As this Bill is a hybrid measure, it will now in terms of the provisions of Rule 29 of the Rules relating to Hybrid Bills be referred to the Examiners of Hybrid Bills for report.

Mr. Speaker, I move—

Mr. Speaker, you will recall that a similar motion was introduced by the Hon. the Minister last year, a motion which was opposed by this side of the House for reasons which I need not now go into. However, the House, in its wisdom, then adopted the motion and a Select Committee was appointed. As this motion is aimed at enabling that Committee to proceed with and conclude its business, we shall not oppose the motion before the House today.

Motion put and agreed to.

Mr. Speaker, I move—

I do not suppose that any Leader of the Opposition at any time in the history of South Africa has ever had an easier job in moving a motion of no-confidence than I have this afternoon. It is easy, Sir, first of all, because I am speaking not only for the Opposition but also for an ever-growing mass of the workers of South Africa. It is easy, secondly, Sir, because the Government is in disarray and is piling folly upon folly and making mistake upon mistake. It is parading its ineptitude for all to see. Sir, the hon. the Prime Minister himself seems to be losing control not only of the situation in the country but even of the situation in his own Cabinet.

I have no doubt that in the course of this debate speakers on this side of the House will make reference to many examples of ineptitude and incompetence by this Government. A few examples will suffice for my purposes.

The first concerns the statement made not so long ago by the hon. the Minister of the Interior about the wage gap between Whites and non-Whites in South Africa.

What about Japie?

Sir, that statement was made on Armistice Day, on the 11th November. It seemed to me that it was a wise statement, couched perhaps in unwise terms. The hon. gentleman referred to the necessity of narrowing the wage gap between Whites and non-Whites and pointed out the difference existing between the productivity of the Whites and the non-Whites and gave examples thereof. But, Sir, he indicated that unless living standards were evened out it could cause great damage to race relations in South Africa. Sir, I think there are many thinking South Africans who will agree with what the hon. gentleman says, but he added two exaggerated riders to his statement. The first was that the situation could lead to murder and violence. The second was that the advance of the white workers should be delayed until the standards of the non-Whites could approach theirs. Sir, I think his actual words are interesting. I have them here in translated form. He said this—

Then, after a few more sentences, he went on to say—

If we said that, we would be called agitators.

Speaking at Randburg a few days later …

Why did you leave out the first line in the last paragraph?

I am unaware of it; if the hon. the Minister wants it I can give it to him with the greatest of pleasure—

That is very important.

What about it?

The standard of living is too high.

“Unnecessarily” high.

Speaking at Randburg on the 19th November, the hon. gentleman explained what he meant. He said that he had meant that no large-scale increase in the salaries and wages of the Whites should be considered before the position of the non-Whites had been properly considered. Well, Sir, I think we on this side of the House agree that the gap is too wide. That was one of the things I spoke about at the central congress of the party in Bloemfontein. But, Sir, I do not think we agree with the dire warnings of the hon. the Minister, that this state of affairs could lead to murder and violence in South Africa. I do not think we agree that improvements in the standards of the Whites must be delayed until there has been improvement in the standards of the non-Whites, and I do not think we agree that the living standards of the Whites in South Africa are unnecessarily high. Sir, that I should differ from the Minister is understandable, but that another Cabinet Minister in that Cabinet should repudiate his colleague makes it clear that there is no coherent policy on this matter in the Cabinet and that their thinking on this vital issue is very much at variance, to put it mildly.

Like on everything else.

Sir, the hon. the Minister of Social Welfare, Dr. Mulder, speaking at Meyerton, was asked about his colleague’s sentiments, and he repudiated him in so many words. He explained to Die Burger two days later what he had meant, and he ended his statement with these words—

Well, Sir, if Cabinet responsibility means anything, then I do not believe it is possible for these two gentlemen to stay in the same Cabinet. I think the hon. the Prime Minister should indicate to us which one of the two he supports and ask for the resignation of the other one. Sir, of course the hon. the Prime Minister has been doing some explaining as well. He was asked about this statement at his Press conference last year, and I must say he very neatly evaded the main question concerning the effect of so wide a gap on race relations. He gave a reply on the existence of the gap itself. Sir, I am not going to deal with his reply; he is well able to do that himself, but it led one commentator to suggest that he is in grave danger of misinterpreting the realities of South African society and thereby misleading the public, and another commented that his contention that the wage gap is closing cannot be borne out by available data, though in specific sectors it may be possible.

Sir, it is quite clear that the hon. the Prime Minister does not share the sense of urgency of the hon. the Minister of the Interior. It is not at all clear whether he agrees with the hon. gentleman. But what does come strangely from this hon. Prime Minister is his statement that the Government is in favour of narrowing the gap. It is strange from this Prime Minister, who leads a party which has done more than any other party in the history of South Africa to increase the size of a gap between White and non-White wages in South Africa. What a muddle, Mr. Speaker! What is the policy of this Government in regard to this matter? Where do they stand?

I want to give another example of ineptitude. It is a case well known to this House. I refer to the Agliotti scandal. Firstly, it is well known to everybody in the House what the facts are and it is not necessary for me to refresh the memory of hon. members, but you will know that evidence was given in the course of debates of gross negligence and of inexplicable conduct by certain members of the Public Service. That, Sir, was a considerable time ago and as far as we know Police investigation started in September, 1970. Here we are in January, 1972. All we know is that investigations are still proceeding. I want to ask the hon. the Prime Minister this afternoon whether the Police have completed their investigations to the best of their ability? Have the papers been sent to the Attorney-General? Has the Attorney-General taken any decision on the matter? Has he called for any further information in respect of evidence on particular facts? If, for any reason, the Attorney-General is not going to prosecute, I would like to know from the hon. the Prime Minister what disciplinary steps have been taken departmentally. Lastly, what is the Prime Minister going to do about the poor showing of his Minister in this matter? [Interjections.] I think the public are entitled to satisfactory replies on those matters. I think a failure to produce them will be a further dramatic confirmation of the inability of this Government to control the public purse at all efficiently.

There is a third example of ineptitude with which I want to deal. That has to do with the hon. the Prime Minister himself, i.e. the dramatic statement he made to his Transvaal Congress on 5th of October last year concerning the tragic loss of life of members of our Police on the border in the Caprivi Strip. I am sure, Sir, that here again the facts are well known to hon. members. It will be known to members also that the statement was made on a most important and delicate occasion and that, unusually for the Prime Minister, it was a statement delivered to the Press in writing. Yet that statement was so ambiguously phrased that it apparently misled virtually the entire Press of South Africa, including certain newspapers known for their support of the Government. The hon. the Prime Minister reacted sharply the next day after Hoofstad, an afternoon paper which supports his party, and a large section of the morning Press had put interpretations on his statement which he felt that statement could not bear.

Is that your interpretation? [Interjections.]

The Prime Minister then announced that he was summoning a conference of editors and the chief executives of their papers. Sir, I believe that conference has been held. I believe that apart from the fact that the Press were almost universally unrepentent and remained critical of the Prime Minister it is of no further moment to what I want to say, and not relevant to my purpose any further. But what worries me, and what worries the public, on this issue are the following things: First of all, that a statement as important and as delicate as this one should have been so carelessly drafted as to leave room for ambiguity on the crucial issue of whether our Police had or were crossing the border. That is the first thing that worries me. The second thing is why there was no reaction from the hon. the Prime Minister, or anyone connected with him, or the Police to the special edition of Hoofstad in the very town, Pretoria, in which the congress was taking place, by way of an immediate statement either to the S.A.B.C. or the morning Press to limit, if not entirely to nullify, the damage done by the report in that newspaper. That was the newspaper which had the headline “Terrorists: South Africa crosses Zambian Front”. That was on the afternoon the hon. the Prime Minister made the statement.

A Nationalist scoop!

There is a third thing that worries the public, and worries me too. That is the question of how it came about that even after an interview with the hon. the Prime Minister on the subject of his statement, Die Transvaler, which was represented at the interview apparently by a senior reporter, Mr. Sakkie van der Merwe, could still have published the report the next morning to the effect that the Police had crossed the border. No one can suggest that Die Transvaler deliberately set out to damage the Prime Minister or the Nationalist Party. [Interjections.] Yet, the report in Die Transvaler is perhaps the most irresponsible of them all.

Then there comes another point, a worrying point, a point which I think concerns most ex-servicemen, and it is this: If there was any prospect at all of our men crossing the border in accordance with the doctrine of hot pursuit—and obviously there must have been even if they did not actually do so—is it wise in the interests of the safety of those men to announce this publicly while the operation is taking place and perhaps ensure them of a hot welcome, not from Police on the other side, but from troops on the other side alerted by our own Prime Minister?

Disgraceful!

Those are the questions which are worrying the public. The question which we ask ourselves is: To what conclusion must we come? Must we conclude that the hon. the Prime Minister is incapable of drawing up a simple statement conveying accurately what he means on an important and delicate matter? One cannot accept that, Sir. Or did he make the statement without full knowledge of the situation? Or is he blaming the Press for cashing in on his own recklessness because he did not perhaps appreciate fully what the repercussions of such an action would be? I want to say that whatever conclusion is reached, if such a mess is made of a comparatively minor affair, Heaven help us if we get engaged in any serious clashes under this Government and this Prime Minister.

Hear, hear!

There is a fourth matter which looks as though it may develop into yet another example of ineptitude. I raise it at this moment because I hope the hon. the Prime Minister or the Minister concerned will seek an opportunity to make a statement in the House on the actual situation. It concerns the situation which is developing in Owambo at the present time. We know that there was a strike, we know that the strike has been reported to be settled and we know that there were reports of disturbances followed by a statement from the hon. the Minister of Bantu Administration and Development indicating that there had been instances of arson, bloodshed, intimidation, wilful destruction of property, and damage to the border fence which had resulted in troops being called in. This caused me to call publicly for full information. That was followed by a statement by the hon. the Prime Minister over the radio indicating, in effect, that things were quiet, under control, and that troops were assisting the Police to control intimidators. In effect, he played the whole matter down.

Putting it in perspective.

The hon. the Prime Minister says, “Putting it in perspective”, but having put it into perspective a report came in within a few hours after his statement whereby it was made known that a Police patrol had been attacked by some 60 Owambos, that two policemen were wounded and that two Owambos were killed. That does not sound like peace and calm! There was an unconfirmed report in one newspaper that 110 km of the border fence had been damaged or destroyed. I put it to the hon. the Prime Minister so that he can give us the correct information. The hon. the Minister of Bantu Administration and Development said that so much damage was done that the Police could not deal with it on their own and that they needed the help of the troops.

I did not say that. [Interjections.]

I accept it. The hon. Minister says that he did not say that, but I shall give him his statement in due course.

It is a very irresponsible statement to make on such a delicate issue.

Wait a moment, I think that is the case on the part of these gentlemen. If this report is accurate, it is not the work of a handful of people or a handful of intimidators. In fact, it is difficult to reconcile the statements of the hon. the Minister of Bantu Administration and Development with that of the Prime Minister, who was putting the matter into “perspective”. It seems difficult to reconcile his statement with the report of the attack by 60 Owambos on the Police. Yet this morning we had a report by the Police that approximately 100 Owambos had attacked a Police patrol resulting in four Owambos being killed and four wounded. Furthermore, there is evidence of at least two more murders. There is also talk of armed men keeping children from school and further destruction of property. I want to say to the hon. the Prime Minister and his Ministers concerned that we on this side of the House have a very shrewd idea of the delicacy of the situation in South-West Africa, especially at the present time.

It sounds like it!

Yes, it does sound like it, and I can say an awful lot more, and I will do it if that hon. gentleman does not keep quiet. Quite clearly, there seems to be something much more serious afoot than we have been led to believe up to the present time. What we want to know is what is behind it all. Is this just the aftermath of the settlement of the strike, or is this a deep-seated difference between certain tribes in Owambo and the policies followed by this Government and the present puppet government of Owambo at the present time?

Why call it a puppet government?

Because its powers are so limited and the hon. the Minister knows it. I have spoken of four matters which I believe are serious matters. I believe there are two other issues in the minds of the public which are possibly even more serious. The first of these matters concerns the number of unanswered questions there are arising from the Government’s administration of the vast powers which it has under the law to invade personal freedom. It is a matter which will be dealt with by other speakers.

However, in passing I do want to say one thing to the address of the hon. the Prime Minister. I want to tell him that the over-reaction by himself and his Ministers to criticism by the Opposition on the manner in which those powers are exercised and their inquiries as to what is going on and their attempts to smear the Opposition and the Press making those inquiries as though they were used as part of a communist plot, is not only making himself and his Government ridiculous in South Africa but is also damaging his image overseas as well as any chance he has of dialogue. All he is doing is alarming his friends and comforting the enemies of South Africa.

The second issue worrying the public of South Africa, and one which I propose to deal with somewhat more fully, is the manifest inability of the Government to manage the economy of the Republic either efficiently or in the best interests of the public of South Africa. We all recall with what confidence the hon. the Minister of Finance started the year 1971. He gave us a New Year’s broadcast in which he said—

The hon. the Minister even expressed the hope that the shortage of investment capital would be alleviated in the course of the year to a considerable extent. That, of course, was before the punitive Budget the hon. the Minister introduced only three months later, a Budget which, coupled with the efforts of the hon. the Ministers of Transport and Posts and Telegraphs, put an additional burden of hundreds of millions of rand on the public of South Africa within a few months. The hon. gentleman sought to justify the imposition of certain of those burdens by saying that they would make savings compulsory and reduce consumption. These are both desperate measures, whatever way you look at them.

The pattern of economic events became clearer and more alarming as the year proceeded. By November the picture was plain. We were in a period of fairly intense “stagflation”. This meant that the economy was developing slowly, probably too slowly, prices were going up, the cost of living was soaring, the rand, which had been tied to the ailing dollar, was weaker and had been depreciated by approximately 7 per cent. Furthermore, financiers and businessmen were depressed, as was evidenced by the position on the Stock Exchange. Capital was scarce and expensive. The balance of payments position was critical. Industrialists were hesitant. Despite the hopes of the hon. the Minister, the rate of investment in industry was low. It was reported, I believe reported by Jan Hupkes, that 70 per cent of the businessmen of South Africa hoped for a change of Government. The farming industry was sick. The only advice that we received from the hon. the Minister was that there should be fewer farmers because so many of them were allegedly incompetent and were alleged to be farming uneconomic units.

However, the Government remained more or less unperturbed. It had an excuse, namely that we had developed too fast during the 1960’s and that there should be time for the economy to cool down before we have the next great leap forward. Of course, we had developed, but so had other countries. But when you look at how our standards of living have advanced, what our people are enjoying of the good things of life, then you find that our performance was a very ordinary one. It is reflected in the Reserve Bank statement of September of last year that the standard of living in South Africa rose by about 2,4 per cent per capita per annum. However, do hon. members realize that even Great Britain, the sick man of Europe, was doing better than that? Do hon. members realize that the countries of the Common Market were doing twice as well as that and that Japan was doing four times as well as that? Therefore, our performance was nothing to be proud of and was no excuse for the position in which we had landed ourselves.

However, it seemed as though there were hon. Ministers on the other side of the House who were a little ignorant of how serious the position was becoming. On the 22nd of October we had a statement from the hon. the Minister of Economic Affairs concerning the Government’s import control policy for 1972. He told us that import control for 1972 would neither be intensified nor relaxed. Of course, the hon. the gentleman’s confidence was misplaced. Within two months we not only had vicious cuts in import quotas but, in addition, we had devaluation at the same time.

Not at the same time.

No, not at the same moment. However, they both applied at the same time. Within two months we had devaluation as well which, because of its extent, came as a shock to the public of South Africa.

Sir, I believe that John Citizen has had his suspicions for some time. Between 1968 and 1969 his cost of living rose by about 2,9 per cent, and between 1969 and 1970 it rose by about 5,2 per cent. Between December, 1970 and December, 1971, it rose by approximately 7 per cent. I think that that is what the hon. the Minister of Finance described as the “once only” jump because of the sales tax. Well, I wonder what the jump is going to be this year and where it is going to come from. I know that it is unfashionable in Government circles to mention that inflation at a rate of over 2½ per cent is dangerous. We know it is! Even before devaluation there was inflation in this country, inflation which was dangerous for both the economy and the welfare of every citizen of South Africa.

I know that the reason for rising prices and falling money values differ from country to country. What one must look at is the comparative performances of the countries, the reasons for their performances and future prospects. I have said that South Africa’s record in respect of loss in money value was not at all bad, but that cannot be looked at in isolation. We must look at our living standards and compare them with those of the Western world. In this regard, as I have said, our performance is a poor one. There are too many countries in the world—particularly the Western world— that are enjoying more of the good things in life than we could afford under this Government in South Africa. The growth or fall in living standards is not entirely affected by world economic trends. I think that the countries of the Common Market have shown that. Japan, too, has shown that. Japan decided that she was going to become the most efficient producer in the world of technological products at a price which would enable her to capture a large portion of the world market. When the opportunity came, she set to it with dedication and determination to carry out that objective. She has achieved that objective with enormous benefits to her own people. We have seen the same happening in France, West Germany and in Italy. In none of those countries was the economy tied to and enslaved by an ideology as it is in South Africa.

I do not think that there are many economists of note in South Africa who will deny that separate development has slowed up the economic growth of South Africa. I know that there are some enthusiasts, some fanatics, who believe that the erosion of their living standards or, at best, the impeding of them, is worth while for the sake of unrealistic and impossible racial policies. These people are becoming a smaller and smaller proportion of the electorate of South Africa. I know that the hon. the Minister and this Government will probably point to many other countries that have mismanaged their economies and fared worse than South Africa. I know all about them, but if one has regard to the South African potential, I for one, am not satisfied for us to be compared with fifth rate nations of the world.

You really say that, do you?

I do.

I believe that our problems here are not due to inherent weaknesses in the South African economy. I believe they are due to the ineptitude of our Government and its determination to bind and bend our economy for the sake of an ideology.

I want to say to the hon. the Minister of Finance that a growth rate of 2,4 per cent per capita for a young country like South Africa may satisfy the hon. gentleman, but that I believe it is too dangerous for this Republic. It is dangerous for a number of reasons. First of all, we want to be and also remain part of the Western world, but yet our standards of living are behind those of the Western world. We therefore have a leeway to make up, and unless we develop faster than those countries we are not going to attract immigrants to South Africa. We will also not be able to stop the brain drain or to spend the money needed for defence purposes to ensure our security. We will not become one of the influential economic countries of the world. When I asked myself why this Government has failed, I came to the conclusion that it has failed because it has been incompetent. I also believe it has failed because it does not understand what must be done in a modern industrial and technological society to achieve high growth rates and high living standards for its people. There are a variety of examples of their failure.

First of all, I believe this Government has failed South Africa in respect of education. Education is one of the vitally important assets for development in a modern society. From your educated people you get your skilled people, your technically skilled people, your company executives and your other entrepreneurs. But what has happened in South Africa? We are spending a smaller percentage of our national income on education than we were doing 20 years ago. The percentage has dropped from 3 per cent to 2½ per cent. Despite the fact that we are behind those other countries, we are only spending 2½ per cent of our national income on education, whereas most of the countries of the Western world are spending amounts of up to 6 per cent on education. I am also not always sure that when we do spend that money we spend it on the right type of training. My information is that despite our shortage of semi-skilled, trade and technical people there were, in the whole of the Republic in March last year, only 3 636 Bantu that were receiving technical, trade and vocational training of any kind. This fact gives one some idea of the leeway we have to make up. But despite this leeway what is the Government doing? It is placing restrictions on the use of the manpower which we have available. It is preventing us from forming the most efficient productive teams of White and non-White workers working together to produce for South Africa. In the Witwatersrand-Pretoria-Vereeniging complex, which produces half of the industrial products of South Africa, for example, the maximum number of non-Whites allowed to be employed for each White is 2½—save in locality-bound industries. Within another year it will become two Bantu for every White employee. At the moment the average in industry is 3½. This seems to have found its own level, as one of the most efficient ways of combining White and non-White labourers. This has been denied to industrialists in that vast complex. It is therefore small wonder that we are not as efficient as we should be and that our exports are not competitive on world markets. Any farmer today will tell you that he expects as much from his agricultural labourer as one would expect from an industrial worker. What would happen if our farmers were limited to two Bantu for every white man employed on their farms? They will all be insolvent very quickly, or the price of foods will go up so much that the Government will be out of office in a matter of a few days.

I think the biggest achievement of this Government has been in the inordinate growth of the Civil Service during the years that it has been in office. The hon. member for Hillbrow worked out that in the last ten years our total labour force in the private sector had increased by 44 per cent, but that the Civil Service labour force had increased by 53 per cent. If you project that to the year 2 000, you will find very nearly all our White workers will be employed in the Civil Service, carrying out regulations governing the lives of the rest of the Republic.

The result, of course, is that the Government is spending more and more of the public purse on its own Civil Service and attached services. In the last ten years the amount has increased from 19 per cent to 25 per cent. That has contributed undoubtedly to “stagflation” in South Africa. I have no doubt that that was what was referred to in a speech of our State President in opening Parliament, when he spoke of severe cuts in Government spending. I think most people said “at last!”, and uttered a silent prayer that those cuts would be made in the ideological obsessions of the Government and not in work for our painfully inadequate infrastructure as it exists at the present moment.

You never know what this Government is going to do. We are short of white manpower, and yet it penalizes married women who can give a hand and come to work. After a small abatement, they have to pay income tax at the highest rate applicable to their husbands’ income. Small wonder that less than half the percentage of white women are working in South Africa than in countries like England and the United States of America.

The other trouble with this Government is that its ideas are outdated. It has never realized that prosperity depends on the standard of our white labour force in South Africa. It is when you have white managerial and technical skill combined with black labour that you get prosperity in South Africa. Training takes time. You cannot expect any sudden transformation. But what is happening, Sir? This Government is limiting the impact of white leadership upon the black labour force in South Africa by placing limitations upon the use of that black manpower. I know what the answer of the Government will be. They will say: “Why don’t you take your industries to the border areas? There there are no limitations on the jobs non-Whites can do or on the number you can employ”. No, Sir, but there is no infrastructure either. To build that infrastructure quickly will cost more than we can afford at the present time. They cannot develop those border industries; they cannot develop fast enough to absorb the creative genius of the people of South Africa. What they are doing by limiting the use of labour in our existing industrial areas, is that they are slowing down the growth of those areas as well as the economic development of South Africa. Now, at a time when we need foreign exchange rapidly, when our economy needs an upsurge, the Government which has interfered with industrial development, needs to do something to restore healthy growth. No doubt, it is looking longingly at the example of Australia, where in the sixties they did a lot to restore their economic growth by the export of raw metals from their country. We know we are rich in coal, iron, magnesium and chrome; but at a time when we need to export those minerals most desperately, we limit it by the lack in availability of transport and harbour facilities. We limit it simply because the Government lacked the foresight to make the necessary preparations. In the 1950’s they spent a fairly high percentage of the national income on developing our transport system. In the sixties they slowed down; over the last two years they have woken up again. They have followed a “stop-go” policy. Tragically the opportunity has been lost.

You cannot help asking yourself what the position would have been like in South Africa, how different matters would have been if over the past ten years we had a Government with the know-how, the vision and the imagination to cope with the problems of a modern, industrial, technological society and to plan intelligently for higher living standards and better conditions for all our people. You see, Sir, we did not have it, and now we are paying the penalty. Now John Citizen is having to bear the burden of that incompetence. Now John Citizen, already loaded with those difficulties, finds himself asking what is going to be the effect upon him of the devaluation for which the hon. the Minister of Finance has been responsible. I believe, Sir, that it holds very little cheer for him in the immediate future. In fact, I believe his immediate future is bleak.

What about the long-term future?

I shall deal with that as well. If we had a competent Government, it might be bright, and I am going to deal with that also. I believe that all devaluation can do is to give us a breathing space, but it cannot solve those basic problems that led to the spectacular rises in the cost of living in 1971. I do not believe that devaluation can stimulate South Africa’s economy to the extent it did either in 1933 or in 1949, because conditions are entirely different.

Last year our economy produced less than we were led to expect. It produced less because the productivity of our workers was down on the expectations we had been given. Because that productivity was down we cannot expect quickly to produce more. Again we are likely to find that there will be too much money chasing too few goods, that prices will go up and that the housewives’ lot will become harder to bear than ever. I know what we shall get from this hon. Minister, Sir. We shall be given the sort of advice the hon. the Prime Minister and his economic adviser gave the Housewives’ League when they went to see him.

Let him reply. Why should you reply?

Why should I not reply? You will probably find that I know more about it than he does. I know what the hon. the Minister will be saying. He will say, “You must save. You must not spend so much, because too much spending will force prices up.” He nods his head, Mr. Speaker, but I wonder whether he realizes how difficult it is to save at the present time with the high cost of living in South Africa. I wonder whether he realizes how much savings depreciate under this Government. Already savings depreciate by 7 per cent in a year, and what will it be in the coming year? It is very interesting that he asks us to save. What has he been doing about saving on behalf of the Government? His expenditure was up by 17 per cent last year. That is the example he has set the public of South Africa. That Government expenditure, forced into an economy not producing enough, has been one of the big causes of rising prices in South Africa. Now what will happen, Sir? I shall tell you what will happen. This Minister of Finance will play true to form. He will push taxes up again. He will bring in higher loan levies and he will tell us that in that way we will spend less because we will have less to spend and there will be less inflation. Do you know, Sir, that that is a delusion. That is what the hon. the Minister has been doing for several years. He has been taxing us so that we have had less to spend, and because we have had less to spend and prices have gone up, we could buy less. Nevertheless inflation has continued. It has continued because of the activities of that gentleman and his Government.

Sir, devaluation will not mean only that South African goods are going to cost more. It will also mean a frightening increase in the cost of goods imported from overseas. The average rise will probably be about 12¼ per cent, but do you realize that the increase in the price of goods from West Germany is going to be about 19¼ per cent? For Japanese goods the increase will be in the region of 22¾ per cent. But, of course, that is before the middleman and the importer take their mark-up, so that the man in the street is going to be paying a great deal more than that 19¼ per cent or 22¾ per cent increase from those countries. No, Sir, something else is going to happen. We are going to find that even if the activity of local industries is activated as a result of devaluation, then the costs of production are going to be higher because of the higher cost of imported capital goods; we are going to find that materials will be dearer and that there are going to be increased costs of distribution. Sir, without being pessimistic, I sat down and tried to work out what the effect of this devaluation was going to be on certain sections of the community, and naturally I started with the unfortunate motorist, who is always the Government’s first victim. What is going to happen to him? The cost of motor-cars is going to go up; the cost of spare parts will probably go up; the cost of petrol will undoubtedly go up; the cost of insurance will go up; the probability is that the cost of licences will go up and motoring will become a bigger luxury than ever.

What is going to happen to the farmer? Tractors are going to cost more and other vehicles are going to cost more. Fuel is going to cost more; insurance is going to cost more. I am reasonably certain that fertilizers are going to cost more; transport and freight will cost more, and the housewife will have to pay more as a result.

What about the benefits?

What about the businessman? The businessman is going to have to pay higher wages very soon. His transport costs on land, sea and air are going to go up. It looks as though postal rates are going to go up, in spite of the R64 million jump last year. Already we hear the appropriate noises coming from the Postmaster-General. Everybody in South Africa is going to find that the costs of transport are up, that the costs of travel are up and that the Railways and Airways are running at a loss. The hon. the Minister of Transport is going to be faced with wage demands. The Rates Equalization Fund is not inexhaustible, and before long we will hear that those costs are up as well.

What is going to happen to the ordinary man in the street, Sir? The hon. the Minister of Finance is already taking off him R167 million by way of purchase tax. Have you thought, Sir, what that is going to jump to when the prices of goods go up? Because that tax is levied at source. By the time it gets into the hands of the consumer it is a great deal higher than the tax collected by the Government, and with increased prices what is it going to mean? I believe, Sir, that all we face in 1972 is higher prices, more judgments for debt, increasing problems for the housewife, more insolvencies—and all because this Government is unable to manage the affairs of South Africa.

What is the answer of the hon. the Minister to date? His answer is that he is going to try to soften the blow to the consumer with price control and cracking down on importers, manufacturers, and wholesalers. The hon. the Minister of Social Welfare, the information officer of the Nationalist Party, has called upon everyone to be his own price controller and to report any price increases. You know, Sir, on this side of the House we have some experience of administering price control, and I want to tell the House that there is no more difficult measure to apply than price control. [Interjection.] Yes, we failed; I make no bones about it. We failed despite the fact that we had commerce and industry behind us; we failed despite the fact that they made their staff available to us to assist, and my guess is that this Minister is going to fail as well. He is going to fail not only because it is a difficult measure to apply, but because costs tend to snowball, because the manpower required tends to multiply and because the frustrations connected with it multiply even more. That has been the experience not only in South Africa; it has been the experience elsewhere too. Only a few days ago there was re-published in the Cape Times the quarterly bulletin of the Merchant Bankers, Hill Samuel (S.A.) Limited, a banking house with international experience, as the hon. the Minister knows. What was the burden of that report?—“Attempts by the Government to minimize inflation through price control are doomed to failure. Inflation is likely to run at record levels in South Africa this year”. I said devaluation has only bought us time to set our house in order, and not much time is left. My trouble is that I do not believe that this Government is either able or willing to take the necessary steps to make the proper use of that time. I say that because it has for so long distorted the economy for ideological reasons. The hon. the Minister told us that he was prepared to bend the economy for ideological reasons. They have so consistently and deliberately failed to realize and to exploit to the full our potential of human and natural resources. It lacks the imagination and the vision to embark on any other course at the present time. I believe it has got itself into such a muddle that it can no longer plan for the future. All it can do is to take a series of ad hoc decisions as problems arise. The tragedy is that very often they contradict each other and cancel each other out.

Sir, what should be done to take advantage of devaluation? I am sure I can help the hon. the Minister here. I want to deal with those as short-term suggestions and long-term suggestions. In the short-term there are certain things which I believe have got to be done if we are to have any benefits from devaluation. But even more urgent, they have to be done to prevent devaluation from turning into a disaster. I believe the short-term aim must be to get more goods and services off the production line as fast as possible and as cheaply as possible. That means that the Government has to set about helping the businessman to increase his output. In the present circumstances, with import control favouring the businessman, they limit competition. Under the policies of this Government, what opportunities have the industrialist and the businessman to manoeuvre at the present time? Look what is happening. How much room has the businessman to manoeuvre when credit ceilings are restricting the flow of money for business expansion? Something has to be done about that. Those ceilings must be lifted or removed entirely. Secondly, companies are being deprived of internal sources of finance by inordinately high rates of company tax. Those taxes again will have to be reduced so that business will once again be able to finance themselves through internal savings. Thirdly, leaders in commerce and industries are dragging their feet because the rates of tax are so high that they make more effort and more risk-taking just not worth the gamble. Fourthly, individuals in high income brackets should be encouraged to give of their best and not discouraged by this punitive taxation from expanding and taking risks. Fifthly, exporters upon whose efforts the success or failure of devaluation primarily depends, have been prodded from all sides to give of their best but they are hampered by the absence of any clear Government policy directed at increasing the supply of goods for export at the lowest possible cost to the world markets.

Such as butter? [Interjections.]

Sir, if ever there was an example of incompetence, it is that Minister and the butter muddle. Unfortunately it is not my job to deal with that today. That is a privilege which will be handed over to other hon. members on this side. But may I just say this. I believe that if we are to encourage exports not only must incentives to exporters be realistic, but the whole economy must be reviewed with the aim of encouraging exports-orientated domestic production. Then we are faced with the fact that the level of productivity by workers has fallen. That, Sir, will have to be increased by encouragement, assistance and education. And let me tell you that you will not get it by dragooning and lecturing the worker. South Africa’s pool of savings is being dissipated in wasteful and often unproductive Government expenditure. I believe that Government priorities must be established and that they must be aimed at increasing the efficiency of South Africa’s economic life so that the savings of the people are directed into more profitable channels and enterprises, profitable in the national sense and from the national point of view.

Now, what does this mean? It means simply that the South African economy must be geared at once to expand and to increase the output of goods and services as efficiently as possible. That immediately bumps up against the labour problem in South Africa at the present time, because it hits the ceiling of the shortage of skilled labour and it bumps up against the uncertainties in the availability of non-White labour under Government policy. Now, we know all the old arguments about moving to the border areas. We are, however, dealing with steps that have to be taken in a hurry in an emergency caused by devaluation. Moving factories and getting them back into production takes time and costs a lot of the taxpayer’s money. Therefore, the minds of businessmen have immediately got to be put at rest. They have to be assured that their labour requirements whether in so-called established cities or towns will be met and that there will be no ridiculous time wasting, money wasting and red tape snarled up with the supplies of labour for expanding industries.

I think I can say without any fear of contradiction that unless these basic steps are taken immediately, we are not only not going to get benefits from devaluation, but in 12 months’ time we are going to be in a bigger mess than we are at the present time. And we are in bad trouble already. There is a fantastic trade gap of R1 350 million. The question we ask ourselves is whether this Government is capable of the necessary rescue operations. Is it capable because it bumps up against their non-White policy, a policy they cannot renege because of the rigidity in their attitude towards race. I believe that devaluation under this Government can prove a disaster for South Africa, because unless they are prepared to forego certain aspects of their non-White policy, they will never be able to take the vitally necessary short-term steps to give us the advantage of devaluation at the present time.

Then, Sir, there are long-term steps that have to be taken as well. The first of those is to conserve our resources. We must plan towards conserving and making the best use of all our resources on a national scale. The second thing we have to do is to increase the income earning capacity of our 22 million people. That means that we have to think in terms of the biggest possible home market, a greatly expanded revenue and we have to think in terms of limitless business opportunity to rouse our entrepreneurs with enthusiasm and a spirit of dedication. This is going to mean vastly more expenditure on education, something in which this Government is already falling behind. Do you think, Sir, they could take the necessary steps? It is going to mean vastly more expenditure on non-White education in a manner which is completely contrary to the policy of this Government. The policy of this Government is based on developing tribal peasant economies for the Reserves. It totally lacks the vision that demands a technically and proficiently trained non-White cadre of Bantu to work in the White industries which is so vitally necessary at the present time. In fact, this Government prohibits the training of those people in the White areas. It insists on those trained people being sent back to the Reserves. It is quite clear that even in the long term, if we were to get any advantages from devaluation, this Government will have to change its policies about education, labour the use of labour and about the jobs which can be done by non-White people in South Africa.

It is going to have to revise its taxation system. I can give it lots of advise on that. It is going to have to reshape its Civil Service because only by concentrating the work of the Civil Service on providing efficiently the infrastructure for a flourishing free-enterprise economy are we going to reduce the burden of taxation and are we going to achieve the rate of development which is so vital for South Africa’s economic future. Then there will have to be something else, and that is proper forward planning of our expenditure. A series of priorities will have to be established with careful thought to those projects which will be of the most benefit to South Africa’s economic future. There are too many examples already of lavish projects unwisely conceived and stubbornly pursued despite their obvious incompatibility with efficient long-term objectives.

When it comes to the cutting down of luxury expenditure, I think it is quite clear that the Government’s decentralization policy of border areas for industries will have to be looked at. This is proving an expensive luxury. We are spending many millions of rand on establishing infrastructures in those areas and it could just as well be spent to build an infrastructure to export those raw metals we have in South Africa. This could very quickly bring us vast supplies of foreign exchange and it would mean that we would be building on a sound foundation for the future in South Africa.

We are being faced by another problem which has been caused by this Government. One of the objectives of long-term economic planning has to be the greatest good for the greatest number of the people of South Africa. Not only do we have to have regard to their standards of living, but we also have to have regard to the job creation potential of any long-term economic plan upon which we embark. Tragically we are faced with the following problem: When the Government in its economic development programme fixed on a growth rate of 5½ per cent, it appears to have missed the fact that with that growth rate the unemployment amongst our non-Whites is going to grow. Because of that growth rate we are not going to have sufficient jobs to employ those non-Whites coming forward in search of jobs each year. The figure has been conservatively put at about 11 000 per year. There are those who say that within a couple of years the number of unemployed will reach a quarter million. That is being said because of the degree of unemployment which already exists in the Bantu homelands at the present time. It seems that this situation has arisen because the White population growth has been overestimated and the Bantu population growth has been underestimated and the economic development programme has been planned and geared to fit in with the availability of White skilled labourers.

Another snag is developing at present and that is that even for a growth rate of 5½ per cent, the necessary private investment capital in industry is not coming forward. It is not coming forward because of the uncertainty which has been created by this hon. Minister and his Government. This state of affairs is dangerous in the extreme. The hon. the Prime Minister tells us that the one thing which gives him sleepless nights is the prospect of non-White unemployment. In order to be able to avoid those dangers, we have to grow faster than 5½ per cent per annum. I have pointed out certain inhibiting factors which are preventing the rate of investment in the private sector from reaching the figure which is essential for a growth rate of 5½ per cent. We are not going to reach that target. I do not believe that half-hearted tinkering with the symptoms of our illness is going to be adequate. I believe we have to have a complete revolution in our thinking about the future of this country. It is quite hopeless to confine ourselves to piecemeal target rates in this and that industry. It is absolutely futile. The basic philosophy of this Government is so out of date and so illogical that within its confines no industry and no enterprise in so-called White South Africa has a long-term future. I challenge any economist on that side of the House …

They do not have any.

I challenge any planner on that side of the House to forecast for any industry in the Republic at the moment a realistic growth pattern over the next ten to 20 years, in terms of population growth and income expectations within the confines of Government policy. Mr. Speaker, it just cannot be done. The funny thing is that the Gerdeners on the other side know it. Those people with the same name as the hon. the Minister of the Interior. What did the hon. gentleman warn against not so long ago? He warned that unless South Africa’s rate of development was radically speeded up immediately, there would be no second chance for the country. He said—

There is a warning from the heart of the Cabinet. What does it mean? It means that Black aspirations, Black needs, cannot be ignored any longer without grave danger to ourselves. It means that the necessity to draw upon the skills of those people is absolutely unavoidable. The tragedy is that we are faced with the problem that, I believe, both in the short term and the long term, this Government is incapable of taking advantage of the necessary opportunities it has as a result of devaluation. I believe that, because of its policies, it will get little or no benefit from devaluation. I believe that because of its policies it will not develop fast enough so as to get the long-term advantages of devaluation. When you look at what is happening you realize that we are moving towards disaster with the inevitability of a Greek tragedy. I believe we have to say to this Government today: “If you do not have the imagination, if you do not have the skill and the know-how to make use of this what may be, according to your own Minister, one of the last chances for development in South Africa, then, in heaven’s name, get out and make way for some other people who can.”

Mr. Speaker, in the light of all the predictions we have heard over the past weeks and months, the speech made by the hon. the Leader of the Opposition should be seen as the start of a mighty onslaught which the United Party intends launching on the National Party during the course of this Session. Mr. Speaker, it should be seen as the spearhead of the “mighty onslaught” by means of which, as we have been told, the United Party will cause the walls of the National Party to crumble during the course of this Session. Over the past weeks and months we had to hear ad nauseum how the United Party had changed from the stagnant and dormant party as we had always known it to be. We heard how the United Party had undergone a transformation, a metamorphosis. The United Party we see here before us today, is supposed to be a brand new party, such as we have never seen in South Africa before. Mr. John D’Oliveira recently reported in The Argus that Senator Horak had allegedly said the following—

However, Mr. D’Oliveira is careful, for he says, “Almost everything will have been said before on countless occasions.” Now, here we have a new Opposition which has been revitalised, which has been rejuvenated. They are “ebullient and self-confident”. The Oxford Dictionary does not have enough terms to describe the excellence of this Opposition. These self-glorification tactics of the Opposition remind one of the “great brag” at intervarsities. The difference is, of course, that it is perfectly in order for young students to have that “great brag”, but not for adults who are ready to unseat the Government. At first these airs they were giving themselves, this swaggering we have witnessed during the past year, this bravado of the Opposition on the other side, were things we found amusing and funny. After a while they became rather boring. I can assure the hon. House that this swaggering of the Opposition is gradually becoming downright distasteful. Psychiatrists have an explanation for this phenomenon. According to them the phenomenon of a person who pretends to be so big and strong, is indicative of a person suffering from an inferiority complex. Since this Opposition has now been sitting in the Opposition benches for 24 years and does not stand a chance of getting into power, we can understand there being an inferiority complex manifesting itself in the phenomenon of a superiority complex.

Really, what a brilliant reply this is!

It is strange, Mr.

Speaker, that when an election is at hand there is no trace of that superiority. Recently we had two elections, one of which was a provincial by-election in Gezina …

And Kensington.

Kensington was not our seat. [Interjections.] We did not go about bragging that we wanted to shake up the whole country. The people sitting over there are the ones who did not have the courage to put up a candidate in Gezina, a workers’ constituency. They had the opportunity of doing so at Brakpan on the East Rand. For a long time they hesitated before deciding whether they would put up a candidate there. When they had done so, they started complaining about all the difficulties they encountered there. After they had complained about the difficulties they encountered there, a further complaint of theirs was that the Herstigte Nasionale Party had also put up a candidate there. [Interjections.] Then the leader of the Transvaal said that the Nationalists should record a “vote of protest” against the National Party. In doing so they made the blatant admission that the Nationalists would not vote for or join the United Party on grounds of policy. He said that, if they had to vote, they would vote against the National Party out of protest. I know that it is not in the nature of the hon. the Leader of the Opposition to be as boastful as his party is nowadays. Instead of following their example, he had a very hard time in making this speech. The hon. the Leader came forward with the same old topics as always, in the same manner and tone, with the same variety and with the same lack of concrete, positive policy. We were told that today and on this occasion the Opposition would concentrate their attack on economic questions in particular.

We have to talk economics sometimes, you know.

I just want to warn hon. members opposite that this is dangerous. [Interjection.] The hon. member for South Coast will remember the predictions his party made in 1948, viz. that the National Party would only survive for six months and that the economy would then cause its downfall. Since then the National Party has become stronger and stronger. Similarly, the economy has become stronger and stronger. Hon. members opposite also know what happened at the beginning of the sixties, when South Africa left the Commonwealth. At the time the United Party said that within a few months South Africa as a country would be virtually insolvent. However, what did happen? In spite of what the hon. the Leader had said, the sixties proved that economically South Africa experienced one of the most brilliant periods in its history.

Now I want to discuss in brief the economic situation, with special reference to the devaluation of the rand. I think that in doing so I shall show that the hon. the Leader of the Opposition is under quite a number of absolute misapprehensions, and is deliberately or wilfully trying, through these misapprehensions, to create a wrong impression with the public. The Opposition know what harm they are doing the country through this exaggerated criticism against the economy of South Africa. I want to know now whether they know what harm they are doing by, firstly, trying to create domestically a psychosis of uncertainty in the economy of South Africa, and, secondly, creating here an atmosphere of uncertainty, reluctance and doubt. Instead of helping to solve problems in times that are difficult for South Africa, they are intensifying South Africa’s problems through their propaganda.

We are telling the truth.

Order! Is the hon. member for Rosettenville insinuating that the hon. the Minister is not telling the truth?

No, Sir.

The hon. the Minister may proceed.

In the past many methods were employed to unseat the National Party, but all those methods failed. Now, in these critical times, the United Party is trying to use the economy of our country in an attempt to give the country a new government. For this reason we find within the country today a Press which is being employed to criticize at times the economy of South Africa in the most extravagant terms. We find young reporters who know absolutely nothing about the economy, but who claim to themselves the right to tell us how we should govern the country.

Rapport.

Whether they are in the employ of Rapport or the Rand Daily Mail, or wherever, does not matter. However, there are young people who think they have a monopoly of wisdom. As far as countries abroad are concerned, these reports are often transmitted. For instance, a certain Mr. Hatton of Johannesburg wrote a report which was published abroad in the Financial Times and which was solely aimed at making it difficult for South Africa to negotiate loans in countries abroad. It cries to high heaven to read such reports in these difficult circumstances in which South Africa finds itself today. However, let us look at the economy and see where we stand today as seen from the point of view of the hon. the Leader of the Opposition. In the first place, it is clear that after the National Party had assumed the reins of government in this country in 1948, there followed two decades of economic growth such as had seldom been seen in the history of South Africa. It is being acknowledged throughout the length and breadth of the world that during this period of at least two decades economic growth in South Africa was such as had never been the case before, and that economically and industrially South Africa was placed on the world map. If perhaps hon. members do not believe this, I want to hold up to them a document which was not written by me, but by Union Acceptances Ltd. …

Five years ago.

No, it was not five years ago; these are the figures for 1969. But, whether or not it was written five years ago, we are now referring to the National Party’s first period of office, from 1948. [Interjections.] The hon. the Leader of the Opposition says that we are not capable of governing, and here I am in a position to quote proof furnished by Union Acceptances Ltd. and many other people that during the first 20 years of National Party régime South Africa grew more rapidly than did any other country. [Interjections.]

Order! I want to appeal to hon. members to give the hon. the Minister a chance to make his speech and not to persist in making a stream of interjections. The hon. the Minister may proceed.

I quote—

That is what the hon. member referred to a moment ago—

The hon. the Leader of the Opposition compared us with fifth-rate nations. In a moment I shall come back to America, West Germany, England and all the other countries of Europe—I do not know whether he regards them as fifth-rate nations—and I shall compare South Africa with them. But this is what is stated here—

And then the hon. member comes forward with a general statement that this party cannot govern. Throughout its term of office, and especially in the sixties, we have known economic prosperity in South Africa such as has never been the case before.

We can examine the figures, especially the latest ones. My hon. friend also mentioned figures. I shall mention to hon. members the figures for the real growth rate between 1965 and 1970, and they will find that South Africa is top of the list as regards the real growth rate of the most important countries, such as Germany, Australia, Canada, Switzerland, the U.S.A. and the United Kingdom. They are not fifth-rate nations.

Are you sure it is per capita?

I have just read out to the hon. the Leader what Union Acceptances Ltd. had to say about the per capita growth, which outstripped that of Western Europe.

[Inaudible.]

Yes, it does not suit him. Apparently hon. members do not like hearing this, because it applies to South Africa. If I had said that England’s economy had shown a fine upward trend, they would have applauded. If I had said it was America, France or whoever, they would have cheered; but when I point out that for almost a quarter of a century South Africa’s economy showed tremendous growth, there is dead silence on that side of the House. No, if I were to disparage South Africa, they would be happy, for that is what they are doing.

Matters did not always stay that way. For more than 20 years the economy in South Africa showed a steady upward trend under this Government. But it is obvious that the tide had to turn, that we could not always go on that way. Approximately two years ago a minor change took place in our economy.

A minor change?

I say “a change”. I corrected myself. I now want to make the statement that if the United Party had been in power during these years, it would not have been able to do any better as regards the solution to these problems, because the underlying causes of these problems were not to be found in South Africa, but in countries abroad, over which South Africa had no control. These are the hon. members who want to tell us how to govern the country, but they do not go into the basic factors of our economy, our, relations with countries abroad and the influence countries abroad have on us. Sir, what do you think of people who say that they can govern the country, but who do not go into matters which have a fundamental influence on the economy, matters such as our relations with countries abroad? Let me deal now with the first point. We had the dollar crisis of 1968 and the sterling devaluation of 1967. Those foreign factors had a major influence on our economy. Do those hon. members not know that? Those factors brought about a tremendous inflow of capital and caused our reserves to increase to record levels. There was unsound liquidity, the prices on the Exchange were unsound, there was excessive consumer spending, and inflationary conditions prevailed. That was the start of our inflation, and because we were saddled with a two-tier price system for the marketing of gold, we were not in a position to export liquidity from the country as we would otherwise have liked to have done. Do you remember, Sir, what was said when we succeeded in negotiating the gold agreement, an agreement which is regarded today as a milestone in the monetary history of the world and which brought South Africa benefits such as few such agreements had ever done before? The hon. member for Parktown ridiculed the agreement here, as you know. Do you know, Sir, what that hon. member said? He said the trouble with this party and this Minister was that they advocated a higher gold price, “which is an exploded dream”. That there could be a higher gold price and that the dollar could devalue were to him an “exploded dream”. Sir, people who look into the future that way, now want to govern this country.

During that period of excess liquidity the Government did everything in its power to combat the position of excess liquidity. Of that excess liquidity we absorbed, by way of various methods, an amount of more than R717 million in order to drain the liquidity from the purchasing power of the country.

But, Sir, there is a second reason as well. My hon. friend, who tried to analyse the economy so carefully, never referred to it, and so far no U.P. member has done so. Have those hon. members ever heard of the rate of exchange in our international trade relations? One of the main reasons why we have experienced difficulty in the last two years, was the fact that the prices of the goods we export dropped in countries abroad. On the other hand, the prices of goods we import, showed an increase. A discrepancy has therefore arisen between the price of the imported and that of the exported articles. We export mainly minerals and agricultural goods, and their prices have dropped throughout. This has brought about a change in our rate of exchange. The earnings derived from our diamonds and copper have dropped by 25 per cent. In the case of wool our earnings dropped by R45 million in 1970-’71. In the case of maize the earnings dropped from more than R105 million in 1968 to R29 million in the following year. In the case of citrus there was another drop in earnings. It is almost impossible for us to sell platinum, whilst the earnings in respect of antimony and vanadium have also dropped by 50 per cent. These are the real trade facts to which those hon. members do not refer. We were saddled with a rate of exchange that had turned against us. From May, 1970, to May, 1971, the rate of exchange changed from 101 to 89. It deteriorated by 12 per cent. But hon. members overlook the fact that the rate of exchange had caused trouble for South Africa. But there is a third reason, Mr. Speaker, and that is the tariff protection of our industries. In 1947 we became a member of GATT, and we are still a member of it. The U.P. Government tied us down, as far as our industries are concerned, by very low protection tariffs, lower than those of most other countries, and more often than not those protection tariffs are binding; we cannot increase them without difficulty, and for that reason our industries cannot compete on the same footing with other industries in those countries which protect their industries. Why does the hon. the Leader of the Opposition not mention these relevant facts which are basic to the international problem with which South Africa was faced?

We gave advice for the future.

Nevertheless, Sir, the authorities took action, and towards the middle of last year we achieved a great deal of success in our struggle against inflation and instability and in connection with the growth of our economy. Hon. members are welcome to read what the Reserve Bank wrote on this matter; I do not have the time to go into that now. But in virtually every sphere of the economy considerable progress had been made towards the middle of last year, and then we had the announcement that was made on 15th August. On 15th August Pres. Nixon made in Washington an announcement which changed the basis of the monetary system and which had a most drastic effect on South Africa’s economy, to which my hon. friend did not refer either. Sir, it had become apparent, even before Pres. Nixon had spoken, that the dollar was in great difficulties; it became apparent that the value of the dollar would have to change in some way or other, that the dollar would have to devalue or that other currencies would have to revalue or that something of both would happen. But it was also apparent to everybody that the rand was no candidate for revaluation, because it had an unfavourable balance of payments, because it was faced with these factors I mentioned, or because South Africa was a gold-producing country which also had to do something for its gold, and when it happened that the other countries had to revalue and that the dollar had to devalue, pressure against the rand was brought to bear immediately. In the first place, there was the world trade which had deteriorated, as a result of which we as an export country suffered; in the second place, there were the intensified imports by people who wanted to avail themselves of the last opportunity to import more goods from other parts of the world; in the third place, there were the well-known leads and lags—people who paid sooner for their imports and kept their export earnings in countries abroad for as long as possible; and, in the fourth place, there was the sluggishness of capital to enter South Africa out of fear that the rand would devalue later on. Sir, these are the real economic facts, facts which placed South Africa in a very difficult position, which caused our reserves to drop and which confronted us with a choice which left us virtually no option. But the hon. the Leader of the Opposition does not refer to one of these things; he only discusses ideology; that is all he refers to, Mr. Speaker. For us devaluation was a necessity, and I think the hon. member still owes me a reply to the question of whether he was in favour of devaluation. Two of his members did comment on the matter. But devaluation was a necessity. When the dollar was devalued by 7,89 per cent, we also had to devalue because of our unfavourable balance of payments, which I have already tried to explain, in order to correct the rate of exchange, and, thirdly, in order to meet a situation of conflict in our economy, a situation of conflict consisted in our being eager to stimulate the economy. But under the circumstances we had an adverse balance of payments, and one could not stimulate the economy by means of an adverse balance of payments, and I think hon. members will agree with me. There was a situation of conflict in the economy, but to that the hon. the Leader did not refer at all, and the economists outside, some of them good friends of ours, these prophets of growth who say that South Africa must grow, grow, grow, not one of them ever offered a solution to this problem of how it would be possible for one to stimulate one’s economy in a period when one has an unfavourable balance of payments. That was one of the reasons why we were obliged to devalue. The hon. the Leader of the Opposition referred to a “frightening percentage” of devaluation. Why did we devalue by more than America did?

We were in a bigger mess.

That is the type of answer one gets. One ought to get a sensible answer from an Opposition, but instead of that one gets this. We had to devalue by more than America did for the following reasons: in the first place, in order to put our rate of exchange on a proper basis. Britain devalued in November, 1967, by 14,3 per cent, and France in August, 1969, by 11,11 per cent. In neither of those cases did we devalue as well. We suffered as a result.

You said they were sick.

The devaluation cured them. We had to devalue, in the first place, to restore the rate of exchange which had gone against us. In the second place, we had to devalue by more for the sake of our gold price. If we had not devalued, we would have got less for our gold in terms of rand. If we had devalued by the same margin as did the dollar, we would have had the same increase in price in terms of rand for our gold, but we devalued by a little more than the dollar did in order that we could get more for our gold in terms of the rand. [Interjections.] Hon. members are finding it difficult to grasp this. We devalued by more than the dollar did in order that we could get more for our gold in terms of rand. In the third place, we devalued by a greater margin because we wanted to afford our industries some protection. I have already said that there is a lack of protection because of the low protection tariffs enjoyed by our industries and because we are bound by GATT so that we cannot increase all those tariffs. But here we were now afforded the opportunity by which we could obtain some protection for our industries through devaluation. A fourth reason is that soon Britain will enter into the common market, which will entail problems for some of our industries. Some of them will be affected to the tune of 25 per cent up to 35 per cent. This percentage of 12,28 per cent by which we devalued, will, when Britain enters into the E.E.C., place our export industries in a better position to compete beyond our borders in the E.E.C. itself. We looked ahead, Mr. Speaker, in order to afford protection to South Africa and its industries. The fifth and the last reason why we devalued by more than the dollar did, is that we wanted to give the impression, to furnish proof, that there would be finality in our devaluation. If there is no finality as far as devaluation is concerned, people may start speculating against the rand again, as is being done against the dollar at the moment. There are people in Europe who believe that the dollar will devalue by 7,89 per cent only, but perhaps by 10 per cent. Something of that nature creates unrest. It brings the price of the dollar down. We want finality, and even if the dollar should devalue by 10 per cent, we, with our devaluation of 12,28 percent, will still have devalued by a greater margin, but we will have created finality.

Now I want to touch upon certain rumours—I think my hon. friend the Leader of the Opposition also had a hand in them—i.e. that economically South Africa was so weak that we were forced to devalue by so much. I say that this is a disgraceful, slanderous untruth. I said earlier on that matters started taking a most favourable turn—we had reached the turning point of all the difficulties we had to experience because of circumstances prevailing abroad. Things began to take a turn for the better for us. However, then developments abroad made matters very difficult for us. At the time South Africa was already getting stronger: consumer spending was high, but it started to show a downward trend; employment was high —we have no unemployment—and fixed investment in the manufacturing industry had risen by 35 per cent. While my hon. friend was referring to it, I asked him by what percentage and he did not reply to me, but fixed investment in industry had started to rise by 35 per cent. Our balance of payments current account had started to show an improvement. There was an increased flow of capital, approximately R700 million last year. There were definite signs that the pressure of inflation had started to diminish. Over and above these things South Africa still maintained a growth of 4 per cent.

Now I come to a matter which to me in particular is a very serious one, namely the constant disparagement of South Africa in the eyes of the world. It is true that South Africa is continually being disparaged in the eyes of the world by the Opposition, sections of the Press and by certain economists. In these difficult times we have been maintaining here a real growth rate of 4 per cent, but our economy is accused of being a weak economy in the world, whereas under present-day circumstances a growth rate of 4 per cent is still one of the highest in the whole world.

Per capita?

I am referring to the growth rate now; I shall refer to the per capita later on. Every schoolchild ought to know this. At present a real growth rate of 4 per cent is still one of the highest in the world, and the economic situation in South Africa is, in spite of the difficulties brought about by international circumstances, still one of the strongest in the whole world.

Our increase in population is big too.

Let us merely take a look at the years 1965 to 1970, when the real growth rate in South Africa was 34,1 percent. In Australia it was 30,3 per cent, in Germany 29,7 per cent, in Canada 27,6 per cent, in Switzerland 23 per cent, in the U.S.A. 15,5 per cent, and in the United Kingdom 12,8 per cent. It was highest in South Africa, i.e. 34,1 per cent. I now ask my hon. friend whether these are fifth-rate nations.

What about the growth in population?

No, this is a national real growth rate. [Interjections.] Let me settle this point now. Those hon. friends now have a new idea, i.e. that a growth rate of 2½ per cent, as put by Union Acceptances Ltd., is a lower per capita growth rate. This is regarded by them as …

What did your own Reserve Bank have to say in September last year?

You never told me properly what had been said. Reference was made to a per capita growth of 2,4 per cent. Every first-year student of economics knows the explanation, i.e. that between the censuses of 1960 and 1970 an enormous increase had taken place in the numbers of the non-Whites, and the impression is that the correct numbers were not given in 1960 … [Interjections.] Yes, the hon. members obviously know much better. In 1960 the correct numbers were not recorded, and that is why we found the tremendous increase in the non-White population in 1970. For that reason this figure of 2½ per cent is not a true reflection of the facts.

In 1950, and again in 1960, this was also the story.

But it is a fact; it is not a true reflection. These figures show the real growth of South Africa. They show that it is higher than that of any of these five or six “fifth-rate nations” to which my hon. friend referred. I want to go further by saying that my hon. friends who want to govern the country should kindly remove their blinkers and see what is going on in the rest of the world. I have here a few articles which will show hon. members what is happening in the rest of the world. For instance, in the London Times the following is said about the Netherlands: “The real growth next year will be only 3 per cent.” In an article in the Wall Street Journal the following was said—

Then a large number of countries in Europe are mentioned, fifth-rate nations, according to my hon. friend, where the economy is rapidly beginning to show a downward trend, and where unemployment is rapidly beginning to increase. Here in my hand I have an impartial publication from Austria. In this magazine it is said that Italy is finding itself in the most difficult crisis it has ever experienced. This magazine goes on to say that in 1970 there was minimal growth—if any at all. Then I have here an article on Sweden. According to this article the industrial growth in Sweden was 5 per cent for the first ten months of last year. That hon. member should listen now, for he does not know this. If he had known about this, he would have referred to it. During the first quarter the growth in Sweden’s production was 5 per cent, in the second quarter approximately 1 per cent and in the third quarter a minus of 2 per cent. Over that period the increases in price were 7,7 per cent. This is what is said in an article in the New York Herald Tribune: “German economic anxiety grows.” This article goes on to call attention to the drop in production and the increase in unemployment.

By how much did they devalue?

The entire economy of Germany finds itself in a tremendously difficult position today, in spite of revaluation or devaluation. It is being said of Sweden that there is a growth of under 2 per cent and that a tremendous amount of pessimism prevails. I have here quotations with references to the economic conditions of various countries in the world. Reference is made to 20 countries in the world, and in the case of each country mention is made of the downward trend in the economy. Finally, in The Economist —which is closer to the policy of my hon. friend—the following is claimed in an article entitled “Will Europe slump?” which was published on 16th October, 1971—

Here we have a growth rate of 4 per cent, and the industrial world of Europe only shows a growth rate of 2½ per cent. Now the hon. members want to disparage South Africa in the eyes of the world. The days when the hon. members started shouting about the downward trend in the growth rate of South Africa, the growth rate was 4 per cent. In Switzerland it was per cent, and I think that now it is 3 per cent. In Germany, I think, it is 1 per cent now. Throughout the industrial world it was 2½ per cent. And yet those people are trying to disparage South Africa’s economy in the eyes of the world.

But you have now convinced me that we should not have devalued.

Order!

I shall now come to the position that will develop after we have devalued. The hon. the Leader of the Opposition had a great deal to say about it in general. But if one is dealing with a responsible attitude towards reality, one sees what benefits devaluation holds. The leads and lags ought to be corrected now. We estimate that about R120 million was at stake. The inflow of capital ought to be resumed. We ought to obtain higher prices for our agricultural products. The hon. the Leader of the Opposition only referred to the high prices of agricultural machinery. The effects of Britain’s entry into the E.E.C. ought now to be softened. We now receive more rands for our gold. We can now stimulate our industry once again. Our industrial products can be exported more easily. The situation of conflict to which I referred, i.e. stimulation of the economy on the one hand and the unfavourable balance of payments on the other, can now be solved. The share market can be reinforced. With the revival in the economy, the Government’s finances can also be reinforced. This will enable the Government to reduce taxation and to borrow less from banks.

We are now breaking new ground. I agree with the hon. the Leader of the Opposition that there are tremendous opportunities open to us. I ask that with these opportunities we are now being offered, the United Party should not be a spanner in the works, but rather use its influence, in its own circles, to help to push along the vehicle of our economy. I know there are going to be problems in respect of wages and prices. We knew there were going to be problems in respect of prices. When hon. members opposite pleaded with us to devalue, even before we had done it, surely they, too, knew that some prices would increase. Those hon. members came out in favour of devaluation, knowing that in some cases this could result in price increases. But what is going to happen now? In the very next debate they are going to attack us about those price increases.

The hon. the Leader of the Opposition also spoke about the tremendous increase in the cost of living. This is a very ticklish matter, because it is a question with which hon. members opposite go to the electorate. They tell the voters that the cost of living in South Africa has not only increased tremendously, but, what is more, that it now ranks with the highest in the world. I just want to draw a comparison in respect of the increase in our cost of living. If one looks at the official figures, they compare favourably with those of the fifth-rate nations of my hon. friends. Up to August/September of last year, as against 1970, the cost of living in Portugal had increased by 12,4 per cent, in Israel by 11,6 per cent, in the United Kingdom by 10,3 per cent, in Japan by 10,3 per cent, in the Netherlands by 7,7 per cent, in Switzerland by 6,7 per cent and in South Africa by 6,2 per cent. In this vein I could continue to mention numerous countries where the cost of living has increased with rapid strides and by a much greater margin than it did in South Africa. If people love South Africa, as they say they do, and they speak of the increase in the cost of living in South Africa and condemn the Government for it, is one not entitled then to ask why they do not tell people that the cost of living is increasing in virtually every country in the world?

But how does that help us?

Why do they not tell people that South Africa’s cost of living ranks with the lowest, and that the increase in the cost of living is a world phenomenon? Why do they not tell people that South Africa, in spite of its difficulties, has kept its increase in the cost of living below that of many other countries of the world?

Mr. Speaker, if they had been patriots they would not have suppressed these facts; they would have told people that the cost of living had also increased in other countries. A moment ago the hon. member mentioned the Reserve Bank. If he read the latest report of the Reserve Bank, he would find that in the past year our cost of subsistence increased chiefly as the result of State-administered prices that are not recurrent. If one deducts those price increases, one finds that the cost of living has increased by a little more than 4 per cent, which bears a most favourable relationship to that of the rest of the world. In any case, hon. members on the other side do not mention this fact at all. The latest figures I have obtained, indicate an increase of 8 per cent in Sweden, 8 per cent in Holland, 9 per cent in the United Kingdom, 7 per cent in France, 25 per cent in Ireland over a period of three years, and 8 per cent in Spain. This is a tremendous increase.

There is a second point the hon. Opposition also suppresses. They not only suppress the fact that there was also an increase in the cost of subsistence in other countries, but also that there was an increase in the income of our people. They speak only of the underprivileged people; I want to tell hon. members that in recent years the incomes of underprivileged people increased more rapidly than did the cost of their subsistence.

A pensioner, for example.

Mr. Speaker, one of the publications of the Reserve Bank tells us that last year we had a 4 per cent growth. That 4 per cent growth was absorbed almost entirely by increased wages and salaries. In addition, it is interesting to hear that this is the fourth successive year in which the remuneration of employees increased at a progressively faster rate, as a result of which it has come to rest at a level representing 61 per cent of the gross domestic product, compared with an annual average ratio of less than 57 per cent during the preceding ten years. The salaried man and wage-earner previously drew 57 per cent of the gross domestic product. At present this stands at 61 per cent. I could refer hon. members to this publication to illustrate that without exception the wages and salaries increased more rapidly for most people than did the cost of subsistence.

Then I also want to refer hon. members to the matter of consumer spending. If our people are having such a hard time economically as the hon. members are suggesting, surely people would spend less and buy fewer consumer goods. Now, what is the position? Statistics show us that for four consecutive years the consumption in the private sector increased by 11 per cent. If one reduces this to real terms, one finds that it increased by 7 per cent in 1969-’70 and by 6 per cent in the following year. This is in real terms! In other words, in actual fact people spent 7 per cent and 6 per cent more on goods and services.

Bought less but spent more.

If it is true that the cost of living is so tremendously high, this fact of the increasing real consumption is sufficient proof that the standard of living of our people rose as well. Contrary to what the hon. the Leader of the Opposition claims, the Standard of living has, in fact, risen in recent years. I want to summarise this question. I grant that the cost of living figure has risen, but as against that the incomes of our people have risen more rapidly. Our standard of living has been raised, and not lowered, as proved by the consumer figures.

In the second place, I want to repeat that the phenomenon of inflation, in this age of inflation, is not solely a South African phenomenon. It is not the handiwork of this Government. It is a world phenomenon. South Africa still has one of the lowest increases in the cost of living, in spite of difficult circumstances.

In the third place, I want to emphasize that the Government is taking steps, where possible, to prevent unnecessary price increases. Hon. members over there spoke of price control. It is not the aim of this Government to introduce a general system of price control and freezing of prices. We know that it does not work. As the hon. the Leader of the Opposition said, it has never worked anywhere. What we are in fact doing, however, is to intervene when an unauthorized price increase takes place. In this connection the public can do much to help by reporting any instance of exploitation and by buying more selectively. If all of us do this, we may succeed in reducing the cost of living.

My time is short, and therefore I want to speak now about another matter that was raised by the hon. the Leader of the Opposition, i.e. that of taxation. The hon. the Leader of the Opposition said that the taxes paid by our people, companies as well as individuals, were amongst the highest in the world. In the Cape I frequently hear that our scales of taxation have now regressed and are worse than they were prior to 1969. It is very easy to speak about taxes and to rouse the feelings of the people by those means. The fact remains that nobody is keen to pay taxes. The fact remains that in modern society the public desire more and more from the State—just as the hon. members of the Opposition ask the State for more and more each year— and that they want to pay less and less in taxes. Now, hon. members must remember, when they say that the public is so heavily burdened by income tax, that only 8 per cent of South Africa’s population pays income tax. Six per cent of that 8 per cent, i.e. less than 0,5 per cent of the total number of taxpayers in South Africa, pays two thirds of the income tax.

Does that include the Bantu?

Yes. [Interjections.] An hon. member has now said “it is a disgrace” that the Bantu do not pay as much tax as the Whites …

Their incomes must be larger.

I have here an international comparison of income tax. The countries given are the United Kingdom, the U.S.A., Canada, South Africa, Australia and New Zealand. The tax payable is calculated on amounts of £2 000 to £15 000. Each time one compares these amounts, one finds that the income tax payable in South Africa is less than it is in any of these countries.

Others have social welfare services.

The hon. member will be given an opportunity to make his speech. Let us now compare the percentage of a £2 500 income which a person in these countries retains after tax deduction. In the United Kingdom it is 78,7 per cent, in the U.S.A. 91,8 per cent, in South Africa 94,3 per cent, in Australia 82,9 per cent and in New Zealand 77 per cent. In South Africa, therefore, tax deductions are lowest. Let us now take a large figure such as £14 000. In the United Kingdom 49,9 per cent is retained, in the United States 67,6 per cent, in Canada 63,5 per cent, in Australia 48,6 per cent, in New Zealand 42,3 per cent and in South Africa 70 per cent. This is an international comparison of the tax payable by a married man with two children in these major countries of the world. When, by means of a comparison, it is indicated that South Africa’s taxes are amongst the lowest in the world, hon. members opposite do not say a word. The hon. the Leader of the Opposition also levelled the accusation at me that South Africa’s scales of taxation had now gone back to what they were before 1969. That is untrue. Every income tax group is better off today than before 1969. The figures prove that. Just take the higher income groups, the R12 000 group for example. They pay R1 126 less than they did before 1969.

You are excluding the loan levy, of course.

I am excluding the loan levy, of course. The R15 000 group gains R1 551. The R30 000 group gains R3 995, and so I could go down the scale to the R50 000 group, and everyone, particularly the higher income groups, today pays less income tax than in 1969, the opposite, therefore, of what the hon. the Leader of the Opposition claimed.

He spoke of company tax. He did not mention any figures. We usually get general statements. What is the position? Company tax in South Africa is 40 per cent. In Australia it begins with 40 per cent for 10 000 dollars, and then it becomes 45 per cent. In Canada the federal tax alone is 50 per cent, and then there is still an additional 10 per cent to 13 per cent provincial tax. In the Netherlands it is 46 per cent. In New Zealand it is 50 per cent. I could mention many other countries where it is also 40 per cent and more, and then the hon. the Leader of the Opposition still says that we pay the highest company tax in the world.

Hon. members must remember that they are pleading for the higher income groups in particular. Those higher income groups are rather hard hit, but you know, Sir, our taxpayers consist chiefly of the lower income groups, because, do you know, Sir, that people with an income of less than R5 000 constitute 83 per cent of our income-tax payers. The people in that group only pay 6,3 per cent on their income tax. Hon. members may also look at the R10 000 group, and they will find that they, too, pay a low percentage of tax. [Time expired.]

Mr. Speaker, we listened to the hon. the Minister for just on an hour. He started off in his usual manner by telling of the harm we are doing to the country by being critical of the Government. He then went back to issues with which we dealt fully last year, for example the fact that the wages and salaries have increased at a faster rate than inflation. We told him last year that he was correct, but that he must also take into account the natural increment which a man expects in his job. He also came back to the question of taxation, which we debated fully last year, when we told the hon. the Minister not to compare the 1969 figures with today, but rather the figures after he had made the drastic changes when he introduced the sales tax. I want to tell the hon. the Minister that as long as he has a 78 per cent marginal rate in tax and levy, he is not going to get the capitalist, the businessman and the industrialist to risk the hazards of investment. He can talk for one, two or three hours, but that is the fact of life.

He complained about our attack on the gold strategy and the fact that I had said it was an exploded dream. Was it not in fact an exploded dream? What was the hon. the Minister’s dream? That he was going to get an increase in the price of gold without devaluation! But what did he get? He himself says that the more we devalue, the more we will get for our gold. Devalue your currency to nothing, and then you will get an enormous amount for your gold. The hon. the Minister must not come with this kind of talk.

The Minister gave reasons for our present troubles, but the tragedy is that he only seems to have found them out today. That is the reason why in the eyes of the people of South Africa this Government is completely discredited. The people no longer place any reliance on statements made by hon. Ministers. They have no confidence in the bland assurances given by the Government. They are concerned with the over-optimism that is being displayed without any problems being solved. They are irritated—and I use the word advisedly —by the surprise and the disapproval shown by the hon. the Minister of Finance at any suggestion that we made in the past that all was not well with the economy, and they indict the Government for a whole series of blunders—for objectives that are never met, for assessments that are constantly wrong, and for policies which do not work and have to be abandoned time and time again. There is ample proof to support these indictments and I want to place it on record today.

Last session the Government imposed additional sales duties to the extent of R47 million. It increased customs duties to the extent of R87 million. It increased the surcharge on personal income tax by R22 million. It raised the loam levies on individuals and companies by R78,5 million, and it taxed insurance companies by a further R2,5 million—a total of R237 million. If we add to this the R58,5 million for the increase in railway rates and surcharges and increased postal tariffs, both of which were imposed last year, then we find that in 1971 this Government took out of the pockets of the public an additional R344,89 million. This was apart from the R52,17 million that they took in August, 1970. What did the hon. the Minister give as his reasons for taking this money? He said (Hansard, Vol. 33, col. 3990)—

The hon. member for Pietersburg, in a speech he made (Hansard, Vol. 34, col. 9280), said: “The increased taxation is going to kill inflation within three months”. [Interjections.] Yes, that was said on the 15th June. I wonder what he is going to tell us today? On the 22nd June, the hon. the Minister of Finance is reported to have said in an interview with The Star: “I have the feeling we are winning the battle against inflation”. He did not then know anything about those reasons he gave us this afternoon. I must be fair. He went on to say—

He received the Reserve Bank’s report all right, Sir, and when he did, I wonder what happened to his “feeling” that he was winning the battle against inflation, because what did the Reserve Bank report of September, 1971, say? It stated—

… while the hon. the Minister was having a feeling that inflation was being curbed! Mr. Speaker, what confidence can the public have in this Government that takes R400 million out of their pockets to curb inflation, that tells them we are winning the fight against inflation, that tells them that inflation is going to be curbed within three months, and then, when the facts appear and they find out exactly what has happened, discover that inflation has soared by 6,2 per cent from July, 1970, to July, 1971, by 6,5 per cent from October, 1970, to October, 1971, and by 7,1 per cent from December, 1970, to December, 1971? What inflation is going to be like in 1972, I hate to think. The various estimates seem to put it between 7 and 10 per cent, unless, of course, the Government enforces a price and wage freeze, which the hon. the Minister has said he is not going to do. But what I do know is that the ever-rising increase in the cost of living is already placing an intolerable burden on the public and any further rise of any magnitude is going to cripple the public entirely, and that will be the end of this Government.

Sir, I want to ask the hon. the Minister of Finance a question. There was a report in Die Transvaler on Friday, where the hon. the Minister is purported to have said that prices will start to come down from the end of March and that the cost-of-living index will start to fall from April. I want to ask the hon. the Minister if this is what he said.

Not in the same words.

The hon. the Minister is wanting to tell the country that as from March and April there is going to be a drop in the cost of living, provided, as he said, people shopped carefully and with discretion. Is this the impression the hon. the Minister wants to give to the country? It is very important.

Was that the impression?

I can give you an explanation.

If the impression is sought to be created that this is what is going to happen, that we are going to have a drop in the cost of living, in prices, from March, then this is just another one of these rosy-coloured optimistic prophecies that never eventuate. To talk about prices coming down at the end of March and the cost of living starting to fall from April is the height of reckless irresponsibility, and I only hope the hon. the Minister is going to make a clarifying statement to say that he did not mean this, because otherwise I am afraid we are going to have to say to him that all that this is, is political opportunism in view of the elections which are taking place in the Transvaal. The hon. the Minister cannot add a rider, “provided the public shops carefully and with discretion”, because the hon. the Minister knows how the public shops. They are not going to change their way of shopping, except that they have less money with which to shop. The hon. the Minister is always coming along and saying that this will happen, or that that will happen, provided somebody does this or somebody does that, and he makes appeals to the public; he knows that the public is not going to listen to these appeals because they are concerned with their own wellbeing, so nothing at all happens and we get this airy-fairy type of thinking which has led us to the very position in which we are today.

Sir, once again the Budget objectives of the Minister of Finance have not been achieved. Despite the Budget of last March, despite the operation of restrictive controls, the Government has not curbed excessive consumption expenditure; it has not managed to encourage saving, and it has certainly not been successful in combating inflation. In fact, Mr. Speaker, Government forecasts of last session have been wrong all along the line and the picture since the recess has been worse, if anything. Let me demonstrate this. On the 25th July the Sunday Times reported that the hon. the Minister of Finance had said that he was not disturbed at present at the balance of trade deficit for the first half of 1971; that although there had been a heavy outflow during the first half of the year, imports had slowed down. He followed this up in an interview with the Rand Daily Mail the following day, when he is reported to have said—

So the exchange basis was not important.

That was before the 15th August.

I will come to the 15th August. Do not let the hon. the Minister worry about the 15th August; I will come to that all right—

That is what the hon. the Minister said and he went on to state that he still believed that the balance of payments problem would right itself.

Yes.

He said that once businessmen became convinced import control would not be stiffened, they would cease stockpiling. I want to ask the hon. the Minister this: What has happened to those businessmen who allowed themselves to be convinced by him? They are sitting with no stock on their shelves, and the people who did not listen to the hon. the Minister have stock on their shelves.

We now come to the hon. the Minister of Economic Affairs, to whom my hon. Leader has already referred. On 22nd October he said merchandise permits would be the same and industry would continue to get its full requirements. Although he was concerned with the high rate of imports, there was every reason to expect that the rate of increase would decline as the result of Government measures against inflation and especially steps to reduce gross domestic expenditure, which are having their full effect.

Was this before or after 14th August?

It was on 22nd October. Now we come to a crucial date, 23rd November. I had the pleasure of listening to the hon. the Minister of Finance addressing the annual general meeting of the Transvaal Chamber of Industries, and it is very interesting to see what the hon. the Minister said at that meeting. He said:

This is what the hon. the Minister said on 23rd November, but the next day, on 24th November, what did the hon. the Minister do? He issued a statement that as a balance of payments measure—after what he had just said, that what we are worrying about was not serious—import control was to be intensified. Here we have the credibility gap at the widest we have seen it in the history of South Africa. The hon. the Minister said on the 23rd that he was not worried about the exchange position, and on 24th he imposed import control because of the balance of payments position. This is why this Government is completely discredited. On the same day the hon. the Minister of Economic Affairs too—and here I must differ from my hon. Leader; it was only five weeks previously that he had made the statement, and not two months—said that there would be no change in import policy and gave details of the new tough policy which he introduced. Now what confidence can anybody possibly have in a Government which practises this sort of gyration? But why did this turn-about take place? Why did the hon. the Minister of Finance indicate on 23rd November that although our balance of payments position was a source of concern our position was still very strong and that there was certainly no justification for extreme pessimism? Why did he then the following day tighten import control as a measure to help our balance of payments? Why did the hon. the Minister of Economic Affairs do a complete turn-about on his import policy within the short space of five weeks? We have been told this afternoon, Sir, why it was done. It was on account of the action of America on 15th August suspending the convertibility of the dollar, and it was on account of the United States imposing a ten per cent import surcharge, and on account of the currency crisis that followed, and on account of the leads and the lags that developed, and because there was no assurance on 24th November that an international agreement on a realignment of exchange rates would soon be reached, it became imperative to protect our balance of payments position; hence the re-implementation of full import control. This is what the hon. the Minister said.

He must have had a dream on the 23rd.

The only trouble is that I do not believe that this explanation is in accordance with the facts. You see, Sir, firstly the hon. the Minister of Finance was already aware in April of last year that a world financial crisis was possible, because he said so. He said so in the debate of 20th April; I do not want to quote it in full. He said: “America is pumping in millions of rands … and if this does not change we will see a first-class crisis in world finance.” In April the hon. the Minister knew. I complimented him publicly on his foresight in seeing what was going to come. So therefore, all the statements the hon. the Minister made and the assurances he gave regarding the balance of payments position, on imports and on exports and on import control were all made in the light of the knowledge that we were going to have a financial crisis. [Interjections.] Secondly, on 6th November, which is after 15th August, in a speech at the opening of the Gardner-Denver plant, the hon. the Minister expressed confidence that the international climate was on the verge of improvement. [Laughter.] Thirdly, on 14th November, the hon. the Minister in a radio interview said that he expected the monetary crisis to be solved. In other words, he knew that the monetary crisis was just a temporary issue. Yet, ten days later he imposed full import control.

Could I devalue before America devalued?

I am not talking about devaluing. It is quite clear what happened. Although the conditions that led to intensified import control had started to build up long before the 15th August, here was an opportunity of taking unpopular action to remedy the position and lay the blame on the United States of America. The hon. Minister had found a scapegoat, a whipping boy. But laying the blame for import control on overseas events is just not going to wash. Why, instead of import control, did the hon. the Minister not use the standby credits available to us from the International Monetary Fund? That would have tided us over what the hon. the Minister acknowledges was a very short-term position. Why did the hon. the Minister of Finance and the hon. the Minister of Economic Affairs go back on assurances that they have given time after time from as far back as February, 1971? The hon. the Minister of Finance then talked about the unfounded fear on the part of importers that import control might be intensified— Hansard, Vol. 32, Col. 569. The reason is not hard to find. Through the policies of this Government the economy of the country with a 4 per cent growth rate … I am sorry to hear the hon. the Minister boasting about a 4 per cent growth rate.

I am boasting about …

I am very sorry and unhappy to hear that. With an inflation of over 6 per cent, plus a dangerous balance in our payments position, our economy has become so sensitive that corrective steps have become imperative. That is why we have the intensification of import control.

Unfortunately for South Africa, the realists, so often called by the hon. the Minister prophets of doom, economic soothsayers and exaggerated pessimists— have all proved to be correct. That is what happened. And if there were ever any doubt that all was not well with the economy this was finally dispelled when the hon. the Minister devalued by 12,28 per cent. Because of the dollar link with gold we acknowledge that it was generally accepted that the rand would follow the devaluation of the dollar. But we all got an awful shock when we went below the dollar. It is clear that our wider devaluation was necessary and due to unfavourable trends in the economy. The hon. the Minister’s statement and what he has said this afternoon, namely that a 12,28 per cent devaluation created the necessary image of finality about the decision, means that if it had been any lesser the world would have expected us to devalue again. As the hon. the Minister said, our rand would have been like the dollar, a weak currency. That is what the hon. the Minister said this afternoon. He said that our rand is a weak currency and we would have been forced like the dollar to devalue again. Countries do not devalue from choice. They devalue because of weaknesses in the economy, or the balance of payments position, or both. This is why we did not follow the dollar to 8,57 per cent but by 12,28 per cent. With the publication of the trade deficit of R1 349 million for 1971, a figure far worse than any estimated by the worst prophet of doom, the whole dismal picture of the Government’s utter mismanagement is exposed. Despite all the optimism he had, all the assurances and all the arrogance of the Government, the facade has cracked wide open and the mess is there for everyone to see.

Now, in an attempt to stabilize the balance of payments position we have the extraordinary situation of the government intensifying import control, and at the same time resorting to massive devaluation. It is massive devaluation. It is not a devaluation of 12,28 per cent.

[Inaudible.]

It is not 12,28 per cent. It is 12,28 per cent plus the revaluation of the other Western currencies. It is not 12,28 per cent. In the recent devaluation only Ghana and Yugoslavia devalued more than we did. Both devaluation and import control are highly inflationary. The hon. the Minister said that devaluation places a natural curb on imports. Devaluation is inflationary and increases the cost of essential imports and inevitably leads to a rise in the price of locally manufactured goods. As for import control, the hon. the Minister of Finance himself said (Hansard Vol. 32, Column 569) that any intensification of import control would to some extent frustrate our attempts to curb inflation. What is he doing now?—giving it the green light. How much more so is this going to be if we add the further curb of the intensification of import control. Import control is one of the antidotes to devaluation; it does not run parallel to it.

We all know that.

What we are likely to be faced with, is a steep rise in the cost of living, lower standards of living, particularly for the fixed income groups, a loss in the value of one’s savings and intolerable new hardships for the lower income groups. As my hon. Leader has said, we can turn devaluation to our advantage to increase production and to attain the maximum productivity; we can hold down prices, minimize imports, increase exports and improve the balance of payments position. However, the benefits of devaluation are very short-lived, and now we shall have to make more widespread concessions to commerce and industry in regard to labour; we shall have to remove industrial bottlenecks being caused by the Physical Planning Act; we shall have to do away with job reservation and substitute the rate for the job; we shall have to ease all the unnecessary controls which at present exist; we shall have to reduce the level of Government expenditure, the high rate of taxation and to provide meaningful incentives for industrialists. We must do this in order to boost their exports. If we do these things, we can be the master of devaluation, but unfortunately the leopard does not change its colours. The dogma of “Ideological theories first and economic virtues second” is, I fear, too ingrained in my friends opposite, to be changed. Therefore we are left with only one solution to the problems that beset South Africa. It is the solution which has been given by my hon. leader, namely, that we must change this Government now for the well-being of the people in South Africa.

Mr. Speaker, as usual I listened attentively to what the hon. member for Parktown had to say. I shall reply to a few matters touched upon by the hon. member for Pinetown. I just want to say at this juncture that the hon. member, unlike his hon. Leader, stated clearly that he was in favour of devaluation. He approved of it although he did not approve of the percentage by which we devalued. Even now I am not certain whether they approved of import control at the time it was introduced. This afternoon the hon. member spoke a great deal and his hon. Leader spoke, but I should like to put a question to them: At the time the announcement on import control was made the reserves already stood at a low level, the Government already had all the facts at its disposal and, what is more, this was just before the holidays. In addition an exchange rate readjustment conference was being held and we did not know when the matter would be finalized. If, under those circumstances, the Government had done nothing and the reserves had dropped further, past the absolute crisis point, and this country had found itself saddled with a problem, then the Opposition would undoubtedly have come forward with their reproaches. We would then have had to listen to innumerable reproaches. Now they are being wise after the event. I want to put them to a test. I want to know from them what their reaction was when intensification of import control was announced. What did they say? Why did the hon. the Leader of the Opposition or the hon. member for Parktown, who is their mouthpiece, not indicate the next day what they thought of the step the Government was taking, i.e. to intensify import control?

All that he said was that there should be a change of Government. That was the only reply he was able to find.

The Opposition are blatantly guilty of coming along two or three months after the time and saying that this or that should have been done. If you consult the newspapers to see what they did in fact say on that specific occasion you will see that they said absolutely nothing. They are like the monkey stopping his mouth and refusing to speak. What did hon. members opposite say after devaluation? What did the hon. the Leader of the Opposition say after devaluation? He did not express disapproval; he did not say that the devaluation had been by too great a percentage. Why did he not say it at the time? All that he said was that we should make the best use of it. [Interjections.]

But of course.

Yes, of course, that we can also say to the country. No one differs on that score. We should make the best use of it. The hon. the Leader of the Opposition said that if we wanted to make the best of devaluation we would have to change our labour pattern. I shall return to this at a later stage, and then he can spell it out for me a little.

But after devaluation the hon. member for Parktown also commented on it in the newspapers. This afternoon he is being clever and says that we went too far. But why did he not say this at the time, when he commented on the matter in the newspapers? After all, it would have made a far better impression on the country and would have conferred more status on him, as financial critic, if he had stated at that time that the Government had gone too far. The newspaper report simply read as follows—

Those are precisely the same words he used here this afternoon. The hon. member can tell me more about this later and explain to me what he meant by that.

Mr. Speaker, we are discussing deviation and it has been said here now that the economy is in a mess. But there is an ulterior motive behind this; the issue here is purely and simply one of rising prices. The only thing hon. members on the opposite side are interested in is price increases, because that is what they want to see.

Mr. Speaker, what I do want to say here today is that, in spite of all the gloomy pictures which have been painted here today, South Africa is, after twenty-four years of National Party Government, still the best country in the world to live in. That is what all its people say. Of course not everything is perfect; that is obvious. But if there is anything you do not like here and you go looking for a better Canaan elsewhere in the world, it is not long before you return. I do not expect the hon. Opposition to agree with me. After all, hon. members opposite are a band of Jeremiahs par excellence. They are a brigade of Cassandras. They are the directors of Pessimism Promotions. They cannot be otherwise. The Opposition is loyal only to itself. This was the case in 1948 when the National Party took over the government. This was the case in 1961 when we became a Republic. Then, already, they were predicting the downfall of South Africa. They said the same things then that they are saying today. That was also the case in 1971, when we devalued. The stamping of the feet of the unemployed is economic and political music in the ears of that side of the House. The closed doors of banks are symbolic for them of other doors which they hope will open to them. That is why we have these pessimistic stories of theirs. The hon. member for Hillbrow said: “The Government has turned the rand from being one of the strongest currencies into one of the weakest in the world”. He said that only a few days ago. Of course, we heard another opinion here today. I am sorry the hon. member for Yeoville has just left, because I read in one of the newspapers that there are eight financial stars on that side of the House, but only the names of seven were mentioned. I still wanted to ask the hon. member for Parktown who the eighth one was, but I heard this afternoon who it is. The hon. member for Yeoville saw his way clear to commenting here on the economic mess which is allegedly prevailing. I do not wish to be unfriendly, but if an hon. member writes a letter to a newspaper on the Coloured policy of his party and quotes the 1971 policy from the 1963 pamphlet, then I should like to know what I must think of his opinion of the financial position in 1971 if he is still living in the world of 1963? I also want to tell the hon. member for Parktown that he should have a chat to the newspapers, because they mention the eight stars sitting opposite, but when they have to choose a Cabinet, they bring in Frans Cronje. That is really not fair towards the hon. member for Parktown. The hon. member for Hillbrow said that we have now turned one of the strongest economies in the world into one of the weakest. The hon. member will be given an opportunity to speak. He must tell us when the economy to which he referred was so strong. He will probably do so, and will not forget. He has a good memory. Was it in 1948? He can tell me right now. When this Government took over there had been no record kept of our import and export figures for three years. Our reserves, which had been high, had then dropped and were completely depleted.

When we were able to lend £80 million to England!

Yes, after it had given England £80 million there was nothing left. The present Government then took over what was in fact a bankrupt estate. Was it then that our economy was so strong? The hon. member could have spoken of “One of the strongest currencies in the world”, for that is what the Rand is. That is what the Rand became under the National Party Government. That is what we made it into. Then, in the sixties, this culminated in the golden decade of this century, as the hon. the Minister said. The National Party made our economy strong. All our people found work. They still have work today. All our people were paid. They are still receiving good wages today. Is that not a sign of a Government which has taken good care of the country and its people? As far as imports are concerned, we imported goods to the value of R2 750 million last year, and paid for them. Is that what a poor country does? Is that a weak economy? Between 1965 and last year, up to the date which the hon. the Minister mentioned—that uncertain date which President Nixon created—we received R2 271 million in capital from abroad. That is a colossal amount. In 1970 we received R517 million. During the first nine months of last year we received R557 million. Does money flow into a country which has a weak monetary unit? In contrast to the United Party, the outside world expressed its fullest confidence in the Republic of South Africa and its economy. Did those people last year talk about a mess in regard to this country in the economic sphere? What arrant nonsense!

We now come to devaluation. I should like to know from the Opposition whether we should, then, have done nothing. I do not want to go over the whole ground again. The hon. member for Parktown has now told us that we had to do something. I take it the Opposition agrees with that. We only have one opinion in writing, that of the hon. member for Constantia. He almost implied that we should in fact have revalued. He said that if the United Party had been in power, they would have been able to consider a revaluation. Would the Opposition really have accepted a lower price for our gold, taking into consideration the gold marketing history of our goldmines and their rising cost structure, under any government? Would they really have made sales of our wool, fruit, ore and our manufactured goods and everything else we export, even more impossible on the overseas market? Should we have surrendered our domestic market even further to cheaper imports from abroad? Surely that would have amounted to a further lowering of the growth rate of South Africa. In my own mind I am convinced that when this readjustment of exchange rates took place, South Africa had to avail itself of the opportunity to achieve certain long-term objectives in the interest of the sound continued growth of the economy of South Africa and in the interest of our gold-mining industry by obtaining a higher price for our gold. South Africa had to do this, but not because it was weak or because its economy was in a mess. I just want to mention in passing that this hon. Minister has, during the past few years, played a wonderful role in the world in reconfirming the position of gold in the international monetary system. He got it reconfirmed in a way which is to the best advantage of South Africa. I should now like to ask the hon. member for King William’s Town and other hon. members on that side of the House whether it was not imperative that we seize this opportunity for the sake of our wool farmers? Let one of them stand up and say that we should not have done this. Let one of them say that we should not have done this for the sake of our citrus farmers, or for the sake of our deciduous fruit farmers, or to overcome more successfully the results of Britain’s entry to the European Common Market. The prices of our minerals and other commodities are now more competitive.

I now want to discuss imports. Hon. members know what happened. We demolished import control. Imported goods came streaming in and our own industrialists then had a hard time competing on the South African market against these imported goods. What was one of the reasons for this? The hon. the Minister mentioned it and I want to do so again. In 1946 that side of the House tied us down to the General Agreement on Trade and Tariffs, so that there was no tariff protection for South Africa in regard to certain goods. In respect of another level of goods we were, on the other hand, tied down to a very low protective tarriff. We in South Africa are today still suffering under that, and hon. members on the opposite side cannot deny it. It is not only on the level of the tarriffs that we are tied down. If we are tied down in respect of a certain article exported to a certain country and we export only a small quantity of those articles to that country while it exports a large quantity to our country, we are on the losing side because it is a matter of one hare as against one horse. This is one of our basic problems. Consequently this was an opportunity for us to overcome this problem to a certain extent. I firmly believe that this was the only way to restore our balance of payments and at the same time stimulate a reasonable degree of growth at home. Everyone in this country who understands these matters will accept this.

I come now to the heart of the matter, i.e. how this will affect prices. We cannot accomplish all these things together. We cannot rectify the balance of payments, at the same time stimulating domestic growth, and on top of that still keep the prices low. We admit that it will to a certain extent have the effect of increasing prices. I do not want to quote the indices already quoted by the hon. the Minister again; I merely want to say that there is a great deal of ignorance in regard to this matter. I do not think the hon. the Leader of the Opposition meant it the way he said it, because I also say things in a way I did not quite mean to say them when I speak hastily, but he said that South African goods are going to cost more. What right does the hon. the Leader of the Opposition have to say that? After devaluation it was implied that the Rand would now be worth 12,2 per cent less in South Africa and that everything would be more expensive by that percentage. The fact of the matter, however, is that as far as locally manufactured goods is concerned, there is no justification for marking up the prices immediately. There is no justification for that. The supplies remain unchanged; the machinery and the raw materials remain unchanged. There will in due course be a price-increasing effect, and we all admit that. As imported raw materials and other goods used in the production process are required there will be a price-increasing effect in proportion to the percentage of devaluation in regard to the country from which those goods are imported. Machinery imported from abroad will also contribute to making locally manufactured goods more expensive, but even machinery is, after all, written off over a period. But as far as locally manufactured goods are concerned, there should not be any immediate price-increasing effects. I refuse to believe that there can be. We admit, however, that imported goods will be more expensive. Large supplies were available in South Africa, and it is almost criminal to mark up such goods immediately. The price controller should take action against such offenders. New goods will, of course, depending on their country of origin, be more expensive. But we must not view the price increases in isolation. I just want to mention a few figures in reference to what the hon. the Minister said. We must view cost increases in the light of wages and salaries in our country. Last year the average remuneration of a white factory worker in South Africa increased by 11 per cent, and the rate of inflation by 6,9 per cent. In 1970 the average remuneration of the white factory workers in our country increased by 10 per cent. Inflation then increased by 4,1 per cent. In other words, in those two years the wages of white factory workers increased by 21 per cent, as against a total increase in the rate of inflation over the two years of 11 per cent. In 1969 our real gross domestic product increased by 3,8 per cent. In 1970 and 1971 it was only 1,4 per cent in each year. Now the Leader of the Opposition is concerned because our per capita growth is lower than that of some other countries. I did not study those figures; but if this is so, it seems to me quite understandable that they should be lower. France, for example, is a country which keeps its population stable and whose population at one stage even diminished. If we suppose that the population remains constant and France’s real growth is 4 per cent then it is obvious that its standard of living increases by 4 per cent per year. If its growth rate is 2½ per cent, its standard of living will also increase by 2½ per cent. But if we, with our White and non-White population which is increasing at a very rapid rate, grow faster than other countries, that factor causes our per capita growth for the entire population to be lower than in some of the older, established countries. But should we now for that reason break our economy to achieve a higher growth rate which is beyond our capacity, and in the process destroy almost everything we have accomplished? I do not think the Opposition can advocate that. But I want to supply the House with another figure. What was paid out in salaries and wages to the workers of South Africa in 1963, already amounted to 62 per cent of our national income. In 1970 it amounted to 67 per cent of the national income. We can therefore say that our workers in South Africa, in spite of inflation which is something we are all very concerned about and which is a world-wide phenomenon— let us always remember to tell the people this—are not necessarily any the worse off. In fact, the figures prove that they are better off.

I should like to make something very clear in regard to wages and salaries. The Government is not in favour of freezing wages. However, it is not in the national interest that there should be wage increases this year without corresponding increases in productivity. We would otherwise gradually lose the benefit of devaluation for the country. In order to maintain our competitive position it is imperative that we do not achieve a higher rate of inflation than our trading partners. Inflation as such will not totally undermine our competitive position in regard to our trading partners in the outside world. This will only happen if inflation increases more rapidly in our country than it does in theirs. For the sake of the life of our gold mines, of course, the rate of inflation must be kept just as low as is possible. In those countries where wage increases were granted regardless of an increase in productivity, the result was stagnation with protracted balance of payments and employment problems. We must prevent that at all costs. The trade unions—I would very much like to say this—that have representation in the Economic Advisory Council, have repeatedly emphasized that they are in favour of a system of incentive wages whereby both employer and employee benefit by increasing productivity. I think we must side with the trade unions and I want to make an appeal to employers to introduce productivity schemes in conjunction with their workers so as to ensure that productivity is increased and that employees in that way receive their fair share of increased profits. In any case, the workers of South Africa are also aware that this Government has never neglected their interests, and that they can also at this time trust the Government to look after their interests at the right time and in the right manner.

Sir, what is the solution to many of these problems we are discussing at this time? The United Party has only one solution, and that is labour. We all know that the pressure on skilled labour had already been alleviated last year, and our immigration figure of 30 000 per annum decreased, I think, to 27 000 or 23 000 for the year. Every man coming to South Africa as an immigrant comes here because there is work for him here, and that is already an indication to us that the pressure at home on skilled work has diminished. Mention was made here today for work reservation. Sir, the hon. members have themselves stated in this House that work reservation applies only to 3 per cent of the work still being controlled. They said that so many exceptions were being made, so many exemptions were being granted, that it really had no practical value any more. But then work reservation is no longer a production-restricting labour problem; surely it cannot then be work reservation; they have themselves stated that it is not a problem. We on this side of the House say of course that work reservation is still a method for retaining order in the sphere of labour in South Africa where it is necessary. Then there is the Physical Planning Act. Hon. members are fond of discussing that Act, which I administer. I administer the Act as fairly as possible. Sir, what is the position? No limits are imposed upon industries which fall within the permissible labour ratio, which are able to expand almost at will; actually, their applications for approval are a mere formality. Not many of them made application last year; and that indicates to me that those people who were able to obtain labour did not avail themselves of that labour either. In other words, this proves to me that the total number of Bantu workers in industry was not necessarily the restrictive factor either last year. When we come to the reclassification of skilled labour, surely the White Paper which was issued after the Riekert Report makes provision for that. Hon. members have it in their possession. They can tell us where they do not agree with it, but the White Paper provides that a reclassification of certain types of work can be made in conjunction with the trade unions. As hon. members know the level of work which the non-Whites may do is not determined by the Government; it is determined by the trade unions and the employers. What do all these words of the Opposition now mean? The hon. the Leader of the Opposition has just said: “You bump against the ceiling of labour.” What does he mean by that? The hon. member for Parktown spoke of “more widespread concessions on our labour”. Hon. members on that side spoke of “a more sensible labour policy”, “lack of a realistic labour policy”, “change the labour pattern”, “labour concessions” and “labour curbs”. What do hon. members on the opposite side mean by all this? They must get up and tell us. After all, they owe it to the country; they owe it to the House and they owe it to the worker, but when we really get them into a corner, then it seems to me their policy is really the same as that of the Government.

Never.

They say it is not; they say “never”; but will the hon. members then tell us clearly where it differs with what the Government states in its White Paper? Where does the labour policy of this Government make production in this country impossible?

What does the Afrikaanse Sakekamer say?

Sir, the Opposition will always have 110 questions to ask you; they keep on asking questions and they keep on quoting. First they quote Jan Hupkes, then they quote the Afrikaanse Sakekamer and after that they quote from Woord en Daad, and when you begin to wonder what the hon. member for Newton Park says, he is already riding another hobby-horse there on the opposite side.

Sir, in summarizing I therefore want to say, for what it is worth, that basically, there is really nothing wrong with our economy. We have certain structural problems, certain basic problems. Devaluation can help us to overcome those problems. It depends on how we make use of the opportunity, not only the Government but the entire country. I think the Government made its labour policy as fair as possible in order to encourage production. The Government created a climate. The Government really cannot do more than that. The country must also make its contribution now. I do not doubt that the country will do so. I also say that we must produce as much as we can, but we cannot confine ourselves to production. Our population must save as well, and hon. members will discuss that topic as well. Nor is it the wrong thing to do. Our population must save as well. Last year we saved only 9½ per cent of our national income, as against a normal 13 per cent. If we had saved the normal amount, we would have had R300 million more for investment in new production. You cannot confine yourself to production only; you must also save. We have now created the opportunity and the climate making it possible for the country to go do so and that South Africa will remain this wonderful and this fine country for us which it has been in the past.

Mr. Speaker, I should have thought that it would be agreed by all members in this House that the economic position of South Africa was an extremely grave one. I should have thought that it would be highly irresponsible to pretend that anything else was the case. I would have expected every member, irrespective of party —every member on either side of the House—to have recognized this basic fact. Not to do so is grossly irresponsible. I have therefore been disappointed and alarmed to hear from the hon. the Minister of Finance and the hon. the Minister of Planning on that side of the House that an economic crisis hardly exists. They have found formulae and statistics, carefully selected, to show us that in fact there is no cause for alarm, that we have every reason for complacency, that there is nothing wrong, and that we look forward to marching along the highroad of prosperity. Sir, this is completely and utterly unrealistic. The two hon. Ministers started, in both cases, by making speeches about the Opposition. They dealt with the United Party at some length and stuffed their rather feeble speeches with that kind of straw. They then concluded with their defences of the economy. I suggest that in both respects the contents were completely irrelevant.

Sir. I will deal in the course of my speech with the points which the hon. the Minister of Planning made in his speech, but I would like to refer at the outset to one or two points which have been made. The hon. the Minister of Planning has asked us to say whether we, the Opposition, approve or disapprove of de valuation, whether we approve or disapprove of import control. In other words, the Government takes a measure, and the Opposition must immediately stand up and be counted as being for or against that measure. Sir, this is not a realistic way to proceed. We say that it is as though an ocean liner were sinking in heavy seas; the lifeboats are put out by the captain—you must remember. Sir, that that Government is in charge of the ocean liner—and we, the passengers, are asked whether we approve of the lifeboats being put out. Certainly, we believe that the lifeboats should be put out, but we cannot forbear to point out that the lifeboats are badly holed, that the engines are not working, that they have left a few oars out.

And the ship is on the rocks.

We want to deal with some of the questions as to why we got into that situation at all. Certain justifications have been given for the devaluation of the rand. There were five reasons given and to some extent these reasons are valid. But these reasons also have their demerits, and that is a subject I will deal with later on.

But then the hon. the Minister of Planning made one remark which is truly shocking and which I truly believe will be shocking to both sides of the House. He mentioned that immigration is dropping from 30 000 to, he said, something like 25 000 or 23 000; he was not quite sure. Let us accept that it is 25 000. I believe that the drop may be greater than that. He treats this with equanimity; and to say that this is probably due to a lessening of employment demand in South Africa, and that that is why we are drawing fewer immigrants, is surely the grossest irresponsibility. It is surely common cause on both sides of this House that we badly need immigrants; we badly need skilled immigrants and we have never disagreed about this since the day when it was said that “die Afrikaner sou ondergeploeg word”. Since those days we have agreed on both sides of the House that immigrants are vitally necessary. I believe that immigration is dropping and I have been told in my own constituency why that is so. In my constituency there are a great many immigrants, because this is the nearest stop to Jan Smuts Airport when they arrive. These young Italians, Frenchmen and Germans and others who are there tell me that they are going home and they are going to advise their friends not to come here. When I ask why this is so they say it is because when they came to South Africa they did so in the belief that they could enjoy a higher standard of living in South Africa for less money than in Italy or Germany, but that they had been home on holiday since then and they now know that with our rising cost of living, they can live better in Europe than they can live in South Africa on the same money. That is why they are going home, and that is what this Government’s economic policy is doing to immigration. If we have to do without immigration, heaven help this country! Where are we going?

If the financial mismanagement in this country could be taken in isolation and be seen as remote from all our other policies and measures for good government and for the peace and prosperity and safety of South Africa, then we would be content to let the volume of evidence and the weight of logic gradually persuade the Government that its policies are wrong. But it is not true that economic mismanagement can be looked at in a vacuum. Economic mismanagement affects every aspect of our lives. It affects our ability to govern ourselves well. It affects our ability to maintain the safety of the State. It affects our ability to carry out good policies and to maintain those policies effectively. If economic management fails then all these things fail and it is idle to talk of grand plans and designs because they cannot be made effective. We believe that this Government is mismanaging the economy because of its rigid beliefs. We believe that it is so inflexible in its attitude that it is unable to adapt itself to the changing demands of the times. Sir. I wish to pay the hon. the Minister of Finance the compliment of saying that I do not believe honestly that he believes everything he has told us today. I think that he has been around too long and he is too shrewd an economist to believe everything he has said and that all the promises he has made are going to be effective and will be carried out. I believe that the hon. the Minister of Finance, in acting as he does, is adopting all these expediencies and all these technical tricks and clever devices because he is under relentless pressure from his colleagues. I believe that he has colleagues on his right who are making financial demands which are becoming impossible to meet and which are in fact militating against the very economic objectives which the hon. the Minister of Finance is trying to achieve. I believe that he, as a loyal member of the Cabinet, is determined to defend them as best he can, but he is not truly convinced that the things he says and does are in the best economic interest or the good financial management of the country. And so we get all these words. We hear a spate of explanations. We get exhortations, we get self-justifications, we get hallucinations and we get contradictions. I have made a list of just a few of these to prove that I am not merely playing with words, and I would like to read out for the information of this House just a few of the remarks that have been made on the subject of economics in the last 18 months.

Firstly, 18 months ago the hon. the Minister of Finance said—

Then again he said that the deficit on the balance of payments “need cause no concern for the present in view of the satisfactory level of our reserves”. Sir, this was in 1970 when anyone, even I, could see that we were running into a grave crisis in regard to the balance of payments. The hon. the Minister may remember that I said that there was a great gap and that there was a gale blowing through this gap in our balance of payments; that it was a cause for grave alarm. South Africa, said the Minister, had had much success in restraining inflation within reasonable bounds; nevertheless an increase in prices such as we have experienced during the past year (of about 4 per cent) is definitely not satisfactory to a country in South Africa’s position. Sir, we are now running at 7 per cent, and both the hon. the Minister of Finance and the hon. the Minister of Planning have said that there is no cause for alarm; everything is fine and the economy is in good hands. Here are one or two more extracts. He said—

Then again he said—

Sir, how things have changed! Nine months ago the hon. the Minister said—

If that seems unbelievable, it is a quotation which will be found in Hansard, Vol. 33, Col. 3959. Last Friday, in the State President’s speech, it was said—

Sir, there is only one more I would like to quote because I think it is worth quoting. In June, 1971, the hon. the Minister of Economic Affairs said that as far as import control was concerned “I want to make it very clear here today that it is not the Government’s intention to intensify or extend import control again”. [Interjections.] Now Listen; this is good: “I hope with all my heart that in so far as there has been obscurity in this regard, it will now have been removed.” (Hansard 1971, Col. 7886).

Strangely silent!

Through the whole of this period the United Party Opposition, supported by virtually every economist and every business leader of significance in this country, has consistently, almost uniformly, told the Government that they were on the wrong course. Equally consistently the hon. the Minister of Finance and his colleagues have denied that they were on the wrong course. They have been perfectly, convinced, I believe sincerely convinced, that their view of the situation was the correct one. All these statements which I have read—I chose them because they have all been disproved—were made in most perfect good faith and they have all been proved wrong.

Shortly before Christmas came the crunch. Then we had the moment of truth, because there was a general realignment of currencies and every country had to stand up and be counted. It had to stand up and be judged, in a sense, on the management or mismanagement of its currency, and of its economic affairs during the previous years. South Africa was described by the hon. the Minister, if I may refresh his memory, as follows: “The picture which emerges is one of a strong and virile economy, soundly based and developing rapidly to meet the challenge of the new decade.” That economy went to the bottom of the international log. There were two exceptions. There was Ghana and there was Yugoslavia. However, apart from them, South Africa accepted the greatest devaluation of its currency of them all.

It is all very well to say that this was done out of expediency, because of farsightedness, as the hon. the Minister of Planning said. However, if there was farsightedness on their part, they were looking ahead in a curious way, because they must have foreseen that certain things would happen or were happening; things which, in fact, obliged them to take South Africa to a position in respect of its currency relationships with other countries, a position which, if it did nothing else, was going to lead to a grave aggravation of inflation in this country. Nobody on either side of the House has attempted to deny it. There is no question whatsoever that this will happen. Devaluation is a classic remedy when one has an imbalance of payments. In the right circumstances it works well, because it so adjusts matters that one’s imports are discouraged and one’s exports stimulated. This is all very well, but it does not work when your productivity is too low to satisfy even your domestic requirements, when your infrastructure is incapable of coping not only with the present growth rate but also with a sudden upsurge of demand. That is what you predicate when you go for devaluation. You are saying that you know that inflation will wipe out the advantages of devaluation. We know that this must happen inevitably. There are also other international trade equalizing factors which eventually wipe out these advantages, but in the short run devaluation can give us a shot in the arm; it can do us good. However, if you apply it at a time when your infrastructure cannot cope with a sudden upsurge, which is precisely what you need, then you are looking for trouble. South Africa is a country which is also heavily dependent upon foreign supplies. It depends heavily upon imports. It is all very well to pretend that these imports are luxury items, that it is due to the extravagance of the housewife who continues to import foreign towels, to mention one of the items the Minister mentioned last year. It goes much further than that. It affects a whole lot of strategic items or essential items, items which we cannot do without. These are items which are in fact vital to our growth and vital to the recovery of a healthy economy in South Africa. All our fuels are also imported and their prices will be heavily increased. This will have a heavy impact on the whole structure of the country.

So you come to the situation where because of the inability to supply the local demand you have a domestic inflationary situation. Because you are relying heavily on essential imports, you also import inflation; and the two combined will give you a high rate of inflation, compounded, which increases the production price and which gradually eliminates your ability to export favourably in terms of that very devaluation you have brought about.

It is true that there is another side to the coin. The hon. Minister of Finance has mentioned five main considerations which he said induced him at the critical time not only to accept devaluation, but a heavy measure of devaluation. Firstly, he spoke about “ruilvoet,” that is to say, terms of trade. It is true that many basic commodities, raw materials, have tended to deteriorate in price as against the cost of imported manufactured commodities. South Africa largely exports raw materials and largely imports manufactures and machine tools and if the cost of one rises in relation to the other, you suffer a disadvantage. This is true, and there is no doubt that devaluation can to some extent redress the damage. It is also true to say that this is not the kind of measure which is permanently effective since devaluation is a short-term remedy. We on this side of the House, while not discounting the effect which the hon. Minister has described, much prefer the idea of productivity in the sense of upgrading the product in South Africa. It is we who have been pleading consistently for conditions, for rail tariffs, for the kind of harbours and for the general conditions for the export of our ores which would enable us to upgrade the value of our products before they are leaving our shores. It is also not true that the “ruilvoet” principle applies disadvantageously to all products. There are certain raw materials of which the prices have in fact gone up. There are also other imports of a manufactured or advanced kind of which the value has not gone up unduly. However, it is true within a limited context. This I can see as a valid argument, but only within those limitations.

The question of gold could give rise to a long argument. The fact is that we have for some time been selling the major part of our gold production on the free gold market. There the price was in any event higher than has been achieved in consequence of the American devaluation of the dollar. What is vital is not whether we are going to get another Rand or two on account of our further devaluation, but that we should check inflation at all costs. If there is one industry in this country which is ultra vulnerable to inflation, it is the gold mining industry. There is no industry which will suffer so gravely and which will be so detrimentally affected by inflation as the gold mining industry.

That accounts for the extent of our devaluation.

If inflation runs rampant at the rate which I believe will be caused by this Government’s policy, we shall see the quick demise of the gold mining industry. Then there is the question of G.A.T.T. tariffs, but I do not think that it is worth going into this matter right now since we shall discuss it at a later occasion. The fact is that the G.A.T.T. tariffs, which were contracted in 1947, worked both ways. They were designed not only to allow import of manufactured goods into South Africa at low tariffs, but they also were designed to enable South Africa to export its natural products abroad at low tariffs. It is all very well to complain in 1972 about something which was done in 1947 because the state of economy at that stage was entirely different. Again, devaluation is a temporary remedy and it will not make a fundamental difference to this situation. More long-term measures will in any event have to be taken. The argument was advanced that Britain’s entry into the Common Market would in fact oblige us to compete more strongly and that devaluation would be of assistance. But again, this is only true up to a point. It is not wholly true in respect of many agricultural products which enter the Common Market, Britain or the continental countries. The price question is not of vital importance. For many of these agricultural commodities there has been established a threshold price and it is not permitted to sell foreign goods, i.e. non-Common Market goods within the Common Market at prices below the established threshold price. Nevertheless, I will concede that there are certain advantages for certain commodities. But, again, as I say, it is not to me an all-persuasive argument.

The last point, the fifth persuading factor, was the question of finality. I do not believe that there is any such thing as finality. The hon. the Minister alleged that if we accepted not only the American devaluation, but made it a good one, a real tough one, if we devalued more than they did, then it would persuade everybody of our determination to devalue again. I cannot think what makes the hon. the Minister think that we might have to devalue again. Is it that the world has so little confidence in our economic management, in our currency and in our economy that they might expect us again to devalue after this substantial devaluation? No, Sir, there is no such thing as finality. I believe that maybe we have persuaded them, at least for the time being, that we are not going to devalue again.

Why is it that this Government, in spite of all the warnings, in spite of the opinions of the great majority of economists and business leaders of this country, is simply unable to understand or to accept that its economic policies are wrong and are leading to disaster? Why is it paralysed, as we say by its ideological thinking? I believe that there is a fundamental misconception in the mind of the Government, and I should like to deal with it briefly before my time is up.

We have in this country 20 million people; we have a single economy of 20 million people. If, for the purpose of an economic entity, we include Swaziland, Lesotho and Botswana, that also would not be amiss, because they are part of our economic union and what goes for us, goes for them. We have well over 20 million people in this country. But this Government, imbued as it is with the belief that everybody of a colour other than White belongs to other nations, because it is imbued also with the determination to make this so even if it is not yet so, because they believe this and intend to prove it and do it, they cannot believe that all of us—20 million odd people—are in the same economic boat. Economically speaking, we are one nation and we cannot get away from it. The fact is that when you adopt a measure, when you use an economic lever or economic trigger and aim it at 4 million people, then, if it also hits another 16 odd million people, it does not work, unless those 16 million people respond in the same way as the 4 million people you are aiming at. Let me give an example. If, for example, you have a state of excessive liquidity, you decide to apply a bank credit ceiling and thus limit loan money. By doing this you achieve to a certain degree a predictable result. This is effective in respect of 4 million people, because the European model, the American model and our own, teaches us that if you do these things, within broad limits a predictable result may be expected. But if you do this and you apply this very measure, namely a bank credit ceiling, to the 16 million Bantu, what will happen? Absolutely nothing! It does not work. Let us take another example, namely hire purchase. Let us suppose that we decide to have more stringent hire-purchase regulations. In the case of the four million White people it is reasonably predictable what will happen. If one increases the down payments and decreases the repayment period, one can work out within reasonable limits what the effect is going to be on the willingness of people to buy the articles concerned. However, if one does this to the urban or even to the rural Bantu, who play an increasing part in our economy, one suddenly finds that one has done something disastrous, something ruinous to them, that one has to some extent destroyed their social pattern. They do not respond in the same way. Operating on a tight budget, their only choice is to stay with the terms they have been getting or to get out of the business and be repossessed. These are the considerations which have to be taken into account. We are producing in this country for a population of over 20 million people. Many of these people are growing at a higher rate, population-wise, than most other nations in the world. Three-quarters of our population is growing faster than any other European country, demographically. Their expectations are also rising faster: because of the lower level of their economy, they obviously have more rapidly rising expectations in that, when one rises from a low level, one rises faster than one rises from a high level to an even higher one. So these people are imposing a real demand. The hon. the Minister has set himself the task of defeating this growing demand. [Time expired.]

Mr. Speaker, in Afrikaans we have a saying which runs “Soort soek soort”. The English-speaking people have a saying with a similar meaning, namely “Birds of a feather flock together”. The hon. member for Von Brandis, who finished speaking a moment ago, involuntarily reminded me of this saying when he told the little story of the immigrants who were allegedly so dissatisfied and were returning home. I, too, come into contact with immigrants a great deal, also in the business activities with which I am concerned. Funnily enough, I come across satisfied immigrants only. I find it striking that he comes across all the dissatisfied immigrants, while I come across all the satisfied immigrants. Birds of a feather flock together. Furthermore, the hon. member emphasized the necessity of having a non-inflationary budget. He emphasized that “non-inflationary budgeting is absolutely necessary”. This is another example of the two-tongued propaganda of the Opposition to which we have become so accustomed, because the previous two speakers—especially the hon. the Leader of the Opposition—emphasized that our taxation was much too high. They emphasized that our taxation should be reduced, especially in respect of the higher income groups. I should now like to know from the hon. the Leader of the Opposition how we could have a non-inflationary budget and how we could finance our expenditure if we should reduce our taxation and could not raise loans? Surely these are two things which cannot be reconciled with each other. This is another example of the typical double-talking tactics of the Opposition, something we have come across so often. While the hon. the Leader of the Opposition was speaking this afternoon, I was particularly struck by the great difference between the actions of his supporters behind him this year and their actions last year. I remember only too well that last year the hon. the Leader of the Opposition almost did not have a chance to deliver his speech, because at every third or fourth sentence they applauded him. This afternoon, however, there was a deathly silence on that side of this House; only now and then was there a little applause. If ever there was a time when an Opposition should have been in a political paradise, it is definitely now, after this Government has been in power for nearly 24 years. It is an indisputable fact that in our Western democratic parliamentary system the electorate becomes dissatisfied after a time of having had the same government and would rather give another government a chance, even if it is not so sure that this would be an improvement. We have the position now that after 24 years of this Government, that Opposition should have been in a political paradise, because there must be a very large number of voters who desire even a dubious change merely in order to get a change. But in spite of that, we do not have this position. If the hon. the Opposition envisaged an early change of government as a result of this political paradise in which they should have found themselves, surely they would have grasped at every by-election? But what do we find? We virtually had to beg and implore them to put up a candidate in Brakpan. Even now we have not yet succeeded in inducing them to put up a candidate in Gezina. Or is Mr. Jooste their candidate? In addition, of course, there is Oudtshoorn, where the Opposition can show that it is very hopeful of a change of government, but we shall have to see whether they are going to grasp that opportunity.

One involuntarily asks oneself why the Opposition finds itself in the desert instead of in the political paradise in which they should have been by this time. Of course, many reasons can be put forward for this, but in my opinion the most important is that after all its years in opposition it has completely forgotten how to think and act positively. All the fruits of this paradise were available to it; those of positive, consistent criticism and especially those of a positive alternative policy. But has the Opposition used these? The Opposition continues eating the forbidden fruit of negative and destructive criticism, and this has now made them politically sterile. This fruit of negative and destructive criticism is most definitely not nutritious. In my opinion it is more of a drug. The Opposition is so busy becoming addicted to this drug that it most definitely cannot think positively any longer. It is so addicted to this drug that the hon. the Leader of the United Party in the Transvaal does not offer the voters of Brakpan a new policy of the United Party which they can support, but merely asks for protest votes. But of what avail is a protest vote? All it means to one is that it turns one into an insufferable grouch. This is precisely what the hon. the Opposition is becoming.

I should like to come to the economic situation in which we find ourselves, because the Opposition press has loudly proclaimed that the entire economy of South Africa is in a mess. Is this really the position? If this is the position, what alternative policy does the Opposition propose in order to get out of that mess? Having listened to three speakers on the Opposition side this afternoon, and having paid considerable attention to the economic correspondents of the Opposition press, it is very clear to me that they in fact have only one solution for all the evils and weaknesses in our economy, and that is to make unlimited use of all available labour. This is the constant refrain.

We all remember that a few years ago the hon. the Minister of Mines experienced problems with certain of our trade union leaders because they were opposed to the Bantu in the homelands performing certain responsible work in the mining industry. Our hon. Minister had serious problems, and then we all thought that those trade union leaders were under the influence of a small splinter party which was very active in our politics. We thought they were in touch with the leader of that small splinter party. Now, however, having reread a few speeches made here during the past few years by the hon. the Leader of the Opposition, I have the suspicion that those trade union leaders were not in contact with the leader of this splinter party, but in fact with the Leader of the Opposition. I should like to read out what the hon. the Leader of the Opposition said in this regard. I quote from Hansard, (Vol. 22, col. 47). Referring to the work to be done by certain Bantu in the homelands, he said—

This is what the hon. the Leader of the Opposition said in respect of more skilled work which we want the Bantu to do. A government can progress only as fast as it can take its people with it. This Government is very rapidly allowing the non-Whites in this country to perform more and more responsible work. But then this is the sort of propaganda we get from the hon. the Leader of the Opposition. I continue reading what he said in that same speech—

He pointed out that the determination in respect of work reservation protecting Whites and Coloureds in these industries was virtually a dead letter and that it was not possible to apply it. Mr. Speaker, how on earth can one progress more quickly in letting the Bantu do more responsible work when one has to contend with this sort of propaganda by the Leader of the Opposition? And then I do not even mention the Leader of the Opposition in Natal; we all know what his standpoint is in respect of responsible work for Bantu. Because the Opposition is so obsessed by this one facet of our economic life, it is overlooking all the other facets completely It will of course try to exploit for political gain the statement I am going to make now, but I want to make this statement as earnestly as I possibly can, because I believe it lies at the root of the economic problems, in so far as there are problems, with which we have to contend at present. One of the problems with which we have to contend is that we are all trying to maintain a standard of living which is too high. It is a simple fact that we are living beyond our means or, to put it differently, it is a fact that we do not work nearly hard enough to justify the standard of living we should like to maintain.

Ask the Cabinet.

The hon. the Leader of the Opposition once again emphasized very specifically here this afternoon that our standard of living was not nearly as high as those in most of the other Western countries. He said we should not compare our standard of living with those of fifth-rate nations, but that we should compare it with those of leading Western nations, in which case we compare very unfavourably. Mr. Speaker, I recently happened to read a very interesting study, an economic study made by the Union Banque of Switzerland, in which it compared the standard of living of our workers in Johannesburg with the standard of living of workers in 30 other Western cities. According to this study the income of our workers is higher than the corresponding incomes in those 30 other Western cities.

Does that include non-Whites?

I am talking about White South Africa now. The categories covered by the study do not include those of managing directors, medical specialists and advocates with very high incomes; the categories covered by this survey are the drivers, motor car mechanics, bank tellers and secretaries. Admittedly the average income of these five groups of workers is 69 per cent higher in New York than in Johannesburg, but on the average prices in New York are 97 per cent higher than those in Johannesburg. Therefore, the effective buying power of these five groups of workers in Johannesburg is considerably higher than that of these groups in New York.

What about the poor farmers?

In Sydney the income is 16 per cent lower than in Johannesburg, but the prices are 15 per cent higher. In London the income of these five groups of workers is an average of 45 per cent lower than that of their counterparts in Johannesburg, while the prices are approximately the same. In Paris the income is 31 per cent lower and the prices slightly higher. This study furnishes detailed figures for 31 cities, including practically all the capital cities and other important cities in the West. Of course, unfortunately I cannot quote them all here, but the study comes to the conclusion that the average standard of living of these five categories of workers, namely—I mention them again —primary school teachers, bus drivers, motor car mechanics, bank tellers and secretaries, is considerably higher than that of the same categories in the 30 cities covered by the survey. Now, the Opposition and its Press are continually emphasizing the rising prices. Allow me to say this now. We do have to contend with rising prices, but, as the hon. the Minister of Finance and the hon. the Minister of Planning indicated so effectively, incomes have increased more rapidly than prices. In fact, this is in reality the most important cause of a higher rate of inflation, namely that wages increase more rapidly than productivity. I ask myself whether this Opposition, after so many years of being in opposition, have become so negative that they can no longer think positively? Have they told themselves that they no longer have a function to perform in our political life? Why are they presenting such a warped picture of our economy? All they are achieving by this is to create mass dissatisfaction—a dissatisfaction psychosis —among our people, and dissatisfied workers are most definitely not productive workers. This means that the action of our Opposition is causing our productivity to be reduced more and more, because by creating this dissatisfaction psychosis it is affecting the productivity of our people very drastically. In other words, the irresponsible action of the Opposition is directly responsible for a decrease in productivity and the slowing down of our growth rate and, in the last instance, for the destruction of our prosperity. What an expensive price to pay, what an expensive price for South Africa to pay for an irresponsible Opposition!

Furthermore, an analysis of our balance of payments position provides a crystal clear indication of the extent to which we are living beyond our means. As recently as 1968 we had a balance of payments surplus of R75 million. In addition, we had a capital inflow of R459 million, and consequently there was a positive change of R534 million in our reserves. In 1969 our balance of payments position changed to a negative one; in other words, a deficit of R245 million. We did still have a capital inflow of R180 million, with the result that the change in our reserves was minus R65 million. In 1970 we had a deficit of R843 million on our balance of payments, a net capital inflow of R557 million and a decrease of R286 million in our reserves. In 1971—here I am quoting the figure mentioned by the hon. the Leader of the Opposition this afternoon—we had a deficit of R1 350 million on our balance of payments and a net capital inflow—this is merely a provisional figure—of approximately R700 million, and consequently a further considerable deterioration in our balance of payments position and in our reserves. Sir, a person who spends more than he earns must necessarily draw on his capital, and once he has done this for long enough, his capital becomes exhausted and he is heading for bankruptcy. A nation which does the same is inevitably heading for devaluation. The hon. the Leader of the Opposition indicated all the disadvantages of devaluation to us this afternoon, how it would cause prices to increase, but he did not say a single word about the advantages inherent for us in devaluation. He did not say a single word about the extension of the life of our goldmines, nor a single word about the improved position for our exporters. I believe that, as the hon. the Leader of the Opposition said, devaluation will very definitely not be able to produce a final solution to our economic problems. But it will give us a very valuable breather. It will depend on all of us whether or not we are going to make use of that opportunity. We as a people will simply have to produce more and spend less if we want to make use of that opportunity. This fact must be brought home to the people continually. If we want to make the fullest use of the opportunity created for us by devaluation, we will have to work harder, produce more and spend less. I now want to ask the hon. the Opposition and the hon. the Leader of the Opposition whether they are going to make use of this opportunity to co-operate with the Government in continually bringing this fact home to the people. If we do not make use of this opportunity to gain a respite, and if we do not make use of the opportunity devaluation offers us to produce more and spend less, there is no future for us. We shall have to tell the people this continually. If we do not do so, the Opposition will not only fail to come into power, but it will help to destroy the prosperity of all of us.

I now ask in all seriousness: Can South Africa afford such an Opposition much longer? Remember, the world does not owe us a living. If we want to destroy ourselves, we will earn only the reproaches of an impoverished posterity. We will not be the first rich country with an impoverished posterity. World history abounds with examples of such peoples. It is not yet too late for the Opposition to come to its senses. It can still pull itself together properly, because devaluation is providing a very welcome respite, not only for this side of the House, but also for that side. Now, the motion of the hon. the Leader of the Opposition reads that this House has no confidence in the Government.

Hear, hear!

It is really high time that we said what the people outside have been saying for a long time, namely that this House does not have the slightest confidence in the Opposition. This Government will still rule for a long time!

Mr. Speaker, when listening to the tirades directed by hon. members from the Government benches against the first three speakers on this side of the House, it is interesting to note from Todd’s Parliamentary Government in England that the procedure for the removal of an obnoxious or incapable government by a direct no-confidence vote dates back to as recently as 1841. Erskine May has recorded that as a convention this is due to the recognized and responsible position of the Leader of the Opposition as being the leader of a political alternative government. This constitutional procedure allows for a major debate to enable the harassed, silent voter, the unprivileged, the pensioner, the salaried man and the civil servants to voice their dissatisfaction with Government mismanagement at the very first occasion which a new sitting of Parliament permits. It is significant that this 1972 no-confidence debate today allows the South Africans, who are thoroughly disillusioned, to voice their discontent and their dissatisfaction with what has been proved to be a totally inept, incompetent and frustrating Government. On the eve of the new year the hon. the Prime Minister indicated in his address to the nation that he predicted a healthy period during the coming year for the South African economy. At the same time the hon. the Leader of the Opposition has stated to the contrary and to his regret that he could see few causes for optimism in the present state of political climate and the economic uncertainty which South Africa is experiencing under the Nationalist rule. How wrong the hon. the Prime Minister and how right the hon. the Leader of the Opposition was! For too long the Nationalist Government has placed ideological issues before the welfare and wellbeing of the South African ordinary people. For too long this Government has asked South Africa to move along at the pace of a donkey in blinkers. In this year, 1972, the South African economy is suffering from ill-health. This is a comment not only from economists on this side of the House, but also from leading businessmen and economists on the Nationalist side of the House.

The United Party will deal in this debate with a number of issues, charging the Government with having lost the confidence of South Africa. Indeed, any Government which has lost not only the confidence of the youth of South Africa, but also of its own youth, the confidence of its own intellectuals and the confidence of its own industrial world of business, banking and financiers, must find itself in a parlous state. Seldom in the history of a country has an Opposition faced a Government where it can charge the hon. Prime Minister with carrying within the ranks of his Cabinet men who continue to hold office while they have forfeited the respect and confidence of so large a portion of the South African electorate. I submit that in this Government we probably have the only Government in the world that is holding office after having made so many blunders and after the disclosure of such alarming incidents as the De Wet-Marendaz scandal, the mishandling of our fishing industry and the Agliotti scandal. It is enough to say that in the Civil Service and from the man in the street today you no longer find confidence in the Ministers who head their respective departments. Indeed during recent months we have found that the Ministers have so little confidence in their own ability to accept responsibility for their departments that they are delegating the responsibility more and more to their departmental secretaries to be the spokesmen on matters of urgent Government policy. We shall not be deflected in this debate from our main attack on the Government which will be based on the reasons for the Government having lost the confidence of the country. The United Party will not be side-tracked. We charge the Prime Minister and the Cabinet with having hopelessly mismanaged the economy of South Africa. The Government has failed in its stated purpose to control the crippling inflationary trend which we are experiencing and which we have experienced during recent years. We also charge the Government with having brought about those conditions which have led to the harsh increase in the cost of living which is making life unbearable today for the ordinary citizen. We blame them for the burden of poverty which today falls upon the aged and the sick, for the lack of confidence which has brought about the present recessionary trends in the business world, for the problems which face our industrialists, for the crippling import, hire purchase and financial restrictions which are hindering commerce and industry today, and for failing to improve the economic growth rate in our country at a time when it can manifestly be improved.

Let me refer to the advice given by no less prominent an industrialist than Mr. Jan Marais, who has pleaded with this Government over and over to aim at a growth rate of not less than 6 per cent under present conditions.

Finally, there is the Government’s total mishandling of the available labour resources in South Africa. Mr. Speaker, I have used harsh phrases. The economy and the country is sick of the Government administering them. It is significant that such a large number of independent financial papers have queried the ability of our present Minister of Economic Affairs to deal effectively with his most important portfolio. So little faith have the financial pundits in the economic ability of the hon. the Minister that they have out of courtesy suggested that the hon. the Prime Minister might well divide the Department of Police from the Department of Economic Affairs and so relieve the hon. the Minister of his somewhat arduous task, which is apparently beyond him. Mr. Speaker, this Government has failed to contain inflation notwithstanding the fact that the hon. the Prime Minister, the hon. the Minister of Economic Affairs and the hon. the Minister of Finance have all nailed their flag to the masthead in a solemn undertaking that this Government will at all costs and by all means combat and reduce the degree of inflation from which the economy is suffering. Let us examine the facts. The 1971-’72 budget was a fiscal and financial disaster. In this budget the hon. the Minister of Finance made great play and drew vastly on the wisdom of Confucius in emphasizing that it was the Government’s prerogative to use all fiscal and monetary weapons in its armoury in its fight against inflation. The United Party predicted that the budget would definitely bring higher taxes and slower growth. This was the cost of this Government’s present racist policies. The hon. the Minister of Finance revelled for some two hours in expounding the deflationary nature of his budget proposals. He said that the recalcitrant public must be rapped over the knuckles for its extravagance, overspending and under-saving. The private individual would be taxed even more severely on his marginal income. Public companies would be compelled to save through increased company taxes. The manufacturer would have a number of carrots dangled before his nose in order to induce him to move into the wilderness, into a sphere of unprofitable industrialization. Mr. Speaker, after a lapse of almost a year, what are the facts?

Mr. Speaker, at this stage I wish to move—