mr. Chairman, in the first place I want to join the hon. member for Pinetown in expressing my sympathy that we have to discuss this very difficult legislation this evening, one of the last evenings of the session. I agree with the hon. member that this Income Tax Bill is one of the most difficult Bills coming before Parliament. And this is the case every year. Like various hon. members on the opposite side of this House, I personally do not feel very happy to have to rise and make a speech on taxation matters for the fourth time today.

The hon. member for Pinetown put a question in regard to the late appearance of this legislation, and I want to say to hon. members opposite that my department does everything in its power to table the Bill as soon as possible. The hon. member rightly pointed out that long before the printed copies appeared, I had taken the trouble of providing them with typed copies of the Bill. It took slightly longer for the printed copies to become available. It takes a long time to draft a difficult Bill such as this one. It cannot be drafted before the Budget has been presented. This Budget and this Bill contained a large number of new principles, as the hon. member for Parktown said. It dealt with the provincial taxation and this new taxation, and it contains 27 new amendments. My staff, too, are only human. Although it is frequently suggested that State departments have too many staff members, I do not have an unlimited staff. I want to express my thanks and appreciation to my staff for the way in which they have worked day and night in recent weeks in order to make this Bill available to members of this House as soon as possible. What is more, two members of my staff who were working on this matter, became fairly ill during this time. We work as a machine in Parliament. It is a machine which comes and goes. I hope hon. members will realize that there are also people behind the scenes who have to do the work. They work very hard and they are also subject to human limitations.

The first accusation levelled by the hon. member for Parktown and other members was that the taxation is much higher than in previous years. I would he wrong if I denied that. I admit it openly; the Bill and the tables show it to be higher. I admit that the total effect of this Income Tax Bill is that in this financial year we are going to pay more in income tax and more in loan levy and that companies will pay more loan levy than in the previous financial year. I admit this. But there are reasons for it. The hon. member for Parktown never asked what the reasons for that were. There are good reasons. Do hon. members know that we are saddled with an inflation problem which it is the Government’s task to combat? We believe that inflation is due to excessive consumer expenditure in the country. We shall not argue about this matter now, but this is our belief. The hon. member may consult other experts as well. The hon. member may read the UAL’s “Newsletters” about these matters if he wants to. Hon. members will find it is our belief that the situation is due to consumer expenditure. We have inflation, and monetary and fiscal methods are the only possible methods of relieving us of our inflation. Part of the purpose of the taxation is not to penalize our people, but to see whether we cannot to some extent restrain this excessive consumer expenditure, frequently on unnecessary goods.

Hon. members continually referred to taxation. A large part of the increase we will have to pay at the end of our financial year or at the end of every month or every week, depending on how we are paid, is not taxation, but savings levy. One of the hon. members was very sceptical in this regard. The hon. member probably wanted to suggest that the State would never repay the savings levies. The Act clearly provides that the State may not retain the savings levies for longer than seven years. After that period it must repay them, although it may do so before the time if the Minister deems it fit. This is debt which must be repaid and these are forms in which we are helping the taxpayer to save. I think it is to his benefit that we assist him to save.

The hon. member for Pinetown said to me that we still think we can spend better than the individual. The individual can judge his own personal affairs better than we can. But the individual is part of a community. The individual travels on the roads, the streets and the railways, makes use of our hospitals, schools, universities, harbours and all the public facilities which the Slate has to provide with this money. The individual would not be able to give those things to us. Only the State which can provide these things. Because the State, this Government, must make such generous provision for the infrastructure of its people, we are morally entitled to ask the individual, especially in these times, to make some sacrifice and to give us more in taxation and in loan levies than would otherwise have been necessary.

Hon. members will recall—and no mention is made of this—that to a certain extent we have to make use of this taxation and this loan levy in order to finance our Loan Account. It will be clear to hon. members that under the present circumstances it is not easy for the State to obtain money by way of loans unless it pays high interest rates or grants very attractive loan conditions. Hon. members will understand that to a large extent we had to finance our loan programme from the Revenue Account which is a sound procedure. I readily concede that the taxation is heavier. I sincerely hope that we shall be enabled to reduce these taxes as soon as possible. I hope the hon. members will cooperate with us in all respects in order to help us to behead the dragon of inflation. Once the dragon of inflation has been removed, it will be much easier for us. Then we will have to and will reduce our taxation. It is the wish of all of us to reduce our taxation again once we are out of this very difficult period of over-expenditure in the field of consumption.

The hon. members refer to the high taxation, but not to the benefits which flow from it. They do not say what will be done with the money. I have already mentioned the infrastructure. The hon. members do not mention the benefits and concessions made in this Budget and in this income tax legislation. There are numerous concessions for our lower income groups and older people. The hon. member admitted this, but it is part of the taxation programme.

The hon. member for Pinetown mentioned the block system. It can happen that if a person's income is increased by R1, he may have to pay R20 or more in extra taxation. This is true. In every system of taxation where the block system is applied, it is the case that, if one moves from the one block to the next, one immediately has to pay a large additional amount in taxation. This also applies to our less well-to-do people who, for example, pay R150 in taxation. As soon as they pass beyond one block, where previously they did not pay a loan levy, everything increases. This is part of any block system. My hon. friend should regard the matter from another angle as well. Some people say that a glass is half full, while others say it is half empty. The hon. member must not regard the extra R20 which a man has to pay as being an extra penalty which the State is imposing on him. It is the people who were ahead of him who derived extra benefits from this system. They should have paid higher taxation long ago already, but all these people received the benefit until they came up against the block. Subsequently they had to pay more and the other person paid the rightful taxation.

The hon. member for Parktown and the hon. member for Constantia had a great deal to say about the new loan levy which has been introduced in regard to the 7½ per cent levy on company dividends. They adopted a very critical attitude towards it. They are naturally very critical of any innovation and any new insertion in our legislation, especially where it concerns our tax legislation. There is a levy of per cent on dividends which a company does not declare to another company which will again pay on those dividends. I may just say that, although the hon. member for Constantia does not like it, we have done so on very good authority. The Franzsen Commission, which consisted of some of our outstanding economists and accountants and which was one of the strongest commissions we have ever had, recommended this form of loan levy after very careful consideration. In fact, I know that they did so only after very careful consideration.

Would you accept everything they recommended?

No, I said that they recommended this only after very careful consideration. I know how long they considered this matter. I do not know whether they considered everything like this, but I do know that they decided after very careful consideration that this was one of the methods of obtaining extra loan funds for the State. I now want to put a question to hon. members. The hon. member for Constantia spoke in this direction. Suppose you were in my shoes and needed R20 million and a method, namely the loan levy on company dividends, was suggested to you by one of the select commissions of inquiry. I may just mention that some of these companies are of the richest companies in South Africa. If you either had to use that method or had to levy extra real taxation on individuals or companies, what would you do? As far as I remember, (he hon. member said we should rather borrow money on the open market.

It is better to increase your loan levy in the usual way than to have this new form.

If I understand him correctly, the hon. member suggests that we should rather have increased the loan levy for ordinary companies. At present these companies pay 7½ per cent of their taxation, i.e. 3 per cent of their profits in loan levy. In other words, we should have taxed the source companies more heavily, but these rich companies which transfer millions of dividends to one another, should be free of any form of contribution to the Treasury. This is a choice which had to be made. I wonder what choice those hon. members would in fact have made in this case had they been in my shoes. The hon. members are of the opinion that this system will not work. I just want to mention here that this taxation has been introduced for this year and that it will have to be debated again next year. Next year we shall again take a look at the position. I have introduced this because I hope that next year it will perhaps be possible to delete it from the Statute Book. But, unlike hon. members on that side of this House, I do not believe it will not work. It simply means that every company will pay 7½ per cent on the dividends received by it, except on those dividends which it pays out to another company and which are also taxable.

The hon. members for Parktown, Pinetown and Constantia said that we were going to have many problems. The main problem they envisage is how one would know, when one has paid out a dividend, whether the party to which it has been paid out is a taxpayer. Of course I know it is a problem. I have already said in my speech that this is a concession we are making to other companies. In actual fact we intended to do so only for these chain companies, these pyramid companies. But this cannot easily be provided for in legislation. However, we are now making a concession to the other companies in respect of which these problems arise. I want to say now that in order that this may work, every company must simply ascertain to the best of its ability where that dividend is going, as we often have to do in our legislation. I am sure there will be difficulties, but I am also sure that in the course of the years we shall solve these difficulties and find an answer to those questions.

One of the hon. members spoke about the payment of the dividends and said it was so difficult to decide what dividends you were getting and whether you had to pay them out in the same year. It is not the intention that you must transfer every individual dividend; you should take your dividends as a whole. We are not going to ask you whether you have transferred the dividend you received from X. We are going to take the lump sum you received in the form of dividends in the course of the year, we are not going to ask you where they came from; it is the lump sum which you have to transfer in the course of the year, and this is not the only case; there are many other cases where similar provisions exist in our legislation. To a certain extent those of us who pay tax in advance are in the same position.

The hon. member for Parktown had a great deal to say in regard to the taxation scales, and the hon. member for Constantia also spoke about them. The hon. member wanted me to compare the present position with that before 1969. I shall therefore draw a comparison with the position before 1969, because I have been accused her of having committed a breach of faith. The hon. members levelled a very serious accusation at me, namely that I have gone back to the position which existed before 1969. That is not true.

I said you must not compare the position now with what it was before 1969.

I shall compare it, because in 1969 I reduced taxation considerably, and I gave my reasons for that The hon. members now say that I committed a breach of faith this year by going back to 1969. That is not true. The hon. member has the figures there, and I just want to mention a few of them now: Sir, on an income of R10 000, a person is still R1 063 better off this year than he was in 1969 On an income of R15 000 one is R2 209 better off. On an income of R30 000 one is R3 780 better off, and so I can continue. There still is a tremendous difference between the taxation scales of this Budget and those of 1969. Hon. members must not come and tell me that I have committed a breach of faith, because it is not true. Sir, those hon. members attacked me in 1969, and now they are the pious ones who say that I have committed a breach of faith. They are the people who said: “Mammon making obeisance to the Minister of Finance”; “soaking the rich”, and that sort of thing. Where do they get the right to attack me now? They are not playing the game!

Sir, let us take a look at the effective taxation, and not merely the marginal scale. Let us draw a comparison. My hon. friend referred to the big “bulges” which existed at the time. In 1969, on an income of R7 000, the effective taxation was 16,2 per cent; now it is 11 per cent. On an income of R8 000 it was 19,6 per cent, and now it is 12,4 per cent; on an income of R10 000 it was 25,3 per cent, and now it is 15,3 per cent, 10 per cent lower, and so I can continue. On an income of R20 000 one paid 42 per cent in taxation, and now the taxation is 25,9 per cent—in terms of these scales! I want to point out that there has been a tremendous decrease in taxation.

Sir, may I mention another point with reference to what hon. members said here in regard to taxation in South Africa. I can draw a comparison here between taxation in South Africa and those in other countries of the world; perhaps this will somewhat disillusion hon. members who allege that we are paying higher taxation in South Africa. I just want to mention a few figures to indicate what the position is in America, Australia, New Zealand and South Africa. Take an income of R8 000. In South Africa the taxation on that is R822, in America R1 456, in Australia R2 489 and in New Zealand R3 050, My hon. friend cannot deny that in comparison with the taxation scales in other comparable countries of the world our taxation scales are still exceptionally low.

The hon. member for Parktown spoke about abatements which have now taken the place of tax rebates. The example was mentioned that one received a rebate of R35 for the first two children and a rebate of R45 per child for subsequent children. Those tax rebates were replaced by abatements of R450 per child for the first two children and R550 thereafter. The hon. member thinks this is wrong as well and that a change should be made in this respect. Sir, if the hon. member had calculated what this system meant, he would have found that 97 per cent of the taxpayers of South Africa benefit by it. Ninety-seven per cent of the taxpayers of South Africa benefit by the introduction of the abatement. A man with one child benefits up to an income of R12 000; a man with two children benefits up to an income of R13 000; a man with three children benefits up to an income of R16 000; and a man with four children benefits up to an income of R18 000. If one takes all the taxpayers as a whole, one finds that 97 per cent of them are better off under the new system of abatements than they were under the old system of tax rebates. I want to ask the hon. member: Is this not a case of the United Party making obeisance to Mammon? The poor man, the average man, benefits most under the new system. I can elaborate further on this, but I do not think it is necessary.

The hon. member for Parktown also spoke about the extensions of time which may be granted in the case of the development areas and, in the case of homeland development, of the tax rebates which are granted, and of the power which is given to the Minister to extend the period from 7 years to 10 years. I told the hon. member that an amendment would be introduced which would make the position clear, but let me put it in this way: Suppose a company receives a tax concession of, say, R100 000 which it can earn over, say, ten years; this means R10 000 per year. But suppose we find that for some reason or other it did not succeed in earning its R100 000 over the period of ten years, then the Minister may extend the period until it has earned R100 000, but not more. The Minister does not have absolute power; his power is limited.

The hon. member also referred to the clause dealing with legal costs. As I understand it, the clause means this: One may subtract legal costs and claims against one from one’s taxable income when they are necessary for the production of income. Damages which one has to pay, one may subtract from one’s taxable income when the claim for damages, just as in the case of legal costs, arises from the carrying on of one’s practice or business that one conducts in order to produce income. This is allowed, but there is one thing one may not do; one may not subtract legal costs or damages if they bear no relation to one’s business. For example, if I were a shoe dealer and I insulted some outside person, it would have nothing to do with my shoe dealer business. Those legal costs may not be subtracted, nor may I subtract the damages I have to pay. This is the meaning of this legislation. One may subtract damages provided those damages, like one’s other legal costs, arise from the production of income.

Then the hon. member raised the question of “security of policies”. Hon. members will recall that last year I introduced legislation to prevent companies, where they had insured the life of a director or an employee in case of illness or death, from taking that policy and ceding it and raising loans on it. The premiums are then subtracted as well as the interest which they pay. What has happened in the meantime? In the meantime companies have been borrowing money without ceding the policies. The Act provided “ceding the policy”. They went and borrowed money, using the policy as security, but without ceding it. This is now being amended merely in order to prevent that circumvention of the Act. Therefore it is the same principle which existed previously.

It spreads very widely now.

I am not a lawyer or a legal draftsman, but I shall try to explain this to the best of my ability. If that policy is specifically mentioned as security—it need not even have been ceded—it is not allowed. However, if a company has a full notarial bond on its assets, it is excluded. In that case the person will not be punishable for that. Only when he makes specific use of the policy under a cession or if in some or other way there is a link between the policy and the loan, it is the case, and therefore it is not as wide as the hon. member wants to suggest. The hon. member for Pinetown referred to clause 10, which is of retrospective effect. That is perfectly correct; it is of retrospective effect. This clause deals with the entertainment allowance. The clause provides that an entertainment allowance of R300 is the maximum which may be granted to, inter alia, a director of a company. However, it also provides that an employee may not ask for an entertainment allowance unless the performance of his duties would be impeded if he did not incur that expenditure on entertainment. This measure was introduced in order to restrict the abuse of entertainment allowances. It has become our practice to do this and it is now being laid down by law. It will be applicable from this year already. The hon. member for Constantia discussed the 7½ per cent loan levy in detail. I do not think he added anything, apart from giving a fairly detailed analysis of this 7½ per cent.

There is only one further point I want to raise. The hon. member for Parktown said we were taxing “non-residents”. That is true. In the past, non-residents paid the normal tax, and now they will be paying the provincial tax included in that, as we all do. I do not think this is unfair in any way. The hon. member was perfectly correct in that respect. I think I have dealt with the most important points. I thank the hon. members for agreeing to support the Second Reading.

Mr. Chairman, this clause deals with the question of the abatements. As mentioned during the Second Reading debate by the hon. member for Parktown, we wish to move an amendment to this clause. This clause is one which brings about a new basis of calculation as far as these abatements are concerned. I think one should take into account that, when the Minister moved the Second Reading of the Appropriation Bill earlier this session, he indicated the concessions to be made to aged taxpayers. Here it is significant that the hon. the Minister moved these various concessions which are contained in this clause, and indicated that these concessions would amount to R300 000. I submit that this is a very small concession, indeed, in a Budget of R3 415 million. We have passed the Third Reading of the Appropriation Bill. If one refers to the summary of that Bill, one would see that this concession amounts to merely R300 000. However, we believe that it is important that these people should be encouraged to take some form of employment. We find that in the light of the present position, these people are in fact discouraged from taking any form of employment, due to the fact that if they take employment, the tax for which they would become liable in terms of that employment, together with their pensions, will place them at a disadvantage, whereas if they had not taken employment, they would not have attracted the additional taxation. We believe that these people deserve a concession from the Government. When one looks at the present labour position in South Africa, one immediately sees that there is a vast source of experienced labour which could be encouraged to take employment and to play an active part in the economy of South Africa.

If one looks at the details of this clause and the new basis upon which it shall be calculated on a sliding scale of abatements, rather than the rebates which we have had in the past, one would see that this is a provision which should be of great assistance to the taxpayer; but particularly when one takes into account sections which deal with the abatements, which are special concessions, to those persons over 60 years of age, and when one considers that the position of these people requires special consideration.

The Franzsen Commission in its first report, presented in November, 1968, indicated on page 26 the following —

Here it was dealing with the question of exemptions and made recommendations in regard to specific abatements. The position of these people today is such that they feel, and I and we on this side of the House believe, that they have a very strong case, indeed, they deserve further special consideration. The abatements that are shown in this clause, bring about a situation where their abatements for medical expenses are enhanced. As the hon. the Minister indicated in his Second Reading speech on this particular Bill, these persons would only become liable for tax when their income exceeded R1 590 per annum as far as married persons are concerned.

Now the question arises whether this concession that is being made and which is provided for in this clause is really of any great benefit to these people. We believe that it is important that they should receive this concession. We are grateful that the hon. the Minister has granted such a concession. However, we feel that this provision does not go far enough. We feel that these people, it is true, have received some benefit as the result of their contributions to a pension fund or to a retirement annuity fund, whereby they have enjoyed a benefit as far as the rebate is concerned, or an allowable deduction for such a contribution from their taxable income, which has been taken into account. However, it really amounts to delayed taxation when one takes into account the tax situation when they go on pension and are then drawing the benefits of a retirement annuity or a pension fund. There is a provision in the principal Act under section 10 (1) (g) where certain types of pensions have been exempted as taxable income. I refer to the war disablement pensions, the war veterans pension and the miners’ phthisis pension which are not taken into account as taxable income. The hon. the Minister has taken into account that there are certain types of pension which should not be taxable. We do not say that all pensions should be non-taxable and that it should be allowed under this clause that an abatement can be claimed for that amount for all pensions. We believe that it must be set at a certain figure. We believe that it would be fair and just for this figure to be set at R1 200 per annum. I therefore wish to move the following amendment—

1. (h) an amount of one thousand two hundred rand in respect of any annuity received from any benefit fund, pension fund or retirement annuity fund;

This amendment will have the effect of allowing and taking into account an amount of R1 200 per annum as an abatement which, of course, in terms of the provisions and the system now being adopted, will be on a sliding scale as provided for in this clause. This would entail that an amount of R1 200 per annum would not become a tax-free income derived from a pension in the case of those persons who are in a high income bracket. It would have the effect of tailing off in terms of the hon. the Ministers’ amendment to the Income Tax Act. This is principally aimed at assisting those persons who are receiving small pensions and who would then be encouraged to take some form of employment if they felt that they would not attract taxation which would then make the whole position as far as employment is concerned, hardly worth while. These people would then be able to supplement the labour market and to play their part in the economy of South Africa. We know that social pensions are taxable income and this amendment is for all types of pensions and all benefits received from any pension fund or from a retirement annuity fund. We believe that the group of people who require assistance will be afforded that assistance if this amendment is accepted by the hon. the Minister.

Mr. Chairman, I should like to support the amendment moved by the hon. member for Umbilo. I know it has always been considered by the experts on tax that the proceeds of a pension should be taxable because the contribution is deductible. This has been one of the fundamentals of our tax law for more years than I care to remember, but times are changing. Our basic principles of taxation as they are today are unrecognizable if you compare them with those of 10 or 15 years ago. We used to have “source” as the unimpeachable base of our taxation, but that has been changed over the years. Things are changing all the time, and I think we have to change here as well.

We have been inundated with requests, or complaints, call them what you will, as I am sure members on the other side have, from pensioners. They write to us and contact us and complain about the fact that they are obliged to pay taxes on the pensions they receive. It is a feeling which has become prevalent throughout the land. The hon. the Minister is going to have to give way to it sooner or later. It is just one of those mass movements which has been developing over the years, until today it has reached the stage where everybody is asking for relief in this particular area. I think there is a modicum of reason for relief to be granted, because we are dealing with a socio-economic problem. The hon. member for Umbilo was quite correct when he said that this is stopping people, who can still be gainfully employed, from taking jobs. The pensioner feels that the pension he is receiving today has dropped considerably in value, compared to the value of the money he contributed, which was tax deductible. He is getting less today than he anticipated. It is interesting, I think, to note that this will not affect the pensioner in the very low income groups, because he is protected today to the extent of some R1 600, I think. It will only help him if he goes out and gets a job, which we want him to do. It will not help the very wealthy pensioner, because the abatement is reduced in terms of the Act, but it will help the broad bulk, the middle class, whom, as the hon. member said, we want to help. I therefore support his amendment.

There is a further amendment I wish to move. It reads as follows:

I think we made it quite clear during the course of the Second Reading debate that we felt that the rate of tax had been increased unduly and that the rebates principle had been replaced by the reducing abatement. We felt that something should be done about it. The hon. member for Pietersburg gave one example. If I remember correctly, he spoke of an income of R10 000. and said that the difference between the two cases he mentioned was R1 88. I call him as evidence for my case. He said: “What is R188? It is completely unimportant”. I say this to the Minister: “What is R188? It is unimportant. Give it to the taxpayer”. Let us take one or two other cases. In the case of an income of R8 000, it seems that there will be a tax saving of about R90 to the taxpayer. On an income of R20 000, which is a fairly large income, the difference will be only R400. I do not have the machinery to calculate what it would cost the fiscus if the Minister acceded to our request. I do not know whether the hon. the Minister has the figure, but it has been suggested to me by some income tax experts that it is not likely to cost the Government more than some R5 or R6 million.

Is that all?

Agliotti could pay for it.

Yes, it is a small amount, and it will enable the hon. the Minister to do the things he said he wanted to do in 1969. It will not take away incentives. It will help to stop people working on new schemes to avoid tax. It will create more savings, which the hon. the Minister wants, and generally, without harming the hon. the Minister’s income to any extent, it will do a lot of good for the taxpayer and for the economic position of the country. I commend this amendment to the hon. the Minister.

Mr. Chairman, in regard to the amendment put by the hon. member for Umbilo, I must say that I appreciate the motive behind the amendment. We also have a place in our hearts for the older people, the pensioners, and we appreciate the work they do. We sincerely appreciate the work they do in this time of a scarcity of workers. The hon. member for Parktown mentioned one of the principles of taxation and I can also mention another principle of taxation with which the amendment of the hon. member for Umbilo clashes. There are certain principles of taxation which we must observe in our taxation system. When we depart from these principles of taxation we land in chaos and we do not know where we are. One of the basic systems of taxation is that you tax the quantum of a person’s income, regardless of where it comes from and how it is composed. We cannot say that the one portion is a pension and the other a gift and so forth. If we regard every person as a taxpayer we must be able to assess his total income. That is one principle of taxation, namely that you take the quantum or the total of the income of a taxpayer regardless of the nature of the composition of that taxable income.

Do you not get away from that principle when you offer rebates?

The offering of a rebate is a different matter. We have now changed that to abatement. The hon. member knows that it has been changed.

What about the income of married women?

That is a concession given to married women only in order to help them get employment and not pay extra tax. It is really a form of abatement to married women. I have already told hon. members that we have to do with a principle. Last year and this year we did a great deal for the pensioners and the aged. just think of the R5 000 limit and the R150 tax limit below which they do not pay any savings levy. We have raised the limit of taxation so that a married person does not pay any tax when he earns less than R1 590. An unmarried person on the other hand does not pay any tax when he earns less than R1 068. If we depart from this principle I think we will land ourselves in difficulty.

Then we find ourselves faced with other problems. Supposing you have a pensioner who gets a pension of R1 200 per year. But this pensioner is also in employment and earns R1 800 a year. That makes it R3 000 per year. Why should that pensioner be in a better tax position than a young married couple who earn R3 000 per year? Can the hon. member tell me that? I think the young married couple earning R3 000 per year is more entitled to any accommodation in this regard than the pensioner would be.

The pensioner is offering experienced service…

But a young married man who is working, provides initiative and strength to his department. He is a man with a future and he may have children too. He has a family to support and a house to build up. I think a young married couple deserve better treatment, with all respect, than an aged couple.

You have not thought of excluding both altogether from taxation?

No. In regard to the amendment of the hon. member for Parktown in which he suggests the substitution of R10 000 for R5 000 as regards the abatement system, I am sorry to say I cannot accent. My staff tell me that they have not worked out the effect of this proposal but that it would mean a very great loss to the fiscus. The hon. member himself mentioned the figure of R5 million to R6 million. That is a lot of money to the fiscus. It means R5 million to R6 million for 3 per cent of the people, the higher income group. I have already told the hon. member that 97 per cent of the taxpayers benefit from this abatement system. Now the hon. gentleman wants me to give another R5 million to R6 million to the upper 3 per cent of the country. I shall remember this next time when he attacks me again. I am sorry that I cannot accept the amendment.

Amendments proposed by Mr. G. N. Oldfield put and the Committee divided:

Ayes—34: Bands G. J.; Basson, J. A. L.; Basson. J. D. du P.; Baxter, D. D.; Cillie, H. van Z.; Deacon, W. H. D.; Emdin, S.; Fisher. E. L.; Fourie, A.; Graaff De V.; Hickman, T.; Hopewell. A.; Hourquebie, R. G. L.; Hughes, T. G., Kingwill, W. G.; Miller, H; Mitchell, D. E.; Murray, L. G.; Oldfield, G. N.; Oliver, G. D. G.; Pyper, P. A.; Raw, W. V.; Stephens, J. J. M.; Steyn, S. J. M.; Streicher, D. M.; Sutton, W. M.; Timoney, H. M.; Van den Heever, S. A.; Van Hoogstraten. H. A.; Von Keyserlingk, C, C.; Webber, W. T.; Wood, L. F.

Tellers: R. M. Cadman and J. O. N. Thompson.

Noes—71: Aucamp, P. L. S.; Bodenstein, P.; Botha. H. J.; Botha. L. J.; Botha. M. C.; Botha, P. W.; Botha. S. P.; Botma. M. C.; Coetzee, S. F.; De Jager. P. R.; De Wet. C.; Diederichs, N.; Du Plessis, P. T. C.; Du Toit, J. P.; Engelbrecht, J. J.; Frasmus, A. S. D.; Gerdener. T. J. A.; Greyling, J. C.; Grobler, M. S. F.; Grobler. W. S. J: Hartxenberg. F.; Hayward, S. A. S.; Henning, J. M.; Heunis, J. C.; Hoon. J. H.; Horn. J. W. L.; Keyter, H. C. A.; Koornhof, P. G. Kotzé. W D.; Langlev. T.; Le Grange, L.; Le Roux. F. J.; Loots, J. J.; Malan, G. F.; Malan. I. J.; Marais, P. S.; Martins. H. E.; McLachlan, R.; Meyer. P H.; Morrison. G. de V.; Palm, P. D.; Pansegrouw, J. S.; Pienaar. L. A.; Prinsloo. M. P.; Rall. J. W.; Reinecke, C. J.; Schlebusch. J. A.; Schoeman. B. J.; Schoeman, J. C. B.; Smit, H. H.; Swiegers, J. G.; Van Breda. A.; Van der Merwe, C. V.; Van der Merwe, H. D. K.; Van der Merwe, P. S.; Van der Merwe, S. W.; Van der Merwe, W. L.; Van der Spuy, S. J. H.; Van der Walt, H. J. D.; Van Staden, J. W.; Van Tonder, J. A.; Van Vuuren, P. Z. J.; Van Wyk, A. C.; Van Zyl, J. J. B.; Viljoen, P. J. van B.; Vorster. B. J.; Vorster, L. P. J.; Waring, F. W.; Wentzel, J. J. G.

Tellers: G. P. van den Berg and H. J. van Wyk.

Amendments accordingly negatived.

Remaining amendment put and negatived (Official Opposition dissenting).

Clause, as printed, put and agreed to.

Business interrupted in accordance with Standing Order No. 23.