Mr. Speaker … [Interjections.] We shall have the last laugh in this debate, Sir. When I said on Monday that the hon. the Minister had given no indication in his speech of how the challenge of devaluation is to be met, the hon. the Minister interjected and asked me whether I did not know that there was a Budget coming. I repeat today what I said then. There is a Budget coming on 29th March, but that is six weeks away. But it is already three months since the parlous position of our balance of payments forced the hon. the Minister to intensify import control. It is nearly two months since the hon. the Minister was forced to devalue the rand by 12,28 per cent. While the hon. the Minister waits for the Budget, the people are desperately concerned with rising prices and they are worried sick at the unequal struggle to make ends meet. They are waiting for the positive programme to reap the maximum benefit from devaluation that the hon. the Minister referred to on Monday. What have we had so far? A heavy silence, a silence in glaring contrast to the splatter of statements we had from hon. Ministers last year.

The hon. the Minister knows that all devaluation offers to us is an opportunity for a limited period of time to correct the elements of the economic structure that created the very need for devaluation, what Dr. Jan Marais called “a temporary breathing space to get our house in order”. Two months of this temporary breathing space have already gone, but there has been not a shred of evidence that a contingency plan has even been formulated by the Government, let alone put it into effect. There has been not a single detail of what the Government is going to do, what it expects industry to do, or what it expects commerce to do, to reap this maximum benefit from devaluation. Therefore, Mr. Speaker, I move the following amendment—

The hon. the Minister of course broke his silence both in the No-confidence Debate and again on Monday, but what did he say? His first point was that in 1947 the then United Party Government, in so far as our industries were concerned, tied us down with GATT with very low protective tariffs. This, we are told, is relative to our present position. The hon. the Minister says correctly that it is difficult to increase these tariffs. I want to ask the hon. the Minister this: What has this Government done over the past 23 years to raise these tariffs? Surely 23 years is long enough for even this Government to alter agreements made in 1947? Of course, if you do nothing for over 20 years and then find that you have to dismantle import control, you have no option but to do what the Government did, viz. suddenly to send emissaries all over Europe to try to get tariffs adjusted, only to find that these things do take a long time. If the hon. the Minister’s reply to me is that he has made tariff adjustments over the past 23 years, then he must stop using what happened in 1947 as one of the main causes for his trouble. One of two things has happened: Either he has made the adjustments, or it has taken him 23 years and he has done nothing.

The hon. the Minister also complained about some new people, some new prophets, the prophets of growth. We used to be the prophets of gloom; now we have become the prophets of growth. Unfortunately the prophets of gloom have been proved to be the prophets of realism. These prophets of growth, he said, have not offered a solution to the problem of how to stimulate the economy when you have an unfavourable balance of payments. The hon. the Minister has his priorities wrong again. The question is not: How do you have growth when you have a balance of payments problem? The question is: How did we get into the position where we have a balance of payments problem? The hon. the Minister gave some of the reasons in his speech on Monday. He mentioned the rapid increase in imports associated with an increase in consumption, the stagnation of our export trade due to unfavourable climatic conditions, a substantial fall in export prices, and declining demands for such commodities as wool, diamonds, copper, etc. I grant the hon. the Minister these reasons. I grant that they are perhaps unavoidable reasons, but what about the other reasons, the reasons the hon. the Minister did not give us and which could have been avoided? Here I think of undue interference in the private sector by a host of controls, including the credit ceiling of the monetary banks, which the hon. the Minister now suddenly tells us has unsatisfactory aspects, notably in its tendency to stimulate the so-called grey market. Really, Mr. Speaker, I have been telling the hon. the Minister this for four years now; now he has suddenly discovered it. Other reasons he could give are the Physical Planning Act, the restraints on the training and use of labour, the bottle-necks in our infrastructure, in the Railways, the Harbours, the postal services, and the whole stop-start “spend for prosperity”—“save for prosperity” philosophy of the Government. These are the vital reasons, and they are reasons that could have been avoided by any Government that is worthy of its electorate.

Sir, the hon. the Minister also gave us the benefits that devaluation holds for us:

The hon. the Minister goes on to say that devaluation tends to raise the price of imported goods and that in some respects this is a desirable tendency, since it increases the ability of local goods to compete with imported goods. This may be all very well, Sir, but what the hon. the Minister does not say is that only 20 per cent of our imports are consumer goods and that the volume of capital goods imported—some 80 per cent—will have to fall to the extent to which the rand has been devalued in terms of the currency concerned to offset any increased prices that will now have to be paid for them. You are going to get fewer goods for more money. The hon. the Minister also does not seem to realize that a higher price for imported goods can have the effect of increasing the price of local goods. Because what keeps down the price of local goods? —Competition, and if you remove competition, you must expect prices to rise. The hon. the Minister also ignores the fact that there will be more pressure on our labour resources and that the increased demand that we may have in the private sector and in industry will be in industries that are already working to capacity, and this is where the danger lies. The whole tenor of the hon. the Minister’s speech on Monday was that devaluation furnishes a golden opportunity. “Let’s seize this chance,” he said, but there was not a word from him on how we were going to gear our economy to give devaluation a meaningful purpose. He does not act like the Americans acted, Mr. Speaker. When America, as a result of their economic position, took steps to remove the convertibility of the dollar and impose the 10 per cent import surcharge and eventually devalued, they did not stop there; they followed through. Within days they had a temporary control price and wage freeze; they lowered interest rates; they reduced taxation …

Are you pleading for the control of wages?

They increased initial plant allowances and depreciation—they had what they called a “game plan”; in other words, they knew where they were going. I am not suggesting for a moment, Mr. Speaker, that we should take exactly the same steps as the Americans did.

What are you suggesting?

Because our circumstances, although very similar in many respects, are very different in other respects. What I am saying—and I want to say it with all the emphasis that I can—is that we, too, must have a follow-through; we, too, must have a “game plan”. For two months we have been waiting for the Government to tell us what it is going to do; for two months we have been waiting for the Government to get moving. On Monday the hon. the Minister told us that the question of the credit ceiling and several other matters relating to economic growth were receiving close attention. In heaven’s name, Mr. Speaker, how much time does this Government want? How much time does this Government think we have? Sir, the people say that we have no time and they demand to know now when and how they will see the benefit of the massive devaluation of the rand. When I used the phrase “massive devaluation” in the no-confidence debate, the hon. the Minister looked at me with some surprise. But let us see what happened when we devalued by 12,28 per cent and other currencies revalued. What happened to the rand? The effect of changes of some of these currencies against rands was as follows: The United Kingdom, 14 per cent; the United States, 7,2 per cent; Japan, 24,4 per cent; Germany, 20,9 per cent; France, 14,5 per cent; Switzerland, 19,7 per cent, Netherlands, 19,9 per cent; Belgium, 20 per cent; Portugal, 12,8 per cent; Rhodesia, 14 per cent and so I could go on. If these are not massive devaluations, Sir, then I do not know what are. But at least in so far as devaluation is concerned, we seem to have some finality. The hon. the Minister says that he is not going to devalue further. But what is the position with import control? After being told month after month that any intensification of import control would be frowned upon by GATT, we were told on Monday that the new import restrictions were applied “in full conformity with our obligation under GATT”. What must one deduce from this, Sir? The only possible deduction is that things were so bad with our economy that GATT saw that it was essential for us to reimpose import control.

What about America?

Well, that hon. member can tell me later why we did; I would be very interested to hear. Then, Mr. Speaker, we sent another flock of pigeons across to the Continent to hold discussions with GATT, but with what result we do not know. Then we had the statement from the hon. the Minister of Economic Affairs on the 24th November, 1971, when he said that he was going to intensify import control. He said that the policy would be reviewed during May, 1972. Sir, that is only three months ahead; and on Monday, to give real clarity to the position, the hon. the Minister told us that it had also been decided to maintain import control for the time being. Mr. Speaker, I want to put on record that it is permanent uncertainty that has been the curse with which the private sector has had to live since 1964, and uncertainty with regard to import control brings everybody no benefits and nobody any benefits. What is the time being? Is it a week, is it a month, is it a year? The public is bewildered; they do not know whether there is going to be a shortage of imported goods and they are over-buying, and very often unnecessarily paying higher prices than they need to pay. The manufacturer is hesitant to invest hundreds of thousands of rands in increased capacity, particularly under the existing conditions of Government policy, with potential overseas competition completely unknown to him, and the hon. the Minister’s own Budget becomes a farce if he does not know what the import position is. If he does not know what imports are into this country, how is he going to calculate his customs duties and his sales taxes? We do not believe—and we have said so—that side by side with devaluation, intensified import control, except for the very minimal period, is in the best interests of South Africa. It is highly inflationary and the public just cannot stand any further rises in prices. But, even worse, this tightening of import control is an admission by the Government of its inability to create the climate and conditions which are necessary to ease, if not to eliminate, the burdens that the people are being asked to carry.

Mr. Speaker, the public have suffered the recurrent shocks of (a) a drop in the growth rate to 4 per cent; (b) an increase in excise duties and sales taxes; (c) increases in income tax and the loan levy; (d) increases in postal, telephone and railway rates and air fares, and (e) inflation at an annual rate of some 7 per cent. They are weary of the continuous mismanagement of the country by this Government. They now want from this Government a clear lead as to where it is taking the country. They want to know how the Government intends meeting the challenges and changing circumstances of the day; how it will protect them, the people, from the effects of the recurrent crises that we have day after day throughout the world.

I do not believe that any of us can be sure that the world monetary and economic crisis is over. Some say that the whole economic system is outgrown and outworn and that prices grow increasingly, that we have had too many crises under the IMF and under GATT, that the world economic expansion for 1972 is by no means certain, that the economies of Japan and of Germany are very sluggish at the moment, that this can affect the developing countries by falling world commodity prices, that many countries may well have to curtail spending to curb inflation. We really do not know what the immediate future is going to hold. But last year’s crisis caught us at our weakest when we needed to be at our strongest; so we were forced to devalue. Now the hon. the Minister says, and quite rightly, that devaluation is a golden opportunity. It is a golden opportunity. It is an opportunity to increase production and productivity. It is an opportunity to increase the availability of locally-manufactured goods. It is an opportunity to stop the deflation of local demand so that we can have the benefits of the economy of scale. It is an opportunity to improve our export performance, to hold down the cost of living, to restore confidence, to get rid of the inflationary psychology, to restore a belief in the virtue of profits so that the industrialist can expand his business, reduce his price through greater throughput and create more job opportunities, so that the worker can have a larger slice of the bigger cake and so that the hon. the Minister himself, who it is calculated takes some 66 per cent of all company profits through companies tax and the tax on dividends, can have more income for his fiscus. It is an opportunity to build a strong and stable economy that can stand up to the vicissitudes of other countries in the world. But the people want action from the hon. the Minister. They have accepted devaluation. It is here; it is with us. Now they want the Government to put our house in order so that they in turn can be relieved of some of the burdens they carry. They have had burdens imposed upon them year after year with pious promises of better things to come, but the promises have never materialized.

Mr. Speaker, I believe that this Government has completely lost touch with the people. It has no longer any feeling for their moods. In all my 20 years in public life, in the provincial council and in this House, I have never known the electorate as bewildered, as frustrated as despondent and as anti-Government as they are today.

Nonsense.

And the evidence for that is in this very building. The evidence is in the postboxes of hon. members on both sides of the House, letter after letter day after day, week after week—letters from the whole strata of the public of South Africa. They come from the pensioners who seek assistance because life becomes harder for them every day. [Interjections.] Look at your own letters and read them. There are letters from retired men and women who either lost their savings in the Stock Exchange drop of 1969 or, if they invested more safely and invested in gilt-edged securities, have had their capital eroded away by inflation. There are letters from the businessmen, hemmed in by control, unable to plan for the future because this Government changed its mind every day of the week and practically taxes them out of existence. There are letters from the younger people who find it almost impossible to get themselves established. There are letters from the housewives, who fight a losing battle against rising cost and who have reached the end of their tether. And then there is the evidence of the letters we do not get, from the silent majority, from the non-Whites who are the hardest hit of all. Sir, we know the mood of the people. It is uncertain. It is lacking in confidence. It is hostile to the Government and it is tragically even a little afraid. And the reason is clear. They see a Government that is moribund, unsure of itself and unable to take the simplest decisions. It is a Government living in a fool’s paradise. The hon. the Minister of Finance may be laughing, but he is one of the greatest problems, as I will now explain to the House. Since the hon. the Minister’s visit overseas last year, where, let me say at once, he is held in esteem, we have heard from him ad nauseam of the high regard in which South Africa is held in financial circles overseas. This is correct—we are held in high regard overseas. We have heard from the hon. the Minister of the confidence foreign financial leaders have in South Africa. That is also correct. It is true—they have confidence in South Africa. We have heard of the surprise expressed abroad at the degree of concern apparently being felt in some quarters here in South Africa at the South African economic situation. I have some doubt about the correctness of this statement. Of course the overseas financial institutions and the rest of the world have confidence in South Africa. They have belief in the strength of our resources and they have faith in the character of our people. But what do they say about South Africa as of now? This is an extract from International Finance, which the hon. the Minister knows very well—

Incidentally, this is dated the 31st January, 1972—

This is what they are saying about us abroad at the moment.

My question to the hon. the Minister is: Why is he so concerned with what people say overseas? Hon. members opposite have said time and time again in this House that we, who live in South Africa and know our problems and the solutions to those problems, are much better able to judge a situation than those who are looking in from without. We have gone along with that feeling. I want to say to the hon. the Minister: Do not take too much account of the views of your friends abroad. They usually are hosts and hosts are very polite …

But that publication is an overseas one.

Come down to earth and listen to the advice of tried and true South Africans. [Interjections.] Listen to the advice of the F.C.I., listen to the advice of ASSOCOM, listen to the advice of the financial editors of our newspapers, listen to the advice of TUCSA, listen to the advice of Aubrey Dickman. If you do not like the advice of that group of people, listen to the advice of Dr. Jan Marais, of Dr. Jan Hupkes, of J. A. C. van Aswegen, of A. P. J. Burger, of the Stellenbosch Bureau, of SAFKO, of the Sakekamer, of the Handelsinstituut, even to the advice of the Minister’s own organization, the Industrial Development Corporation. Do not listen to us; listen to these people, because they have been telling you and will continue to tell you the same things that we have been telling you day in and day out. What have we been telling you, and what have these other good South Africans been telling you? Curb Government spending, develop the infrastructure, but stop being infatuated by the power of spending, stop interfering with the private sector, ease the labour bottleneck, remove all these unnecessary controls, some of which the hon. the Minister is now beginning to see in a different light …

You mean like the days when you were in power?

Stop trying to eliminate the symptoms and get to the basic causes. [Interjections.] I don’t know why that hon. Whip is so cross this afternoon; he seems to be upset.

I go on to mention the other steps that should be taken. Expand productivity in the manufacturing activities and stop subjecting the manufacturing sector to limitation. Expand productive capacity, create more employment opportunities and give meaningful help to our exports. We do not need words; we need deeds and action. Create a rapid and sustained growth in the domestic market. Let us create a domestic market so that we can have an export market. Go for the economy of scale, large production units with a meaningful volume of goods for export. Generate income so that you can reduce taxes. Here is the “game plan” that South Africa wants …

These are generalities.

These are no generalities, but 13 points that I have mentioned. If the hon. the Minister would only listen to these points, he would get somewhere. There is a cacophony of sound rising from all sectors day after day, and the Minister knows it. The vital question is whether the Government can initiate and sustain a plan of this dimension. I do not believe that it can. When I hear the hon. the Minister of Finance saying “generalities”, I am sorry to say that I am reinforced in my opinion that the Government cannot. Equally, I do not believe that the public will any longer suffer silence, inactivity and platitudes as the corrective for our present dilemma. They are not going to be like the man in the music hall song of the eighties who sang—

The electorate are going to wallop this Government; they are going to wallop them good and solid.

Mr. Speaker, on so many occasions I have said in this House that the hon. members on the other side of the House have lost all sense of the positive after sitting in the Opposition benches for 20 years. On Monday afternoon, when the hon. member for Parktown rose to reply to the Part Appropriation speech by the hon. the Minister of Finance, he moved the adjournment of the debate in more or less the following words: Because the hon. the Minister did not announce any positive steps concerning what this Government intended doing subsequent to intensifying import control and devaluing. “Because the Government has not taken any positive steps, I now move the adjournment of this House in order that we may prepare ourselves for telling this Government on Wednesday what positive steps it should take to remedy the economic situation in the country.” This afternoon I listened for 25 minutes to one long string of negative criticism. Right at the end, in the last two minutes of his speech, the hon. member came forward with his thirteen points, which are supposed to be the positive steps that should be taken by this Government to get our economy going again.

The first of these is, as usual, that the Government should curtail public expenditure. Of course, he did not elaborate on that, because how can he? Only last Friday his bench mate here made a plea for the establishment of another Ministry. They are still passing negative criticism, without really making a positive contribution. I do not want to pass too harsh a judgment this afternoon, because I can understand why the hon. member who was so keen on Monday to read out positive steps to this Government, fell flat on his face this afternoon. If I may for a moment plough with a heifer of a colleague of mine, I want to repeat here what he said about the speech made by the hon. member for Parktown, namely, “He May-faired not too well.” [Interjections.] Mr. Speaker, I rather find myself in something of a dilemma, for yesterday, after the hon. Opposition had been so excited here about what had happened in Mayfair, I had to prepare myself for replying this afternoon to the speech of the hon. member for Parktown. Naturally, I had to prepare myself for replying to what they would have to say about Mr. Jan van Blerk. Only yesterday the hon. member for Yeoville said the following in the Strand, according to a newspaper report (translation)—

Mr. Speaker, this interim flow was much shorter than was the interim period of the U.P. in respect of the representation of Bantu in this House. That is a perfectly interim flow. I actually wished that I would be able to grant them that small amount of pleasure this afternoon, for then I would have been able to remind them that to us it is by no means strange to find people defecting from that side to this side of the House. Just see how many of them are sitting on this side of the House already. The only member that hon. Opposition has gained over the past 23 years, is the hon. member for Bezuidenhout, and he did not even cross over from this side to that side; he simply ran away from this side. [Interjections.] Two years after he had run away, he deceived the hon. the Leader of the Opposition beautifully by telling him how many Nationalists he would bring along if they would only give him a safe U.P. seat. Nothing came of that either. I do not know what happened in other constituencies, but in my constituency there were only five supporters of his National Union at that time. The year after he had deceived the hon. the Leader of the Opposition in that manner and had been given a safe U.P. seat, those men were back with the National Party, all five of them. [Interjections.]

Order!

Supposing Mr. Jan van Blerk had not changed his mind and were still a member of the United Party this afternoon, I would have told them that I hoped they would be happier with this latest defector they gained, much happier than they are with the one they gained 11 years ago, for judging by leakages from the United Party caucus, one finds that they are not terribly happy with him at the moment.

Nor he with them.

Yes, how happy he is with them, is of course a different question. Mr. Jan van Blerk had the audacity to say that he was going over to the United Party because there he wanted to plead the interests of the poor man, the man in the street, the worker. Now I wonder whether he would feel at home with those rich men of the United Party, the people who are continuously complaining about the severe taxes imposed on the higher income groups. Unfortunately I cannot say these things to them this afternoon, for according to the latest reports I hear that Mr. Jan van Blerk is no longer so happy with his new friends.

One day was long enough.

I want to come back to the Part Appropriation. [Interjections.] The hon. member for Parktown is terribly upset about the fact that the hon. the Minister did not make a major policy speech. I should like to know from him since when it has been traditional in this House for the Minister of Finance to make, in a Part Appropriation debate, a major policy speech six weeks before his Budget.

And what did he do last year?

I expected the hon. member for Durban Point to ask that, because he knows precious little about finance. It was no policy speech when he raised the sales duty in an emergency. There was no question of a major policy speech at the time. Now I want to ask the hon. member for Parktown again since when it has been traditional in this House for the Minister of Finance to make a major economic policy speech in a Part Appropriation debate. How can he show his hand six weeks before the Budget? Surely that is too foolish to consider.

But, surely, conditions are not abnormal?

Having listened again this afternoon to a string of negative criticism of this Government, and especially in regard to the economic recession in which we find ourselves now, I find it very obvious that the Opposition speakers on economic matters do not have the slightest understanding of the cyclical movements of a capitalist economy. If they had known economics and the history of economics, they would have known that a capitalist economy has its hills and dales. Then they would have known that the curve runs up and down, and that, just as we find ourselves down in the trough of that curve at the moment, we shall very definitely rise again to the top and soon reach the hill of growth and progress again. Does the hon. member not know that in a capitalist economy it is in fact the developing countries, whose exports are still comprised mainly of raw materials and agricultural products, that are affected to a greater extent by the economic cycle than is the case with the highly developed industrial countries? Does the hon. member not know that not even 20 per cent of our exports consists of industrial products and that the other 80 per cent consists of gold, diamonds, metals, minerals and agricultural products? On the position of gold I do not wish to say anything, for it is common knowledge that since 1934 until recently we were saddled here with a pegged price. Does the Opposition not know how the prices of diamonds, platinum, copper, zinc, antinomy and molybdenum recently dropped on the world markets, and that this must necessarily have a very adverse effect on our balance of payments?

Did you not listen to his speech?

The hon. member may as well keep quiet now; he is only revealing his ignorance of economic matters. Surely, this must necessarily cause our export earnings to drop tremendously and our balance of payments to deteriorate considerably. After all, they do have wool farmers on the other side of the House. Do they not know how wool prices have dropped in recent years, and how wool, which has always been one of our major agricultural export products, has suffered as a result? I can also refer the hon. member to the position in the fruit industry. In the latest report of the Deciduous Fruit Board it is stated that although our exports showed an increase of 12 per cent during the latest season, the payments to producers remained constant at R34,2 million. The exports increased by 12 per cent while the payments to farmers remained the same. Does the Opposition have no evaluation of these problems? Why do they always criticize negatively, or are they simply negatively inclined because they have forgotten how to govern a country? Or are the Opposition merely being wilful because they do not care about the way their negative attitude is destroying the prosperity of all of us? After every depression cycle there is one major requirement for lifting us out of that trough, i.e. confidence. We must have confidence in our economic future as well as its strength. Have we found any evidence of this with members of the Opposition? Has the Opposition ever shown any confidence in our economy? Their spunkless nagging has had exactly the opposite effect on our economy. If our entrepreneurs had to listen to this spunkless nagging, surely they would never feel at liberty to invest larger sums of capital in our economy.

There is one fact I want to emphasize very strongly here this afternoon. The blame for the depression cycle in the economy is being laid at the door of this Government. It is being said that this Government is responsible for all the problems we are experiencing. However, I want to emphasize very strongly that, to my mind, we are finding ourselves at present at the start of a new upsurge in our economy. When, after two or three years, we shall be experiencing the full force of this upsurge, I shall remind the Opposition that just as they blamed us for the depression cycle, they should also give us the credit for the boom cycle. Are the Opposition going to give us the credit then, or are they going to undo this 12 per cent devaluation when pigs learn to fly and when they should perhaps come into power? Are they perhaps going to revalue by 12 percent, or axe they only going to revalue by the 4 per cent by which we devalued more than America did and about which they are so upset? Now they are laying the blame for the price-raising effects of devaluation at the door of this Government. However, are they also going to give this Government the credit for the benefits that are going to result from it once their effects are felt in our economy? Will they give us the credit when we get more money for our gold, minerals, diamonds and agricultural products?

I want to emphasize strongly that we are finding ourselves at the start of a major upsurge in the economy of this country. However, there are two conditions which I lay down for this upsurge. These are two conditions with which we shall have to comply if we want to enjoy that greater prosperity. In this respect the Opposition can play a role and help us if it wants to be positive.

Yes, we can replace the Government.

Suppose the Opposition replaced the Government and then lost its supporters again just as rapidly, like leaves falling from a tree, which is what happened in Mayfair, what would happen then? Surely then we would have another election within a year of its coming into power.

There are two important conditions for this greater prosperity, this upsurge in our economy. The one is increased productivity without any insistence on undisciplined wage and salary demands, and the other is more capital for investment derived from the savings of the people. In regard to these wage and salary demands, I want to add, though, that all of us would be well advised to search our own hearts. In this respect I should like to address a few words to those business leaders whom the hon. member for Parktown is so fond of quoting, and who are supposedly condemning us for our actions. It is very easy to tell the worker that he should not make any demands for increased wages, but he does after all have the right to expect his employers, too, to discipline themselves. Last year, when this House had the unpleasant task of raising the salaries of its members, there was a great deal of criticism from many quarters. The increased salaries received by Ministers and Members of Parliament as from that time, were scattered to the four winds. Would those business leaders, those professional people who levelled criticism, be willing to make known their incomes, their increases in fees? That is why I want to say that each of us should rather search his own heart and make sure that he does not demand higher wages, salaries and fees without increased productivity.

The second condition which I have laid down for this greater upsurge in our economy, is sufficient capital for investment and growth. Capital can only come from one place, and that is the savings of the people, either from the savings of our own people or from countries abroad. Of course, there is one other way of getting money, and this the hon. member for Parktown advocates so easily. Only this afternoon he referred to it again. All we should do, according to him, is to remove the credit ceiling from the banks and to create more credit. Very well, money would then be more plentiful, but we would be creating inflation by doing so; that is extremely inflationary, and I should like to see what the rate of inflation would be if we yielded to the unrestrained credit which hon. members opposite are so fond of advocating. I have often mentioned figures in this House to indicate how the savings of our people have shown a downward trend in recent years. I notice in the latest edition of Business Times that Charles Diamond reflects it as follows—

If this trend were to continue, surely we would not have the necessary capital for financing this upsurge in our economy. If we had to listen to the appeal for a tremendous amount of credit to be created and to the continuous pleas that credit should be more freely available now, it would be very easy for us to be heading for galloping inflation. Galloping inflation always reminds me of the chap in Germany who in 1923 went to a pub pushing a wheelbarrow loaded with bank notes. Having arrived at the pub, he left his wheelbarrow with its load outside the pub so as to order his drink, and when he came out to fetch the notes in order to pay for his drink, all the notes were lying about in the street, for somebody had taken his wheelbarrow! That is what happens to an economy that extends credit in an uncontrolled manner in order to finance unsound growth. There is only one way to ensure safe capital formation, i.e. by way of the savings of the people. To bring this lesson home to our people in a time of inflation, is no mean task; it is an extremely difficult task, for unfortunately we have an Opposition which acts irresponsibly, which always tells the people that they are not getting enough, and which continuously prods the people into asking more, also from this Government. On the one hand we find the first of the 13 points mentioned by the hon. member for Parktown, namely that Government expenditure should be curtailed, but on the other hand they are always advocating that the people should ask more and more from the Government. To that one should add the shocks that are sometimes given to a saving public, such as we have just seen again in Natal, where a very active financial institution went under and dragged along with it the savings of many underprivileged people. If we take these facts into account, it is indeed a formidable task to persuade the people to save more. Without those savings we cannot obtain the necessary capital, and that is why I say that the Opposition has a task to perform. The Opposition can help us in this task; it can help us to persuade the people to save more and thus to create more capital, so that we may finance this upsurge in the economy.

All we have at the moment is an Opposition continuously harping on the so-called hardships suffered by the people. Sir, in looking around me and in looking at economic indicators, I do not see many signs of those hardships. Do you know, Sir, that the sales of new motor cars have been doubled within one decade? Just look at our roads, at our fine roads; look at the large numbers of motor cars, the smart cars on our roads; look at our holiday resorts. In doing so, one sees very few signs of these terrible hardships which the Opposition is continuously trying to impress upon the people.

Oh, Sir, it is so easy to be negative, but it is so darned irresponsible. It is so easy to be negative. Like us the Opposition has a task of combating that negativism, because if that is not done, our nation will become a nation of malcontents, and a nation with a dissatisfaction psychosis is not a nation that will put its shoulder to the wheel and work itself up to the top. That is what we need.

Sir, we are on the eve of a tremendous new upsurge. Just look at our economic history. In 1959 the growth in our industrial production was only 1,7 per cent. For the first ten months of 1971 it was also very low, i.e. only 2,8 per cent, but see how the curve has run in the meantime. In 1959 it was 1,7 per cent, in the next year it was 6,5 per cent, and then it went as follows: 8,4 per cent, 6,7 per cent; in 1963, 14 per cent; in 1964, 15,2 per cent, and then again there was a gradual downward trend: 7,8 per cent, 7,5 per cent, 6,3 per cent, 4,3 per cent, until we come to 2,8 per cent in 1971. We can but guess at what it is going to be next year, in 1972, by my prediction is that it is going to be considerably higher than 2,8 per cent, provided that we comply with the following two requirements, and these requirements are not only for this Government, but also for all of us, for our entire nation, namely no undisciplined wage and salary demands without increased productivity, and increased savings so as to provide the necessary capital for that growth which we need so badly and which I predict here today is very, very definitely going to start this year and will in due course gain momentum until we shall once again have reached the crest of economic prosperity, and then I shall remind the Opposition that it is time it, too, gave us the credit for that prosperity.

The hon. member who has just sat down started off by emulating the Prime Minister and telling a few jokes, but the jokes he told were not as good, nor did he tell them as well. I would remind the hon. member of Mayfair. That is typical of the Nationalist Party; they never have a constant policy; they change all the time. The hon. member went on to talk about savings and pointed out that the percentage of savings had diminished. Of course savings have diminished; there is less left to save. He tried to paint a rosy picture for the country as a whole, but he is out of step with all the financial papers in the country. He is out of step with the leading financiers. Surely in the position he occupies he should know better than that, or is he just whistling in the dark? You see, Sir, the hon. the Minister’s speech gives naught for our comfort, and the speech of the hon. member who has just sat down is equally tedious. The Minister said—

Our case this afternoon, Mr. Speaker, is that they are a good deal more serious than they are alleged to be. The position is very serious indeed. One only has to refer to the daily Press and see how many companies have gone into liquidation, the extent of the liquidations and the difficulties that people have in their every-day life, to realize that our position is very difficult, and that is why we asked the hon. the Minister for an indication of the position six weeks before his Budget. He said that the three least satisfactory aspects in recent months have been the continued inflationary pressure, the weakness of the balance of payments and the slower growth of the economy. Sir, this is negative thinking because we should be concerning ourselves with the growth of the economy. The Minister has said that the present position is due to the fact that the economy has been overheated and he has had to apply correctives. The correctives are such that it is not a case now of overheating, it is a case of deep freeze, and we have to get our economy on the move again. I would say, Sir, that the country is in a financial mess, and I refer the Minister to a recent financial comment which says this—

It goes on to say this—

With those sentiments I agree and I think the position is so serious that we are on the precipice of a general depression which will require all the ingenuity of business and of the financial world to keep our financial boat on an even keel. We have been paying the price for 24 years of long-term projects on short-term borrowing. For practically the whole of the past 24 years the Government has been financing itself on short-term borrowing and business firms have also followed that lead. Many of the financial difficulties which have been developing over recent years are because of too many firms having relied on bank overdrafts and short-term borrowing, instead of seeking long-term capital, but the example was set by the hon. the Minister of Finance, and by preceding Ministers of finance.

The hon. the Minister has spent some time in trying to explain what he said in the No-confidence Debate. He tried to explain the figure of 4 per cent, but the housewife and the ordinary voter in the street does not understand economics and is less impressed by the Minister’s explanation of the 4 per cent. What the housewife wants to know is when costs are going to come down and when prices are going to stop rising. The Minister has given us no indication as to whether he thinks the financial spiral is going to continue. All the indications are that the financial spiral will continue and that the spiral will go on rising, and I predict that the cost of living will go up by another eight points before the end of this year. I shall be very pleased if the Minister could contradict me in that regard. Prices will rise as a result of inflation, and the sooner the public are told, the better. The imports for 1971 amounted to R2 879 million and if we have the same volume of imports we will have to pay another R345 million for them. So unless we cut down our imports to the same figure, we will have to pay an extra R349 million to get the same volume of goods, and that has to be carried by the ordinary public. The man in the street, the housewife and the industrialist will all have to bear an increased burden as the result of devaluation. Yet the hon. the Minister seems to gloss over the devaluation. He seemed to indicate that it was not a matter of very great consequence. A devaluation of some 12½ per cent means millions in increased costs to the country. We will have to pay more rands for our petrol and more rands for the materials for our motor car industry, which means that the cost of transport will increase. Bus fares will go up. With the cost of raw materials going up, as well as the cost of spare parts, we must expect other rises. We have already been told that air fares will go up. Increases in the price of petrol have been forecast. Clothing will go up. The housewife who wants to clothe her family will find that clothes have gone up because of the increased cost of raw material. Industries which have imported goods in the past will find that they have increased costs because many of the imported materials are not available in South Africa. If children’s clothing goes up, the worker in the factory will find that he cannot come out on his wages and so their wage demands will increase. The Minister tells us that he does not expect them to make further demands; he expects the wage earner to be satisfied and to absorb these increased costs. The answer was given this morning by Mr. Tom Murray of the trade union movement, who made it perfectly clear that the wage earner was not prepared to absorb those costs.

One finds the same thing with price control. If an industry goes to the department and asks for an increase in prices because of increased levies or increased costs, it is told to absorb those costs. The factories cannot recoup the costs from the distributor and the distributor cannot meet the increased costs through public resistance to increased prices, and businesses will fail. We already find that there have been some spectacular crashes in recent weeks and there are one or two more threatening in Cape Town today. I heard this morning of two very large businesses which are in financial difficulties, although for obvious reasons I do not wish to mention names. Last year when the hon. the Minister’s colleague decided to tighten hire-purchase transactions, little did he realize what was taking place; little did he realize the effects it would have on the people concerned. Hire-purchase is a means of creating capital. It was said at the previous session that it was a means of creating capital by the non-Europeans in the townships. If the hon. the Minister wants any idea as to the extent to which hire-purchase is being used in the townships, let him face up to the difficulties which are experienced by industry in the townships. The instalments are not paid and when the collector goes to collect the instalments in the townships, he is told that the particular person is unemployed and the instalment cannot be paid. The legal remedy is to take possession of the goods. The hon. the Minister knows, or he ought to know, that the average distributor knows that he can neither collect those instalments nor take possession of the goods, because he dare not go to collect them. Just try to send a man to go to repossess furniture in a township and see how far he gets. This is very serious indeed and the Government does not seem to know it. They do not seem to be aware of the effects which their policies have on the ordinary man in the street.

When it is suggested that we have full employment, people fail to realize that while there may be full employment amongst the Whites, there is not full employment amongst the non-Europeans. There are no official figures on Bantu unemployment, but one only needs to go into one of the townships to the labour offices to see the queues of people looking for work. The hon. the Prime Minister indicated last year that he would be very worried if unemployment were to increase amongst the Bantu. There are no figures available, but one can see with one’s own eyes the difficulties which the non-Europeans are having. They are unemployed and they cannot get jobs. That, in turn, is having its effect on business. The turnovers are coming down and as a result of the turnovers coming down, the shopkeepers and industrialists are not able to meet their obligations. They cannot meet their obligations because the hire-purchase instalments are not paid when they fall due. Their obligations are then passed on to the banks. So the vicious circle goes on. These conditions are here and can be examined and the hon. the Minister can substantiate this, but although that is the position, we have the kind of speech the hon. member for Paarl made just now, indicating that all was well. What utter nonsense! It is utter nonsense to suggest that all is well in the financial world and that there are no difficulties at all and that things are going to be all right in future. On what does the hon. member base his argument that things are going to be all right in future and that they are going to be all right this year? Does he know of some proposal of the hon. the Minister to encourage development; does he know of any special measures to be taken by the Government? If there are special measures to be taken, then the time to indicate them to the House is now; they should not wait six weeks. The position is indeed desperate and the sooner the Minister gives some indication as to what proposals he has, the better for the country as a whole.

We see in our major cities office blocks where three, four, five or six floors of offices are vacant. We see advertisements in our Press advertising a month’s free rent if you will sign a lease for a luxury flat. We see some of our new shopping centres offering shops to let. If you go to Sea Point today, you will see a whole row of six shops which have now been vacant for a year. You will see a hotel which has closed down or has been standing idle for two years. You see these hotels which have closed down because of their failure to do business. Notwithstanding all these circumstances, we have this speech this afternoon from the hon. member for Paarl, who suggests that all is well.

When you find the position that the Bantu in the reserves are looking for work and are starving, that they cannot get jobs in towns, can you be surprised that there is evidence of frustration, that the incidence of crime is increasing, that the townships are not safe at night? But against this the hon. the Minister would have us believe that the Government is in control of the financial situation. The suggestion is made that price control is taking effect and yet we know that the public have little confidence in price control. Price control is only touching the fringes. They do not have the qualified staff to do it, nor is there a basis laid down, except an arbitrary basis as to what the price should be I would like to know from the hon. the Minister what he regards as a reasonable percentage of profit. Because you get a case where firm A goes to the Price Controller and gets a decision to sell his goods at one price while firm B is selling the same type of goods at another price. Firm B may have a lower profit margin, and so he gets an increase in price. In other words, you are encouraging the inefficient to exist. That is happening every day, and yet the public is told that there is price control. We get price control on the fringes, but generally speaking this price control is a farce. It is impossible to have price control over all articles. Other Governments have tried and failed. To suggest that there is adequate price control is farcical and is misleading the public. We would like to know from the hon. Minister What he regards as a reasonable margin of profit. Is it 10 per cent or 15 per cent on capital? When he examines capital, does he take capital formed 10 years ago or recently formed capital? Those are questions which have not been answered. Members of the public go to the department and ask it for a determination. At times they get a decision and at other times the decision is delayed for several weeks. Yet the hon. the Minister would have us to believe that it is essential that we should establish new industries and expand existing industries. How can existing industries expand or raise further capital unless they know where they are going to and unless they know what profits they can make? The biggest advances which have been made in the modem world have been made under the private enterprise economies, but not under a private enterprise economy that is restricted. Mr. Van Aswegen, the chairman of Santam, made the following criticism:

This was said by the head of Santam. He also said:

Another economist with whom the hon. the Minister will probably agree, said:

That was said by Professor Horwood, seven months before he joined the Nationalist Party. [Interjections.] Competition is the best discipline for price control, and not bureaucratic control. We have far too many restrictions, and yet the hon. the Minister is asking business to show some incentive and to develop. Yet they are baulked on two fronts. The first is the uncertainty of price control, to which I have referred, and what the department regards as a bare profit. On the other hand there is the competition offered by Government-controlled institutions. How can an individual compete against conditions offered by the Bantu Investment Corporation? I am referring to an advertisement which appeared in the Financial Mail on the 21st January, 1972. I hope the hon. the Minister will realize where some of his money is going to, since he provides the money for the Bantu Development Corporation, athough he does not control its policy. The advertisement reads as follows:

These are the points mentioned in favour of it:

Surely the Minister knows that long-term labour-intensive industries must disappear. Labour-intensive industries are the first industries which the industrial engineer looks at in order to introduce automation. If industry is to have a future, you have to go for automation and not for labour-intensive operations. Here they say that Sitebe is ideal for new labour-intensive industries and for labour-intensive operations in existing industries. Yet Sitebe has no infra-structure, it is a place in the bush where only one industry has been started. There is no infra-structure, no persons to service machines or to give expert advice. Everything has to be obtained from Durban, which is some 110 km from Sitebe. The next point in its favour reads as follows:

In other words, it is not the “sky is the limit” as far as wages are concerned, it is the “gutter is the limit”. You can pay what you like. For many years organized labour has built up certain standards of factory efficiency and certain standards of wages. Government inspectors visit the factories in the towns to make sure that those standards are maintained. Here we have a Government encouraging industry to go to an area where no job reservation or wage restrictions exist. But can they guarantee any future for that industry? What will happen if that becomes an independent state? Will the negotiations be on a national basis? Will Zululand take over the contract or will he have to start negotiating with the head of the Zulu nation?

And the Minister of Labour said he is protecting the White worker.

For two industries in Durban you will have two different standards. I believe there is a factory manufacturing windows in Sitebe. This factory will be ideally placed in competition with a factory doing the same work in Durban, or in Pinetown. There will be lower standards of labour, lower factory conditions and our money is being taken to finance this kind of thing. The advertisement further reads:

Are they also going to discipline the factories as far as pollution of the rivers is concerned? Further—

This is a special concession. Rental rates will be much lower than in Durban or in Pinetown or Pietermaritzburg—

Tender preferences for Government departments—

Mr. Speaker, the Minister wants industry to expand; he wants industry to develop; he wants to see growth. That is the encouragement South African industries are given. Is this the kind of thing he wants? Does he want two different standards? Does he want a breadline standard? If we continue in the present way, we will have the standard of living reduced. We will have a state of affairs where, if this kind of thing is established, the workers will have to absorb all the increased costs as a result of devaluation. What will happen? At the end of the year the worker will not be able to absorb those costs and will therefore have to lower his standard of living. The company which employs him will have to compete with his competitor who has a factory in Sitene, 100 km away from Durban. Those are the conditions which this Government through its Bantu Investment Corporation is advertising and encouraging. It is no wonder that industrialists are sitting tight. Those who have the funds are hanging on to them because they do not know where to go. The future is uncertain. The Physical Planning Act baulks them. Price control is the one obstacle on the one side and on the other side the Government financed institutions. It is no wonder that industrialists are nervous indeed to develop. They are asked to venture and then they are shackled before they start. Still industrial growth is expected. If the hon. the Minister expects industrial growth under these conditions, it shows how far away he is from reality. It is time that the hon. the Minister took his coat off, purchased some old clothes and went to some of the townships, into some of the factories not in his capacity of Minister but as an ordinary citizen to see what takes place. Only when he sees what takes place as an ordinary citizen, will he realize that things are far more desperate than he has led this House to believe.

Mr. Speaker, this afternoon the hon. member for Pinetown had a few statements to make here that are really beyond belief. He alleges that there is so much unemployment among the Bantu. He says they have no work, no income, that they cannot buy anything from the merchants, and so on. Right after that the hon. member says, however, that so much is being spent by the Bantu Investment Corporation. This is exactly what is being done to give those Bantu work. What is he thinking about this afternoon? It completely dumbfounds one. The two hon. members contradict each other at every turn. I just want to take a look at the amendment that was moved here in connection with, inter alia, the raising of the standard of living. Whose standard of living? Do these two members not realize—and these are the figures of the United Nations Organization itself—that the standard of living of the Whites in South Africa is the fourth-highest in the world and that the standard of living of the Bantu in this country is higher than that of any other Bantu state in Africa? The hon. member for Parktown and the Opposition know this. There are, however, insinuations that our people are actually crawling around on the ground in poverty and in misery.

Has the hon. member ever been in the Transkei?

I have been everywhere in the country. That hon. member knows that conditions in the Transkei are not as bad as in the rest of Africa. On 31st March last year the hon. member for Parktown said in the debate, inter alia, and I quote from Hansard, col. 4001—

Hear, hear!

Hon. members say, “hear, hear!” That is so, but probably never again in history will so much be paid for the “blundering” of these few political opportunists on my right.

While I am speaking of blundering, it is interesting to note that I came across the word “bull” the other day. I then went to look in some or other source for what “bull” meant. The definition in one of the dictionaries I consulted reads—

I just want to add that the word “bull” has much more to it than is generally realized. Inter alia, one gets “bulls” and “bears” on the Stock Exchange, where a “bull” is the increasing market price. In astronomy there is also the “Bull of Taurus” in the northern constellation of stars. “Bull” was also the name given to the five-shilling piece in Great Britain. And there was also an Irish attorney by the name of Obadiah Bull who practised in London during the reign of King Henry VII. It was said of him—

His friends usually said of him: “As usual, he spoke a lot of bull.” That is all I can say of these hon. members. This “notorious blundering” on the part of those two hon. members this afternoon was not only in respect of their policy, but also in respect of our economy. It shocks one. The hon. member for Parktown contradicted himself throughout in respect of certain statements he made. I shall come back to that at a later stage.

Tell us what.

I want to say that the electorate is being made to believe here that things are going very badly in this country of ours, that things are not going well in the economic sphere. I want to say that things have never gone as well for South Africa as they have since this National Party has ruled. At the present moment, after 24 years at the helm, there are no problems. We do not need an Opposition to tell us that. This hon. Minister, the Government and we ourselves from platforms, tell our people throughout the country what the dangers and problems are. We have also taken steps throughout to deal with these problems that crop up. The hon. member will agree with me when I say that the increase in the consumer index was 99,8 per cent from 1948 to 1970. But what, on the other hand, was the percentage increase in real earnings? I am going to mention the various industries, including virtually every person outside and all the branches of industry and commerce. In the timber industry the increase was 124 per cent, much more, therefore, than the 99,8 per cent. The percentage increases in other industries were as follows: the textile industry 136 per cent, mines and stone quarries 153 per cent, the retail trade 161 per cent, the wholesale trade 164 per cent, the food supply industry 179 per cent and the printing industry 192 per cent. The percentages therefore increase tremendously. In the manufacturing industry, about which there were complaints here alleging stagnation, the figure is 203 per cent, in the paper industry 227 per cent. Hon. members can now see how this compares with the consumer index of 99,8 per cent. Metal products registered an increase of 266 per cent, coal mines 359 per cent and the railways, for which the Government is exclusively responsible, 227 per cent. We therefore cannot say that things are not going well. People do not have very long memories, and I fear the hon. Opposition has no memory at all, not even one an inch long. They forget the prosperity, comfort and luxury they have lived in during the years of this Government’s rule, and just do not think of the misery in which South Africa found itself when they were ruling. It is clear that these wage increases have always exceeded cost increases. We cannot get past that, because these are actual statistics. This is also one of the reasons why our standard of living has increased in the past two decades to one of the highest in the world, the fourth-highest in the world. This can be seen from the statistics of the U.N.O., and not those of the National Party.

Over the last 20 years.

That is correct, yes, but during that period no country could beat us. When South Africa is compared with other countries one sees that the price increases in South Africa have been checked to a great extent. The United Party must say whether they regard these countries I am now going to mention as fifth-rate countries, as they stated the other day when the hon. the Minister delivered his speech. Since February 1970 the following countries have had the following price increases: Israel 12,4 per cent, Ireland 10 per cent, New Zealand 9,9 per cent, Britain 8,5 per cent, Sweden 8 per cent, Spain 7,8 per cent, and so I could continue. South Africa appears 18th on this list with an increase of 4 per cent, while the increase in Belgium was 3,7 per cent. However, this does not yet complete the picture. A very terse summary of conclusions for the rest of the year 1971 are contained for us in the report of the 51st ordinary annual general meeting of the South African Reserve Bank. The president said the following, inter alia (translation)—

One can therefore now see what hon. members opposite tried to make the electorate believe this afternoon. We do not deny that we had problems. The economy was over-heated. However, what is the fundamental problem in South Africa? The fundamental problem is the imbalance between supply and demand. We are living in a capitalistic country with a free economy. South Africa is not a communistic or a socialistic State. Where there were problems, this National Party did not hesitate for a moment to take steps, even though they were unpopular ones and even though the Government made enemies along the way. The hon. the Minister and the Government have always taken the necessary steps to keep South Africa’s economy a sound one. I could just mention a few steps taken in the monetary field. The credit ceiling for banks was introduced. The hon. gentlemen now want this to be abolished. But what would happen then? Then every individual would freely be able to borrow money and carry on exactly as he liked.

What does the hon. the Minister say now? It is worrying him.

It is worrying us, but we ensure that it is arranged and regulated in a proper and disciplined manner, so that the relief will come in good time and at the right moment. But we do not throw it all open so that inflation can run away with us. We have the higher interest rate structure, which is also a form of combating inflation. The hon. member knows this. We freed those interest rates to give supply and demand free play. The Minister took action in connection with the prescribed investments. He did not hesitate to take action against the bodies concerned. Take as an example the fiscal policy that was adopted. There were compulsory savings levies and the increased company and personal taxes. If we are not doing this to benefit the country, why are we doing it? What Government in the world would just levy taxes that anger its own people and which they have to pay? Is it only for the sake of popularity? It could, however, also be done if one did not know what was entailed, if one did not know how to gauge the future and how to do the right thing at the right time.

Then there was the tax on undistributed profits, the purchase tax, etc. There were stricter hire purchase conditions, price control and the Physical Planning Act that hon. members are so opposed to. Then there was the relaxation of import control and its reintroduction. This is very clearly being done because we want to steer the economy in the right direction.

Hon. members said this afternoon that there is too much interference in private initiative. The very next moment they move a motion in which everything indicates that they want to interfere in private initiative. That hon. member for Parktown spoke in vague and general terms. The 13 points he mentioned might mean immediate benefits, but the very next moment prove detrimental to the country, and in other spheres they would clash. He knows this.

Hon. members also referred to the import control we introduced and they are opposed to it. If it is implemented there are fewer goods in the country itself. As the hon. member said, a certain amount of competition is removed. Domestic prices would then increase. What does that hon. member now want? Should the Government never have introduced import control? If there had never been import control we would surely have had no money in respect of payment. What then about the balance of payments? Then that hon. member would again have said we should borrow money. He would have said we should make use of overseas Loans.

There was also reference to this Government only borrowing on a short-term basis; but just let me tell hon. members something about our burden of interest on our foreign loans. Between January, 1965, and September, 1971, we obtained a net foreign capital inflow of R2 271 million. By conservatively calculating that this capital earns a cash yield of per cent per annum for foreigners, this inflow has, since 1965, burdened our future balance of payments annually by R170 million on the services account. That is now the extra cost to us annually. Had we borrowed even more from abroad, not stimulating our local industries and exporting commodities, if we had only borrowed, where would we have stood with our foreign loans? No, Sir, this current burden in respect of our foreign capital is one of the foremost factors this Government has always noted. I do not know whether the hon. member knows it— I am sure he does—but this burden of interest on our foreign capital must be paid in foreign currency, and that is expensive, after all, particularly with the advent of devaluation. The hon. member knows this. We are very lucky that in the past this Government has not borrowed so much abroad. Had they done so, we should now have had to pay an impossible extra amount. In the past year the trend was as follows: The net payments for services overseas from 1966 to 1970, amounted to R373 million, R378 million, R394 million and R491 million, and now in 1970 the figure stands at R570 million. It must be noted that in 1966 these payments for services alone amounted to about 48 per cent of our total South African gold production. In 1970 it was as high as 68 per cent. At the present rate, if we do not control that increase, the gold production, valued at R28 per ounce, will have to be employed, within the next decade, to finance our net service payments abroad. Not a cent would then remain of our total gold production to pay for any other imports.

Sir, reference was also made to savings. We must make an appeal to our people, and this is where this Opposition does not do its duty. Your duty as Opposition does not lie in unsaddling this Government and trying to clear a path for yourselves with a view to taking over the reins of government, because if you take over the government what are you going to do with it? In the four years from 1967 to 1970 there was a general levelling off in our saving. The ration of personal savings to the available personal income decreased from 13.1 per cent in 1967 to 8,6 per cent in 1970. We must encourage our people, we must petition them and we must clear a path for them to do more in that sphere. The hon. member knows that we must take much more concerted action as far as that is concerned.

I now come to the question of government spending. The hon. the Minister also referred to that in his speech and said it was something the Government was keeping a close watch on. The Government is determined to combat the increase in government spending, but we cannot combat everything. Neither can we cut too much. It is true that the Government must first sweep its own doorstep, and this Government has done so, as it has always been doing. I just want to mention a few items in this connection relevant to the past year’s Budget. There was an additional loan of R28 million to the South African Railways, which means a total amount of R168 million. In speaking about that now I am reminded about what was said yesterday afternoon during the discussion of the hon. member for Walmer’s private motion. Despite the large Sishen-Saldanha project, the Opposition also wanted a railway line from Sishen to Port Elizabeth. In other words, they are advocating that tremendous additional cost instead of pressing us to save it. In the case of the Post Office there was the amount of R50 million, i.e. in respect of telecommunications. For transport the amount was R9½ million. I now ask the Opposition: Which of these three items should the Government have eliminated? The three amounts together give a total of R227 million.

Those amounts which do not contribute to increased productivity.

I do not understand the hon. member very well. Must there be fewer telephones?

No, more telephone exchanges for a productivity …

More telephone exchanges?

Yes.

But that costs money.

Other building plans can be set aside. [Interjections.]

The hon. member says that buildings must be set aside, but how can one erect a telephone exchange if one does not also have a building? Must the telephone exchange stand exposed in wind and weather? [Interjections.]

They need not build the Hendrik Verwoerd Post Office.

We may not build post offices. Sir, from now on we shall take note of how much the Opposition complains about buildings that are lacking. That infra-structure must be maintained, and thus far this Government has succeeded in doing so. We can look at yet another item and that is the salary increases granted during the same period to our officials. Would the Opposition not have had the Government grant these salary increases? The Opposition cannot tell me today that they are opposed to that, because no country can have a sound administration if it does not pay its officials properly. The private sector has enticed our officials away by paying them higher salaries; they are free to do so, but then this Government must ensure that it pays comparative salaries, and because things are going well in the private sector, the Government was forced to increase the salaries of its officials. I do not blame the private sector if they entice away our public servants by means of higher salaries; but this is not fair to the Government, because the country’s administration must continue to function, but then they must not come and complain if the Government accordingly pays its officials higher salaries, so that it can build up and develop for the future a good and a sound national administration.

Sir, I want to touch upon another matter concerning the European Economic Common Market. We know that England applied for membership to the EEC and that Ireland, Denmark and Norway will join England in entering the EEC. This means that the EEC will now comprise 10 countries. Sir, it was an encouragement to us when the hon. the Minister of Economic Affairs went overseas and took early steps to pave the way there for South Africa’s economy. Unfortunately we have not vet obtained much information from the Government in that connection; the negotiations there were probably also of a confidential nature. Sir, we are grateful for what was done there. We must remember that these 10 countries represent 250 million people, which is more than the population of either Russia or America. We are also aware of the fact that the joint gross national product of these 10 countries exceeds that of the entire Eastern bloc; it is equal to two-thirds of the gross national product of the United States of America. Sir, except for South America, the East and Africa, the EEC countries are the countries where our salvation actually lies. If we look at our imports, we find that those from Europe—chiefly EEC countries—amount to R1 323 million out of a total of R2 397 million, i.e. almost half of our total imports. Our exports to these countries amount to R634 million out of a total of R1 265 million, i.e. exactly half. Sir, today I want to advocate that on renewal we ensure that we capture additional markets for us there, even though it costs somewhat more, and that we retain the markets we already have. I think that both parties in this House are agreed that this must be our endeavour.

Then there is another matter that I also want to raise. We are not afraid of saying things that would perhaps give the Opposition a stick with which to beat us. If the Opposition wants to use this stick against me let them do so. In the Budget debate last year I spoke about the credit enslavement we encounter here in South Africa. Sir, if our people saved more, bought more for cash, we would not have all these problems that we do have today. If our people incurred less debt, if they did not recklessly incur debt and only bought those things on credit that they knew they could pay for in future, things would go very well with this country of ours. What is the position with regard to saving within the national economy? During the period 1961-’65 our people saved about R500 million. In 1968 the figure was R661 million, in 1969 R674 million and in 1970 R729 million. But we must remember that in 1970 their incomes were much greater than in the previous years. Saving decreased in the year 1970-’71 by 2 per cent and amounted to only 21 per cent of the gross domestic product, while for the previous two years it amounted to no less than 24 per cent of the national product. Sir, this decrease can be ascribed to the excessive increase in private consumer spending, including spending on non-essential imported consumer goods. If we want to combat this unstable element in personal saving, we shall have to take a look at that. The increase in this aspect always causes a negative trend in saving. It is estimated that consumer credit increased from about R1 025 million at the end of 1967 to R1 400 million at the end of 1970, an increase of R375 million at an annual average rate of about 11 per cent, which is altogether too high. The national income cannot carry it. The people cannot afford to use so much extra credit. The figures released on 11th February, 1972, by the Department of Statistics, bring the following to light. A sample was taken of 1 900 firms’ clients, and the clients of those 1 900 firms had R20 million more debt for goods in June, 1971, than for June, 1970. The item trade debtors in respect of goods purchased was R504,2 million on 30th June, 1971, by comparison with R484,3 million at the end of June, 1970. Hire purchase debt on 30th June, 1970, was R194,5 million by comparison with R213,3 million in June, 1971, an increase of R18,8 million in this sector. Sir, the figures are self-explanatory, and we can see that things cannot continue in this way. It is clear that credit enslavement in this country has become an accomplished fact. It has now become the fashion to spend, while to save has become an anachronism. The consumers are continually the focal point of all advertising media which are aimed at the continual increase of consumption, regardless of the consequences. To save is now old-fashioned. Has it not long been time for us to have a credit ceiling for the merchant as well as for the consumer? We shall have to look at the Prescription Act, as in the liquor trade, to combat this by introducing a shorter term. This will very definitely solve our future problems. It would, help the consumer, and we in this country must look after our consumers. It will help the merchant in this country, because he would not have so much bad debt. Things would go well if we looked to all these matters.

There is another aspect we could take a look at, i.e. buying associations. We have found that the consumer is organized into buying associations, and it is perhaps interesting to examine the influence of these buying associations on the price level. We shall have to see whether the disadvantages attached to these buying associations do not exceed the advantages. We are glad that the hon. the Minister, together with the rest of the Cabinet, has administered and maintained our economy on so sound a footing in the past year and has done what had to be done. This afternoon we want to make this appeal to every man and woman in this country. Be conscious of this prosperity that is yours, but also be conscious of the problems along the way. Gird yourselves, and on your behalf, Sir, I want to tell every man and woman in this country: See that you secure your futures by doing what this Government asks you to do and not listening to the Opposition.

The hon. member for Sunnyside has charged the previous speakers on this side of the House with having been excessively pessimistic in regard to the factual state of the economy as we find it today. Let me quote from the Argus of Wednesday, 9th February, 1972—

Nothing illustrates more vividly the incompetence of this Government, its lack of contact with the reality and its unsuitability to govern South Africa than does the speech which the Minister of Finance made in this House last Monday, a speech that is lacking in reality and does not face up to the true facts of the situation. The Opposition had hoped that after the Government’s poor showing in the no-confidence debate when the hon. the Prime Minister, spent the major part of his two hours’ speech making jokes and indulging in personalities and pursuing red herrings, the hon. the Minister of Finance would realize that we on this side of the House have a responsibility to show up the defects of the Government, and that we are in deadly earnest in our endeavour to pursue our criticism of this Government’s bread-and-butter issues. The speech of the hon. the Minister of Finance came as a distinct disappointment; in fact, the hon. the Minister was not at his best—it was his off-day and in rugby parlance, which he himself used, “he is likely to be dropped from the next occasion”. [Interjections.] It is regrettable that the Cabinet has no substitute. His effort was a defensive one. The hon. the Minister admitted that there are a number of unsatisfactory weaknesses which have to be faced in the economy as we have it today, but he concluded that these weaknesses were not too serious. This is not the position when we find that medical costs have increased by twice the increase in the cost of living in recent days, that there are going to be efforts to increase bus fares which in turn will harm the cost of living to the man in the street, and that prices on a broad front are increasing and escalating beyond the control of the Government.

Thirdly, the hon. the Minister is either being excessively naïve or is out of touch with the real facts of the situation with which the man in the street has to live. Let him ask the electorate whether they are happy with the price escalation and whether they are happy with what they are paying for the basic necessities of life. Let him ask the office worker whether he can come out on his salary. Let him not split hairs about whether 4 per cent or 7 per cent is the real escalation in the cost of living. Let him merely face the fact that today the rand is buying that much less and the wage earner is that much poorer.

There seems to be a curious malady affecting the Press these days. For one reason or another they seem to be incapable of interpreting the spoken or written word of Ministers on the other side of the House. Only recently the hon. the Prime Minister had to claim that he was misinterpreted by the Press and now the hon. the Minister of Finance claims that the Press has misunderstood his statement in his speech concerning what will happen to prices during the next year. Fortunately we on this side of the House are so much better attuned to public reaction that there is no fear that we will be misunderstood when we tell the hon. the Minister that the public’s view of the Government is that it is the government which is responsible for the present unsatisfactory state of the economy. It will not avail the hon. the Minister of Finance to admit now that it has been excessive spending by the public sector which has been responsible for up to one-third of the rate of increase in inflation during the past year. The Opposition has spelt out this fact ad nauseam during recent debates. This has been the price which South Africa has to pay for the follies of a Government which pursues its ideological aims and endeavours to bend the economy in the way it desires. The Opposition has warned the Government that the 1971 Budget would be highly inflationary; yet this was the Budget which the hon. the Minister of Finance claimed last year as being designed to use the whole armoury of fiscal and monetary weapons in order to bring about a reduction in inflation. What a confession of failure!

Then too with the wisdom of hindsight, the hon. the Minister of Finance has sought to explain the Government’s decision to introduce intensified import control in November last year. This may well prove to be one of the Government’s biggest blunders. Certainly import control and devaluation cannot live together in the same bed. One wonders whether the Government realizes what harm has been done to the country’s trading reputation through the slashing of the 1971 import permits by 50 per cent. One does not place orders overseas with manufacturers against irrevocable letters of credit for either fashion goods or other commodities specifically designed for the South African economy and then cut these orders when they are already in the pipeline, without losing face and making trading relations far less advantageous in future. The hon. the Minister laid stress on the fact that import controls may soon be eased, while a few months ago these controls were quoted as being the saviour of the South African manufacturing industry. Does the hon. the Minister realize that the manufacturer who is now spending further valuable capital overseas to get plant and machinery, will no sooner have that plant installed when import control will be released? Then he will again have to bear the brunt of the Government’s maladministration. Now that the control is to be removed, the only protection that will accrue to industry will be devaluation. The hon. the Minister has also explained devaluation which he claims simply means a reduction in the value of the rand in terms of gold and foreign currency. In his words it is an adjustment which has to be made by nearly every country from time to time. The hon. the Minister has claimed that in devaluing the rand by 12,8 per cent, we shall in the first place guarantee adequate protection to our industrialists. We only hope that this utterance does not go down in history as the famous last words of a wishful optimist. The hon. Minister’s appeal to organized labour not to press on with wage claims had hardly left his lips when we found the following: We found a 6 per cent increase in building wages, an increase in the salaries of banking officials, a claim for further increases by the clothing trade and so on. One speaker after the other has appealed to the Minister to be a realist and not the perfectionist he would like to be. Perhaps we on this side of the House are more realistic. After 23 years in powers, this Government has been judged by failures. Commerce and industry and the man in the street have taken a hard good look at South Africa today and have found that under the Nationalist Party rule our achievements under this Government are entirely negative. It is not surprising that the hon. the Minister has sought refuge in his own words, “in the calmer atmosphere of the Appropriation debate”. It may well be that the Minister may be proved to be wrong and that this debate will become one of the most significant, contentious and realistic debates of this Session. Certainly South Africa is in no mood for pure academic discussions about the state of our economy. The United Party will expose mercilessly and clinically the mismanagement of the Government, and the Minister of Finance, who must accept the ultimate responsibility, one would have thought that the hon. the Minister would have used the very first opportunity available to him to review the economic position in some depth and that the Minister would have dealt at some length with Government plans to reduce the harsh increase in the cost of living which may well rise by 8 per cent during the coming year. It is this increase which is making living unbearable for the ordinary South African citizen. One stark fact that the Government refuses to face up to is that the country is sick, and it is no use accusing the United Party of disloyalty when we make these statements. They have been made by the Afrikaans businessman, Mr. Human, in his capacity as chairman of the Afrikaanse Handelsinstituut. There are others as well who are practical but not disloyal. It is time that both the hon. the Prime Minister and the hon. the Minister of Finance stop accusing members on this side of the House of economic disloyalty when we are merely indicating and highlighting the critical state this country has been brought to through the acts of the Government itself. Let me quote the words of a businessman, Robert Conway, Investment Manager of the National Board of Executors, who has just returned from a six weeks’ tour overseas. He said—

Mr. Speaker, that is not the United Party; that is hard talk by hard businessmen. Not only is the economy sick but it is bedevilled by controls which are hampering the productive efforts of most of our industries. The heavy construction industry is in trouble, the building industry is in trouble, the motor industry is in trouble, the clothing industry is in trouble and even the grey market is in trouble.

And the United Party is in trouble too.

As a result there is overall pessimism amongst commerce and industry for which this Government is directly responsible. The United Party has criticized the Government for placing too heavy a tax burden on the man in the street, for penalizing the entrepreneur, the public company and the private company excessively, and for penalizing those groups which are responsible for producing most goods and services. This is a penalty on efficiency. The higher income groups have been deprived of rebates and abatements. Income tax rates have been increased to as much as 78 cents in the rand, and sales taxes have been increased. As a result South Africa now suffers from the worst of both worlds. We now have the sales tax and the tax bulge. There is no longer any incentive for increased effort or improved productivity or for the upper echelon of immigrants to come out to this country. The hon. the Minister of Finance has been particularly harsh in the severe punishment which he has meted out to private companies. During the last seven years their rate of tax has been stepped up to 43 per cent and their reserves for undistributed profits have been reduced from R100 000 to R20 000. It is significant that at the time when the hon. the Minister was making his speech in this House and voicing platitudes about the Government’s good intentions as far as our economy is concerned, Dr. Jan Marais, chairman of the Trust Bank, and one of South Africa’s leading Afrikaans businessmen, was calling upon the Government to abandon the negative elements of its policy and to swing over to a programme of prosperity and development. Then Dr. Marais pleads vigorously, too, for increased growth and prosperity in South Africa. When he does this, he is only repeating what has been said again and again by speakers on this side of the House. It was my Leader who first called for an absolute minimum growth rate of 6 per cent. It was my Leader who implored the Government to use every scrap of manpower and talent on the basis of merit. It was the United Party who pleaded for an inflow of immigrants to supplement the skills of our industrial sector. It was the United Party that called for a manpower council to make the maximum use of all the skills and labour within South Africa. But it was left to Dr. Marais to warn this Government, as it has been warned time and time again, that the alternative to a programme based on greater productivity, prosperity and development, would be a poorer South Africa suffering from exorbitant taxation. It was Dr. Jan Marais who warned the hon. the Minister of Finance that unless we remove the burden which is crippling all population groups and unless we reduce excessive taxes which are killing the incentive of our business community, there would be a significant rise in unemployment amongst our under-developed people which would eventually result— and I quote Dr. Marais—“in unrest, conflict and much more—we cannot and dare not build a human time bomb in this way”. The Opposition in this country is entitled to ask: What went wrong with the economy in 1971? We ask the hon. the Minister of Finance: Where did it go off the rails and what does this Government intend to do to put it back on the rails again? Why is business confidence lacking in vitality? Why is the economy slowing down to the danger level? Why did our economic growth decline in 1971, while our rate of inflation increased? Certainly, the hon. the Minister must accept responsibility for inflationary trends which were boosted as a result of the 1971-’72 Budget, which provided a large increase in Government spending which was financed in an inflationary way. The hon. the Minister must bear full responsibility for the false assumption that inflation could be curbed by attacking the private sector or demand only, while ignoring Government spending.

Secondly, the Government must bear full responsibility for procrastinating in its handling of the country’s fundamental labour problem. This Government must again bear full responsibility for the slowing down in the economy, which it wants to re-activate at this belated stage. I need only refer to H.P. restrictions which hit manufacturers of consumer goods and the motor industry and where today sales are down by 30 per cent. I need hardly refer to the sales taxes which have had the same results. Because of the mishandling of our economy, a pessimism has developed and started to snowball. This pessimism was heightened when businessmen realized that this Government was not prepared to take the best advice of its own financial, banking and industrial experts. Then we have the Government’s handling of import control measures. The hon. the Minister has claimed that after November, with our balance of payments becoming critical, they dared not delay. But he knew, that the Big Ten meeting was scheduled for December. He also knew, or should have anticipated, that some action would be taken. In fact, the Government was stampeded by a bogus crisis. One may ask why the hon. the Minister did not rather use his International Monetary Fund credits. Surely it was worth waiting for the meeting of the Big Ten? After all, the hon. the Minister had admitted that he had been toying with the idea of devaluation right back since September, 1971.

The hon. the Minister is now appealing to commerce and industry to come to the rescue of the Government. He has said we must export more. He says we are to take advantage of devaluation. But what he has not told the country is that we certainly do not have much unemployment or spare capacity and that our transport infrastructure cannot cope with the additional load. The hon. the Minister has again implored industrialists to increase their export performances, but he has given no sign of any Government intention to increase the existing export incentives through such sensible relaxations as exempting export-orientated industries from the provisions of the Physical Planning Act in that, wherever they may be situated, they should be given such labour as they might require. One would have hoped that other concessions would have been made available, such as reduced rates for transportation, harbour dues and tariffs charged on goods being shipped for export. A 50 per cent reduction of these charges would have a meaningful effect in the eyes of the industrialists. We realize what a backlog must be overcome when we hear that Dr. McCrystal, speaking at the Assocom congress recently, stated that at present we are, generally speaking, apart from our major base metal and agricultural exporting industries, not export-minded at all. We must still create a climate within which the broad mass of manufacturers will become aware of the advantages of exports.

Then, too, one would have thought that the hon. the Minister would have dealt with the falling trends in immigration. These must affect our present and future economy, a tendency, which is critical, if the plan for a 5½ per cent growth target of the economic development planners has to be achieved. The United Party has urged greater vigour in the implementation of immigration programmes. We should be planning to treble and quadruple our immigration figures if we are to maintain the productivity rate necessary to halt our galloping inflation. The hon. the Minister has been silent about so many matters affecting the welfare of the man in the street that the Opposition has a responsibility to speak up loudly and clearly. By going further than the dollar in devaluing the rand, the Government that admitted that it has followed mistaken policies in the past. It has devalued the rand in order to buy time to rectify its mistakes. One should remember that no strong government devalues a strong currency. In the case of South Africa we have a weak government devaluing a weak currency. The time has come for the Government to take the whole country completely into its confidence. If our White standards of living are to be maintained we have to make far better use of our labour. This is our stark choice.

The hon. the Minister should have indicated that Government spending will be reduced and pruned drastically and not merely relatively in the next Budget. The hon. the Minister should also have indicated that taxation will be reduced significantly where it is having a serious disincentive effect and that import controls and profit controls will be phased out with the least possible delay. There can only be a reduction in taxation if effective discipline is placed on Government spending and if the productivity of the bulk of our population is increased.

The Government has ignored the recommendations of the Opposition calling for a policy of faster growth using all our resources. The hon. the Minister cannot ignore these demands any more. Only last week the Afrikaanse Handelsinstituut appealed to the hon. the Minister to choose a policy of faster growth and to adapt his monetary and fiscal policies accordingly. Why is it that politicians on that side of the House must always follow in the wake of its industrial advisers and not anticipate them? We on this side of the House will use the Part Appropriation Debate as a logical extension of our continued attacks on the policies of the Minister of Finance. Nothing that he has said during the Part Appropriation Debate has given any hope to the Opposition that this Government either recognizes the desperate plight in which South Africa finds itself or is capable of taking the necessary corrective measures to bring our economy back to an even level. What do we find? Evasion, vacillation and procrastination. One would have expected this hon. Minister to take the country into his confidence and that he would place his cards on the table and give some indication of the shortfall which he expects on Revenue Account. A report on revenue collections under the headings “Personal income tax, sales tax, excise duties and company taxation” should also be made known.

Under a United Party government it will be, as it has always been, our policy to create a climate which allows commerce and industry the benefits which accrue from freedom to reap the maximum rewards from the optimum use of all our resources. The United Party will do so in future. It will not wait for its advisers to give it hints. I want to quote Mr. Harry Oppenheimer, who is on record as having said that “our present problems arise not from over-consumption by the consumer but from our failure to make use of the maximum productive efforts of which this country is capable.” The United Party realizes that if we want to play our part in the distributive sector we have to give manufacturers the right to make a reasonable profit at all times under competitive conditions. When we say we will do this we realize that the economic situation today is of key importance, and the man in the street is reeling from successive burdens of rises in the cost of living, the rising cost of houses, transport costs, taxation costs, both direct and indirect, and the crushing hospital and medical fees. No one can say that warnings have not come from the Opposition and from leaders in industry, but the Government today remains impervious to the situation which faces it. It remains blind to the opportunities that are open to us and yet in the same breath it talks about the “challenge” of making use of the time made available to us by the devaluation of the rand. The hon. the Minister has done nothing to break this economic logjam which is confronting the country, and at a time when the country is desperate, we on this side of the House have a right to demand that something must be done to end the present impotence and sterility of the Nationalist Government’s policies. What is called for in a country which is ill and ailing—there is no fear that it will die—is a change of doctor.

Mr. Speaker, the hon. member for Cape Town Gardens said that this would become one of the most important debates because the Opposition would clearly point out the maladministration by the Government. If they regard their own contribution thus far as being important, I want to say to them that their estimation of worth is very poor. In addition, I want to say that very little value is attached to them as an Opposition. Therefore I should like to introduce the Opposition to themselves, because it seems to me they do not know themselves. If one expresses criticism, one should be in a position to be able to offer an alternative policy or solution as well. We on this side of this House have been waiting for that in vain, and even the English Press is waiting in suspense. I cannot describe the participation of this Opposition thus far in the debate in better terms than the Sunday Times of 15th August last year did. This has already been quoted in this House. Faultlessly and correctly they were described as “the party that is losing its way”. This party which has lost its way and in which even the English Press no longer has any confidence and which it scolds for being a stubborn, short-sighted party with a pitiable fighting spirit, a party which has ensnared itself as far as race matters are concerned and has therefore been off balanced for many years—this is what the Sunday Times says—now says through the hon. member for Pinelands that we on this side should make way for them so that they may take over the Government.

Furthermore, they are trying to create the impression among the people outside that they are ready to take over the government.

But let us look at what the English Press says. I think it is extremely pathetic that these people, who say they are prepared to take over the government, are not even able to fight simultaneously on the three fronts on which they are obliged to fight now. The first front is the sincerity of purpose of the National Party’s relationships policy. The second front is their own inability to accept the fundamental principles of that policy, as they are being realized in the Bantu homelands endeavour, and as a result of which they are incurring the scorn, contempt and abuse of the Sunday Times. The third front is their own political immorality towards the Black people of this country. [Interjections.] The hon. gentlemen who are making such a noise now, made a big show in this House last year about the equivalence, in the White area, of the Black people of this country, equivalence in the economic, cultural and political spheres, in order to prove their so-called morality towards the Black people. But in their first action outside this House, when they had to stand face to face with the electorate, they somersaulted in such a way that even the Sunday Times of 15th August had to call out in frenzied bewilderment—

This is why the Sunday Times tackled these people so vehemently and gave them a tremendous drubbing. Their annoyance with the United Party and my statement about their political immorality arise from a quotation in a speech made by the hon. member for Hillbrow. The Sunday Times of 15th August referred to it.

What does Rapport say?

Mr. Speaker, I can hardly refer respectfully to the hon. members in the back benches who are making such a noise with their interjections, but who do not make speeches. The Sunday Times of 15th August said—

Is this not a good testimonial, even though it comes from the hon. member for Hillbrow, of the sincerity of purpose of the National Party’s relationships policy? If we have to add to that the statement made by the hon. Senator Niehaus, the leader of the United Party in South-West, which has already been referred to, namely “to create a good image overseas, the Government have spoilt the Owambo with too much kindness”, I want to ask the Black people of this country to take careful note of the difference in points of departure between the United Party on that side and the National Party on this side. They should take careful note of this, because these are the people who talk with great show in this House of their goodwill, but when they get to the electorate outside, they somersault in such a way that even the Sunday Times cannot understand it.

Let us talk about communism now.

I shall come to that, and you will not like it. Then the Sunday Times added its own comment. It said—

Sir, these people do not even feel ashamed of their own ignominies any more. There you have it, Sir. This is what the United Party looks like with its brilliant record of double-taking and immorality towards the Black people of this country.

Order! The hon. member must withdraw the word “immorality”.

I withdraw it, Sir.

And “double-talking”?

Order! The hon. member may proceed.

These are the people who do not grant the Black people of this country their dignity and self-respect. These are the people who attacked the Government in this House last year about its so-called morality towards the Black people of this country. As soon as they get outside this House, they scold the Government because by means of its policy of separate development it is granting these people dignity, self-respect and a niche in life which they did not have before but do have in their own areas now. Sir, this is why the English Press have little regard for those people on that side as being a possible substitute for the Government at present in power. Then they went further and launched a final onslaught in order to prove that the Opposition was not at all capable of taking over the government of the country. The Sunday Times of 22nd August put it in this way … [Interjections.]

What does Rapport say about you?

Sir, they are very scared of the Sunday Times. They are so touchy about it now that they are interrupting me. The Sunday Times gave them such a hiding that they cannot endure it, but they deserve it.

Rather talk about coalition.

Sir, I want to quote to you from the Sunday Times of 22nd August, and you should listen very carefully now, because this is what is being said of these people who have to take over the government—

Can you see what they look like, Mr. Speaker? The Sunday Times went on to say—

It is all very well for Mr. Marais Steyn to say the United Party cannot afford politically to do this or that. If this is true, then the United Party might just as well pack up and go!

And this is the party, Sir, that wants to tell me they can take over the government, while the English Press tells them they should pack up and go. This is what that party, which pretends to be a possible government, looks like in the eyes of the English Press. But I want to quote further to you from the Sunday Times, because I find this so applicable to that party; the Sunday Times of 29th August last year came with this final onslaught to expose the United Party—

And the word “policy” is in inverted commas, Mr. Speaker—

Then they went on to say—

[Interjections.] Mr. Speaker, I am not at all surprised that hon. members opposite do not like hearing what I am saying to them; that is why they are making all these interjections. They are very ashamed of this, and I am surprised that they can still feel ashamed; I am not used to it from them. Sir, this is what that party looks like in the eyes of the Press, and the public think the same of them. It will probably be a long time before we come across a bigger manifestation of disregard for and dissatisfaction with a party and its leadership. I want to go so far as to say that even the National Party has never been drubbed by the English Press in such derogatory, slighting and bewildering terms. This is the party, with its lack of policy, its listlessness, its short-sightedness, its obtuseness, its unintelligibility, its powerlessness—and all the other terms of abuse which the Sunday Times picked out and applied to them so lustily—which tells us here that it is ready to take over the government; these are the adjectives used by the Press to describe them.

Astounding!

Yes, astounding, Sir. But after the Sunday Times had given these people a good hiding week after week, and even in the fourth consecutive week were threatening to close their tentacles around these poor perplexed people and suck out their last bit of vitality, peace was suddenly made between the Sunday Times and the United Party, but a very ominous peace. The Sunday Times of 5th September in glowing terms reported the statement made by the hon. the Leader of the Opposition on the acceptance of the fundamental principles and the irreversibility of Bantu homelands. The hon. the Leader of the Opposition’s ego was soothed in big front-page headlines as well as in carefully calculated words in a leading article. He was praised. He was lauded— I am tempted to say he was revived as well—but not without good reason, because the object of the Sunday Times, which it in fact achieved, was that these people should start with renewed vigour under the directions and dictates of the Sunday Times—but unfortunately they somersaulted again, and how disappointed was the Sunday Times not then! On the same front page of the Sunday Times of 5th September on which it announced, with glowing terms in praise of the hon. the Leader of the Opposition, that the United Party had once again followed the dictates of the Sunday Times and had accepted the policy of the National Party in respect of the Bantu homelands as being irreversible, it was also announced, unfortunately for them, that the Sunday Times was once again bringing pressure to bear on them and bullying them with fierce determination, stating that it had no confidence in the declared policy of the United Party. Opposite that report devoted to the hon. the Leader of the Opposition, the following little report was placed, so that one had to notice it.

What was the date?

It was in the Sunday Times of 5th September, if hon. members want to know. It read as follows—

Then they praised and lauded the great deeds of the hon. the Leader of the Opposition in clarifying the position, as if it were brilliant statesmanship to repudiate oneself and one another in order to be able to satisfy and follow the Sunday Times. And this is precisely what happened there. But then the Sunday Times went on to say …

The shareholders.

Sir, those hon. members do not like hearing this, but they received a very good hiding and I should like to drive this point home to them. The Sunday Times proceeded to point out to these people that they were not capable of taking over the government and also indicated to the readers outside that these people could scarcely be an official Opposition. The Sunday Times went on to say—

And here we come to the interim policy of the hon. member for Bezuidenhout—

These are the people who say they want to take over the government, while their Press tells them they should abandon their policy and forget it. But then they want to take over the government with it, while the hon. member for Bezuidenhout says it is a mere interim measure. But at the last United Party congress he actually came forward with the refrain: “Abandon it, scrap it, forget it,” when he proposed that non-Whites should be represented by non-Whites in this House. He came forward with this refrain, but this is not the only little tune of the Sunday Times to which these people danced so much and raised such clouds of dust that they almost worked themselves up into a frenzy. No, as a result of allegations made on that side of the House last year that a Black Power danger was being created here, allegations to which the hon. the Leader of the Opposition—and I want to charge him with that—on no occasion reacted disapprovingly, and as a result of similar remarks made by hon. members opposite during the recess, the Sunday Times expressed its greatest displeasure towards these people, these people who want to take over the government, and asked the party leadership to take speedy action against them. Again they danced, and danced with gusto, because at the subsequent United Party congress in the Transvaal the hon. the Leader of the Opposition asked his people please to comply with this request of the Sunday Times and not to create the impression again that such a danger was in fact being created here. After the Sunday Times had kept up a wild tirade around and over the head of the United Party for more than six weeks and the hon. the Leader of the Opposition had said everything which he had to say on the instructions of the Sunday Times, the Sunday Times of 26th September wrote … [Interjections.]

I have it all here and want to say even more to them. They should listen carefully now and then I should like to hear whether one of them would laugh some more, because this concerns their Leader. The Sunday Times of 26th September, told the hon. the Leader of the Opposition that he should start showing signs of possessing qualities of leadership and added that he should not allow himself to be led by the ill-considered advice of the political brood around him. Mr. Speaker, this is what they look like; these are the people who want to take over the government. Why are they not laughing now? “A political brood”, the Press calls them, but they say they are ready to take over the government. But it is a long time since I have heard that people who have progressed to the stage, to which they themselves think they have progressed can be abused in such bewildering, derogatory and slighting terms. I shall leave that there.

Let us talk about communism now, man!

I shall come to that [Interjections.] Mr. Speaker, I should like to say a few words about the political immorality of the hon. member for Hillbrow, as measured in terms of his resistance to the fact that it is Government policy …

Order! The hon. member must withdraw the word “immorality”.

I withdraw it, Mr. Speaker.

I say I want to say a few words about the statements made by the hon. member for Hillbrow as measured in terms of his resistance to the fact that it is Government policy to establish a political platform to grant the leaders of the Bantu homelands responsibility, self-respect and the attendant powers which they have not had as yet. He objected to this fact in public. He objected in public to the fact that these leaders could speak on behalf of their own people. He objected in public to the fact that these people will be guided to independence.

Did you hear him say that?

These are the same people and this is the same party which harangued the Government last year about its morality towards the Black people. How can the Black people of this country or anyone have confidence in a party which uses such double-talk? I am asking the hon. member for Hillbrow and his party where their morality towards the Black people of this country is. How can the Black people of this country have confidence in a party which wants to belittle the status and the authority of the Black people’s leaders among their own people; which wants to belittle the decency and responsibility of those leaders in their own homelands and who want to deny, undermine and deprive them of their right of having a joint say in their own political affairs? How will they succeed in bringing about racial peace and racial harmony in this country? How can any person, White or Black, have confidence in a party which, for the sake of petty political gain, is prepared to create great friction, great discord and great contempt among the various peoples of this country, White and Black? How would they be able to create confidence?

I should like to come to the frivolous, idle statement made by the hon. member for Yeoville—I am sorry he is not present —that God has cursed this country and this people by giving it a government such as the one which is governing at present.

Hear, hear!

The non member for Port Elizabeth Central says “hear, hear”. I should like to say to him that all believing and decent people are deeply shocked by the frivolity and idleness with which the United Party leaders are directing their ways in blasphemy towards God. I want to ask him how any person can say and prove that God has cursed this country and its people. Who can ascribe something so ghastly to God and then expect to have the trust of decent, believing people? Furthermore, I want to say to him that the only people who can have, any appreciation for this, are those who have become disciples of the devil under the cloak of religion and respectability.

This is the image which the United Party has, and its image cannot be any different, because it has created its own image. Many aspects of the United Party’s policy, its actions and its convictions reveal to me an astounding resemblance with certain aspects of communism. [Interjections.] Just listen how excited they are getting. We are living on a continent in which there are people and elements who are used to war, terrorism, chaos and bloodshed.

T am tempted to call you something very unparliamentary … [Interjections.]

The actions of the United Party and of a large section of the English press and their opposition to the Government’s attempts to prevent these undermining activities in South Africa, however insignificant they may seem on the surface, are not at all conducive to the security and solidarity of this country and its people. On the contrary, their joint action and opposition are highly conducive to these people and these elements continuing with their undermining activities. I refuse to be told that the United Party does not realize this. The only logical deduction one can make from this is that the hon. members on that side are not at all co-operating in the struggle into which the Government has been forced as a result of circumstances on its borders. On the contrary, it would seem as though these people are taking delight and revelling in the struggle in which the Government is involved in the interests of the security of this country and its people. Furthermore, they are revelling in the fact that, by carrying out its duty and giving effect to its convictions, the Government is making enemies both at home and abroad; they are delighting in that and therefore …

What a terrible thing to say!

The hon. member over there says it is a terrible thing to say …

Of course it is.

… but if we listen to their open discussions, if we read what is reported in the Press and if we examine their pleas, we can make no other deduction.

Such as what?

There are numerous examples. I have my own suspicions regarding the actions, the standpoint, the policy and the point of departure of the United Party in respect of this particular subject, and I want to say that they make me feel extremely concerned.

Mr. Speaker, the speech of the hon. member who has just sat down has left me with three impressions. They are impressions that are not going to last very long as far as I am concerned. The first impression is that the Government has completely run out of speakers who are capable of speaking on any financial matters.

Hear, hear!

The second impression I am left with is that the contribution of the member for Odendaalsrus has done little to raise the standard of the contributions made by hon. members on the other side. It is a contribution that is not likely to be remembered long and, as far as I am concerned, the sooner it is forgotten, the better. [Interjections.]

The third impression that the hon. member’s contribution has left with me is that he is unlikely to be the first member on that side of the House to cross to this side of the House.

The truth hurts.

Mr. Speaker, I should like to return the debate to the subject which I believe is at issue, namely the Part Appropriation Bill. During the No-confidence Debate my colleague, the hon. member for Von Brandis, described the hon. the Minister of Finance as being too shrewd an economist to believe all that he was saying. Normally, I would go along with what the hon. member for Von Brandis has to say on an economic subject. However, I do not think I can go all the way with him as regards his description of the hon. the Minister as an economist. But then I have had the advantage of reaching my assessment of his shrewdness as an economist after the speech which he made on Monday, whereas the hon. member for Von Brandis made his assessment before that speech.

On Monday we listened to a speech by the hon. the Minister which skirted around the main problems with which this country is faced. We listened to a speech which laid emphasis on the symptoms of our problems rather than getting down to the root causes of those problems. We listened to a speech which was full of excuses for the difficulties which we are facing, a speech which tried to play down the seriousness of those problems. We listened to a speech which gave no indication whatsoever of any constructive steps which the Government has in mind to deal with the situation. The hon. the Minister did identify three of the economic problems with which the country is faced, namely inflation, the balance of payments problem and the lack of growth in the economy. Let me say that I agree with the hon. the Minister that these three problems are some of the problems with which this country is faced. I also agree with him that in identifying lack of growth as one of our problems, he was identifying really the main problem with which our economy is faced, although he did not describe it in such words.

Inflation is one of the other problems which he mentioned. However much he tried to play down the seriousness of inflation, however much he tried to juggle with figures to show that it is not as serious as I believe it is, inflation is an absolute cancer in our economy. It is a cancer which is eating away increasingly at the very fibre of our living standards. Inflation, which the hon. the Minister mentioned, and the balance of payments problems are in fact by-products of the main problem, which is lack of growth in the economy. Having identified those problems, I consider that there was a glaring omission in the hon. the Minister’s speech. He omitted to say why economic growth in South Africa is stagnant. Axiomatically there can only be one reason why growth is stagnant. That is because we are failing to use and develop our productive resources so that they can produce more and more goods to supply the market. The hon. the Minister was virtually silent on the subject of the development of our resources. He was virtually silent on our problem of labour shortage. He made no mention at all of the stagnant position of our savings although that matter, I am glad to say, has been raised by other members on the other side of this House. He made no mention at all of the fact that the level of investment in fixed assets to increase our production capacity for the future, was falling last year. Yet these are the real problems facing South Africa. These are the real factors hindering the growth of our economy and that must be put right, if there is to be any chance at all of our successfully fighting inflation. These are the things which must be put right if we are to have any chance of exploiting the opportunities which devaluation of the rand has afforded us.

Of these problems, I consider that the labour shortage still looms most prominently as our most pressing problem. For that reason I am going to say a few words on it specifically. It is a fact that the severe impact of the labour shortage in South Africa on the economy is a comparatively recent phenomenon. During the first half of the 1960’s we did have a reservoir of unemployed White, Coloured and Asiatic labour on which employers could draw if they wished to expand their operations. That reservoir in fact continued to exist until about 1968, although by that time it was shrinking fairly fast. It was really from 1969 onwards that the slack in the White, Coloured and Asiatic labour supply had been taken up, the reservoir had ceased to exist and the really critical stringency in the labour market had developed. It is no coincidence at all that the economic problems with which South Africa has been faced and is still being faced, have grown in proportion as the shortage of labour has grown in intensity. It is no coincidence that the demand for goods and services, of which the demand by the Government itself is an important component, has outstripped the supply of goods and services at a time when that supply has been restricted because of restrictions in the labour supply. It is no coincidence that the demand for the factors of production has outstripped the supply of the factors of production at a time when one of the main factors of production, namely labour, has been kept in artificially short supply. It is no coincidence that costs and prices have escalated since 1969 when, inevitably, the shortage of labour led to employers competing for labour and pushing up wages which in turn has pushed up costs, which in turn has pushed up prices. It is no coincidence that, during this period, we have suffered a balance of payments problem because imports have been increased in an attempt to redress the imbalance between the supply and the demand for goods. Finally it is no coincidence that savings and fixed investments should have suffered during this period; savings, because they never flourish during a time of intense inflation; investment because it relies on savings as its source of finance and also because the desire and confidence to invest is dampened when one of the important factors of production which is going to make investment profitable namely labour, is not in reasonable supply.

I do not think that the hon. the Minister of Finance will argue with me on this identification of what the problems facing South Africa’s economy are. In his speech on Monday he tended to play down the seriousness of these problems and he did not mention all the problems with which we are faced, but I do not think that he will disagree with me that these are the problems. Where we on this side of the House do radically disagree with the Government, is on the Government’s failure to apply the correct remedies and solutions to overcome these problems. We disagree radically with the policies that the Government is applying, and particularly with the policies which the Government is not applying, in its attempt to deal with the situation …

What do you suggest?

I shall come to that. The Government’s solution has primarily been directed towards damping down demand in order to redress the imbalance between supply and demand. This it has done through the media of the control of credit, the control of finances, financial restrictions and taxation in an attempt to restrict the private sector’s spending and thereby reduce demand by the private sector. Since 1965 we have had, continually, without any lifting, credit ceilings in the banking sector. Since 1970 we have had, to some extent, high or low, restrictions through hire-purchase regulations. They have been like a yo-yo, up and down. In the last two budgets we have had higher taxation applied to us in an attempt to use taxation as a deflationary instrument and thereby to take the ability to spend away from the private sector. But this use of taxation as a deflationary instrument has been completely nullified by the fact that all the money, and more than all the money that has been collected by way of taxation, has been used by the Government to spend on its own requirements. It now appears that we are going to have, at long last, an attempt by the Government to prune its own spending, which is a measure we on this side of the House have been recommending for a long time.

These are the measures which the Government has been following in trying to deal with the situation. I believe it would be a very great exaggeration to say that these measures have worked to any significant extent, are working to any significant extent, or are likely to work to any significant extent. I say this advisedly. The excess of the gross domestic expenditure in South Africa over the gross national product, which is the measure of the excess of demand over supply, did it is true, diminish in the first three quarters of 1971, compared to the first three quarters of the previous year. However, that gives â very false impression of the situation, because what happened in fact, was that expenditure on consumption by the private sector and by the Government increased faster than it increased in the previous year. But it was outbalanced by the fact that investment diminished faster than it did in the previous year. The fact that investment was declining to the extent that it was outbalancing an increase in consumption expenditure, is in itself a very serious position. Any improvement in the labour position as was indicated by the hon. the Minister in his speech on Monday, has been very minimal, amounting to an increase in unemployed of only a few hundred people. I am referring of course only to Whites, Coloureds and Asiatics. That minimal increase in the reservoir of unemployed has probably been caused more by a dislocation of industries as a result of the financial measures that have been applied to hire purchases than by a general easing of the labour position.

As far as inflation is concerned, however much the hon. the Minister may juggle with his figures, and however much he may try to play down the seriousness of inflation, it is a fact that it is not under control. It is a fact that during the 12 months, from December, 1970, to December, 1971, prices of consumer goods increased by nearly 7 per cent compared with 4,2 per cent in the previous year, and that inflation can only accelerate and not diminish as a result of devaluation.

Nor is there any solace to be gained from the savings position. The latest figures of savings that are available indicate that in 1970 11,2 per cent of the net national income was being saved, compared to 12,5 per cent in the previous year. I am sure that 1971 will not show any improvement in that position. The only problem that has made any headway in recent weeks has been the balance of payments, as was indicated by the hon. the Minister. But I think it would be a bold man who would attribute this improvement to any change in the balance of trade. It is far more probable that the improvement in the balance of payments situation over the last few weeks has been due to a reversal of the leads and lags situation and the resumption of capital inflow as a result of the settlement of the international currency situation than to any fundamental change in the trading pattern.

Apart from the opportunity which devaluation has afforded the country to improve its balance of payments, we are still faced with the same problems as we have had for the last two or three years. We are still faced with all the other same problems that I have attempted to identify this afternoon, and these problems are not in any way improved by the step that we have taken to devalue the rand. The same solutions to these problems are still being dished up to us, and the same solutions are still failing to work. But in addition, with the passage of time, we are now starting to feel some of the harmful side-effects of having applied short-term financial measures for too long a period. This is something about which we on this side of the House has continually warned; we have warned that if you use short-term measures they have got to be short term. If they are applied for too long, then they have harmful side-effects, and this is what has been happening. The hire-purchase restrictions, for example, may have curtailed the demand for the products of the industries to which they have been applied, but at the same time they have also restricted investment in those industries and they have reduced the productivity of those industries. The credit ceiling may have dampened business activity, but it has also dampened investment in additional capacity for the future. The long period during which we have had credit ceilings has also meant that borrowers have had to compete for funds that are not controlled by the credit ceilings and they have forced interest rates up accordingly. A grey market has developed and a tragedy such as the Sidarel collapse is a direct result of the development of the grey market. High interest rates have now been with us for so long that they are no longer deflationary, as they normally are, but they have become part of the cost structure of producers, with the result that they are highly inflationary. But I think, Sir, that the measure which has been propounded by the Government as being deflationary, which in fact has been most inflationary, has been the high level of taxation. The taxation of goods, mainly through the sales tax, has increased the cost of living, and when that increase in the cost of living as the result of taxation is coupled with the fact that income tax has taken income away from salaried people, it has impelled them to seek higher wages, and however much they are exhorted not to seek higher wages it is a human failing, if you like to call it that, that people will try to protect their standards of living if they can, and in the case of labour and wages, labour being in short supply as it is, employers find it difficult to resist paying higher wages, otherwise they lose their labour. This, of course, is causing costs to rise and inflating monetary demand. The high marginal tax under which we are suffering at the moment is also proving a distinct disincentive to harder work and higher productivity, because it is just not worth while earning the extra rand if so much of it is taken away in tax. But possibly, Sir, the most damaging harm which is being done by taxation is the effect which it is having on the ability of individuals and companies to save, because the highest taxation rates are hitting the people who are best in a position to save. Had some of the proceeds of the higher tax which we have been paying been sterilized, then higher taxation might well have been deflationary, but that has not happened. The Government has, in fact, spent all and more than the taxation it has received purely in order to make its own ends meet.

Mr. Speaker, this is the vicious circle in which the Government finds itself, in which the short-term measures which it has been taking to try to deal with the problems in the economy, are having undesirable effects in other directions, with the result that inflation stays with us; inflation accelerates and economic growth remains at a low rate. The Government is imprisoned in this vicious circle. It cannot attempt to break out by reversing its monetary and fiscal policies, as has happened in other countries when they have reflated their economies in recent months. It cannot do this because if it did so it would only run up against the brick wall of a labour shortage and that would only exacerbate the inflationary position. I am going to be quite honest, Mr. Speaker, when I say that unless the Government breaks out of this vicious circle, I consider, unlike the hon. member for Paarl, that the future of the South African economy is not bright.

Sir, there is only one way in which the Government can break out of this vicious circle, and that is to take imaginative and realistic steps to increase supply so that excess demand is eliminated by raising supply rather than by lowering demand. This will take time because it entails increasing productivity, and particularly the productive capacity of labour, but it is the only answer to our economic problems, namely to encourage growth. Increased productivity is not just going to happen for the asking; it is not going to happen as the result of exhortations to labour to work harder. It is not going to happen as a result of exhortations such as the hon. the Minister made on Monday to employers to organize themselves better. It is only going to happen as a result of the creation of conditions and circumstances which are conducive to greater productivity, and that will require a constructive approach to the problem by the Government; it will require an approach which will accept a programme which is aimed at removing the bottle-necks and obstructions which are preventing the productive resources of the country being fully developed and used. It will require a balanced programme to remove the artificial restrictions placed upon the employment of non-Whites and the substitution of a plan of training and opportunity. It will require the suspension of the decentralization programme based on ideological considerations and the substitution of a decentralization programme based on economic considerations. It will require that the Government frame a programme of priorities in the development of the infrastructure, placing the highest priority on productive infrastructure, and it will require ruthless pruning of unproductive expenditure which is not contributing to the welfare or the security of the State. These, Sir, are the things that this country needs. The Government will be failing in its duty if it does not refocus its sights and get its perspective of what is required correct.

Sir, we have been listening in vain all afternoon, just as we listened in vain throughout the entire no-confidence debate, for practical plans from the so-called economic stars on the Opposition side which could help to counteract the problems which, according to them, exist in South Africa. I sat here listening attentively to the hon. member for Constantia. He is one of the so-called economic stars sitting in the Opposition benches. He is also a practical businessman and I would at least have expected him, more than any other member on that side of the House, to propose concrete steps which the Government should take, for example to combat inflation further.

But he did.

In the 25 minute speech he made here, I did not hear him make a single practical suggestion. All he was able to tell us again was that South Africa’s great problem is inflation. He said that the artificial shortage of labour in South Africa was the main reason for the inflation we have in South Africa. But can hon. members on that side mention to us any step he suggested to the House for making labour more readily available in South Africa? I think that if one considers the record of the present Minister of Finance, there were probably few predecessors of his in the history of our country who were more aware of the dangers of inflation. He in particular was the man who over the years became unpopular with certain sectors in commerce and industry, precisely because he took so many steps to combat inflation in South Africa. One of the main reasons why he was so concerned about the position of inflation was because he was aware of the prejudicial effect it would inevitably have on our gold mining industry, and that South Africa, which is dependent upon gold to such a large extent to cause its balance of payments to tally, could least afford of all countries in the world to have a high rate of inflation. If we consider the past 11 years and we take the period from 1959 to 1970 we will find that the average rate of inflation during those 11 years was only 3 per cent per annum. The rate of inflation was 34,1 per cent over a period of 11 years up to the end of 1970. It is generally accepted that a developing country, if you can have a rate of inflation of 2½ per cent, is still economically sound, and this is virtually accepted as normal. Since South Africa approached very closely to that accepted 2½ per cent rate of inflation which developing countries should have, I think we cannot but congratulate the predecessors of the present Minister of Finance and the hon. Minister himself today on their having succeeded, under difficult circumstances, in keeping that rate of inflation so low.

I should just like to remind hon. members on that side of the House of a few steps which were taken by the Government precisely in order to counteract a high rate of inflation. Firtly there are the steps which were taken to increase the supply of goods in South Africa. When we recall what was done two years ago when the Government announced drastic measures to increase the number of training facilities in South Africa, and measures which were then announced in the Budget to improve the financial position of our universities in particular, we realize that it was almost a completely new dispensation which took effect. This supplies us with the highest category of trained manpower in South Africa, men who in their turn must provide for the technical training, in technical colleges and training colleges, of our people. This Government has over the years concentrated throughout on attracting skilled manpower to South Africa through immigration, in a period when there was major economic growth in Western Europe and where there was major economic growth in our countries of origin, from which we have to attract immigrants, and at a time when it was obviously not so easy for those people to go and establish themselves overseas. Nevertheless South Africa was very successful in bringing trained manpower to this country. We also recall what happened during the past 20 years as far as the expansion of our infra-structure as a whole is concerned. When we think about this, we cannot accept the complaint which is being made today that the Government is spending too much, because this infra-structure was in fact expanded to this extent because State expenditure increased to this same extent to make increased production in South Africa possible. If it had not been for the fact that the Government had, through the expansion of the railway system and the communication system as a whole, increased the services of all the departments to the public. South Africa would not have been able to have the high growth rate in the sixties which it did have. I also want to point out that the Government, precisely in order to bring down production costs in South Africa, and in spite of continual opposition from organized industry, relaxed import control as much as possible without hurting our industries too much. If this step had not been taken prices in South Africa would have been far higher today. We kept the price level of our own products low precisely because we allowed people like the hon. member for Constantia, who is in that specific line of business, to make use of greater imports and in that way dampen prices in South Africa.

I can continue in this way to mention numerous positive measures which were adopted to increase the supply of goods in South Africa. On the other hand as well this Government, because there was a high spending rate in South Africa, particularly in recent years—and in this connection I should like to remind hon. members that in the years 1968, 1969 and 1970, spending by the private consumer increased by 6 per cent to 7 per cent every year, as against the target of the economic development programme of only 4,8 per cent per annum—adopted quite a number of measures, which made it unpopular among certain sections in the country, precisely in order to curb this excessive spending rate and also in that way to restrict inflation. In the first place the bank rate was increased. A ceiling was placed on bank credit. The liquidity requirements of our banks were raised from time to time, all for the purpose of making less money available to the private sector so that it would have less to spend. Not all these steps were popular, but this Minister of Finance and this Government can claim the credit for having been prepared to take these steps in spite of their unpopularity. They did this for one reason only and that was to keep the rate of inflation in South Africa as low as possible. One can also indicate, by means of comparative figures, which have been furnished on a number of occasions by members of the Cabinet both last year and this year, that South Africa has really been successful compared to what happened in the rest of the world. I just want to remind you of the statement made by the hon. the Minister of Planning in the No-confidence Debate, i.e. that the real test which should be made in this connection is whether we in South Africa are able to maintain a lower rate of inflation than that in the rest of the world, for if we could succeed in doing so we would then, and then only, be able to compete on the world market. That is why it is important to consider how our rate of inflation compares with that in the rest of the world. The figures were mentioned to you last week, but because hon. members do not seem to have paid any heed to them, I want to mention them again today. Even last year, in 1971, when the rate of inflation in South Africa was relatively higher than it had been the preceding year, when it increased to approximately 7 per cent—if one makes provision for the increase in State expenditure, the increases in taxation, etc.—South Africa was relatively well-off. Portugal then had a rate of inflation of almost 12,5 per cent, Israel a rate of inflation of 11,5 per cent, the United Kingdom 10.3 per cent, Japan also 10.3 per cent, the Netherlands 7,7 per cent and Switzerland 6,7 per cent, while our rate of inflation was just below 7 per cent. Then, too, one must at the same time be fair and concede that the hon. the Minister of Finance is correct when he states that this rate of inflation of 7 per cent was really abnormal for South Africa precisely because increases in taxation and other moneys collected by the State through the Post Office and through our transportation services had come into effect the previous and in that year. These increases were responsible for almost 3 per cent of that rate of inflation. If one takes those factors into account, which can to a large extent be regarded as being quite exceptional—it seldom happens even in the space of a decade that increases occur to that extent—we actually fared relatively well in being able to restrict our own rate of inflation to 4 per cent per annum.

I say therefore that we as Government have nothing to feel guilty about in regard to this problem when we go to the country, and we go to the voters of Brakpan and ask them whether we as Government took steps which were strong enough to keep the rate of inflation in South Africa as low as possible.

On that side of the House the picture which is painted of conditions in South Africa is frequently very one-sided. Looking at all their speeches, one notes that frequent reference is made to this one statement, i.e. that the growth-rate in South Africa is supposedly so low, and that steps must be taken to ensure a higher growthrate. I have pointed out before in previous speeches that it is very unfair to compare the growth-rate of South Africa with that of a country like Japan for example. Japan has one of the most highly developed populations in the world.

And a hundred years ago?

It is a country with man-power which is among the most highly skilled in the world. If we compare it to the relatively large non-White population of South Africa, it simply cannot be expected that our manpower position and our productivity could in any way be compared with that of Japan. In the second place Japan is a relatively small country in surface area and consequently the infrastructure is concentrated over a relatively small area, but in South Africa we have a sparse population which is distributed over a very large country. It must be borne in mind that as the infrastructure is established throughout South Africa, whether it is transportation or communications in whatever form, these are often things which can last for decades; that it is not necessary to expand that infrastructure to the same extent from year to year, as the National Party Government has been doing since 1948. If we consider South Africa’s history of growth since the year 1920 until today it reveals a very significant picture. If we were to look at paragraph 19, on page 5 of the third report of the Franszen Commission, we would find there figures in respect of the average real growth-rate of the South African economy since the twenties until the end of 1970. Between 1920 and 1930 South Africa maintained an average growthrate of 3,9 percent. From the year 1930 to the year 1940 South Africa maintained an average growth-rate of 4,4 per cent. From 1950 to 1960 South Africa was able to maintain an average growth-rate of 4,7 per cent. If you now consider the growthrate which South Africa was able to maintain between the years 1960 and 1970, you will find that it was 5,9 per cent. In other words, if we compare one decade with another, we have had in South Africa a constant increase in the average real growth-rate. This is attributable to the fact that South Africa became less and less dependent upon primary products. The contribution of primary products, such as produce from the agricultural sector and the mining of minerals as seen against the production of secondary industries, gradually diminished. Because this progress is maintaining itself in this decade and will continue to maintain itself in coming decades, we can expect that when we reach the year 1980—when the second term of the National Party programme of this decade expires—we will have an average growthrate which is higher than the one we had between the years 1960 and 1970, in spite of the fact that the target rate of the economic development programme is only 5,5 per cent. In this regard it is highly significant to note that previously in South Africa we have had considerable growth fluctuations within the space of a decade. In the decade of the twenties, between 1920 and 1930 we had years during which we had a negative growth-rate of as much as 6,6 per cent. Then we had other years during which we had a positive growth-rate of 18,4 per cent. So there were years in which South Africa’s national product actually decreased by 6,6 per cent, and in other years it increased by as much as 18,4 per cent. We had those great fluctuations precisely because South Africa, in those years, was so dependent on the production of primary products. The same pattern was present in the decade of the thirties. In that decade there were years during which the negative growth-rate was as much as 10 per cent, while there were also years during which the positive growth-rate in a single year amounted to as much as 24 per cent. In those years we had these tremendous fluctuations, so tremendous that the national product decreased in one year by as much as 10 per cent while in another year there was an increase of as much as 24 per cent. If those periods were to be compared with what happened during the period in which the National Party Government was in power, we would see that in the years 1960 to 1970—the period of the development of our secondary industries— there was not a single year in which the growth-rate was lower than 3½ per cent. The highest point it reached during that decade, was 8,5 per cent. In that way we have arrived at this relatively high average of 5,9 per cent. If we were to view the year 1971 as a difficult year in the financial sphere, and a year during which production was to a certain extent restricted—perhaps owing to a shortage of capital, and perhaps owing to relatively high rates of interest or whatever the reason was—we can feel satisfied that the beginning of the third last decade of this century nevertheless produced a growth-rate of 4 per cent, as compared to the lowest point during the previous decade, which was per cent. Without posing as a statistician, I make so bold as to say that if we have the normal course of events in South Africa as we have had during the past few decades, we should expect that this new decade of ours will produce an even higher average real growth-rate than even this 5,9 per cent.

There are many other factors which make me feel optimistic when I consider the future of this country of mine. Yesterday a speech was made in the Other Place in which the hon. Senator Horwood mentioned one of these factors which cause us to feel optimistic. He pointed out the increase in the price of gold and he did not only mean the dollar price of gold, but also the increase in the gold price on the free markets of the world. If we consider the research done by economists in regard to gold-mines this is something which one would have predicted would have to happen sooner or later, i.e. that there will be a steadily increasing price for gold on the world markets as the industrial utilization of gold increases. I do not want to go into this subject any further, but that alone will give South Africa a far greater measure of stability in its balance of trade. It will bring greater confidence, in general, in South Africa. Not only our own entrepreneurs in South Africa, but thinking entrepreneurs in every country of the world, will take a more optimistic view.

There is another highly significant development taking place in the world today. The government of Britain, with its entry into the European Common Market, has taken the step which any responsible government would do, i.e. to create, in the face of the fierce competition of the international world of commerce, a better opportunity for growth for its own industries in the greater market of Europe. Because this has happened and because, alongside the American bloc, and the Communist bloc with which little trade is conducted, another large world economic power-bloc has developed, a bloc which is already comparable to the United States of America, one must inevitably expect that other parts of the world will also reconsider their own position. In this connection it does not take much of an economist to predict that a country like Japan will take a fresh look at the possibilities of trade with the mainland of Asia. It does not take much of a prophet to expect that a country like Japan will take a fresh look at Red China and even the possibility of trade with Soviet Russia. One can perhaps in due course expect, in spite of the fact that it seems unlikely at this stage, a new trading bloc to develop in the East. If that happens, it will inevitably mean that there will not in future be the same degree of competition in the international commercial world between individual countries as we have known it up to now, but that we will be dealing with competition between large commercial blocs which have developed in the world. In this very respect I see a special role for South Africa, particularly here in Southern Africa. As one of the less-developed parts of the world, with relatively large natural resources and with a steadily growing market, we can expect, as wages and production increase here and in the various countries which are joined together in this region, that all the trade blocs in the world, the United States, the European bloc and the bloc we expect to develop in the East, will have to take a fresh look at Southern Africa. If they do look to Southern Africa, it will in the first instance be with the purpose of acquiring minerals from this part of the world. But they will also in due course have to consider Southern Africa as a potential market because their own marketing possibilities are being restricted by the establishment of trade blocs. With the intensification of competition, particularly for a country like Japan, they will have to take a fresh look at Southern Africa. If they appreciate the possibilities of trade, imports and exports to this part of the world, they will inevitably have to recognize the position of the Republic of South Africa itself. I can hardly imagine an entrepreneur in any part of the world being able to overlook South Africa in that process if he wants to establish himself in an industrial sphere or in a trade sphere in any country in Southern Africa. If an entrepreneur wants to control an undertaking, maintain supervision and manage that undertaking in any of the neighbouring states of South Africa, it would be far more practical for such an entrepreneur to do so from South Africa itself. That is why I believe that countless entrepreneurs from all over the world will, with the intensification which is going to occur in the international trade position, see South Africa to an increasing extent as the nub of the entire southern section of this continent of ours. In that process we can expect to find ourselves in a reasonably strong position of power, not only for investment, but also for trade. That is why I say that if we see South Africa in that role which it has to play in the world, we must believe that this new decade will usher in a new wave of prosperity for South Africa.

I want to go further and say that there is also a third reason why I believe that the third last decade of this century is still going to become a golden decade for us, as the Minister of Finance has often said. That reason is that, as the policy of this Government unfolds, to decentralize industries to our Bantu homelands to the greatest possible extent, to give assistance to neighbouring countries and to provide non-White workers with training on a large scale, particularly to serve their own people, we can imagine that to a far greater extent than is the case in South Africa today, the non-White peoples of South Africa, as we know them today and also the Coloured population of South Africa, will be able to an ever-increasing extent to provide their own administrative manpower. This will not only be administrative manpower for the public sector, but also for the private sector. As this happens, the pressure which exists at present on the White manpower of South Africa, which is at present fulfilling this role, not only for 4 million Whites or 6 million Whites and Coloureds, but for a population of 22 million, will be reduced. Because the non-Whites will to an ever-increasing extent be able to provide their own administrative manpower in the public and private sectors, we can expect these people to acquire for themselves a much higher standard of living through their labour than they have today. Because they will of necessity acquire it then, we shall in this part of the world find an ever-growing market for our products. Every businessman in South Africa has already realized this, but when I listen to the speeches made by hon. members on the opposite side of the House, it seems to me as if they believe that the non-White peoples within our own borders, those of our neighbouring states and also our Coloured population will not be competent to provide their own administrative manpower in future. We on this side of the House believe that we will in due course reap the benefits of the work we are now doing and that we will in this decade, with the larger market which will in this way arise, have an industrial upsurge as we have never had before, not even in the last two decades. If the voters of Brakpan, who have to elect a member of the House of Assembly to represent them here, listen to the speeches made from those benches, they will see that that is a party which consists of pessimists, who do not believe that there is a new prosperity waiting for South Africa. But if they listen to what is being said by all the representatives of this Government, they will see optimists, people who believe that an exceptional period of prosperity lies ahead for our country. That is why I know that this country as a whole, and not only the voters of Brakpan, will reconfirm its confidence in this Government to an increasing extent in every election still to come.

Mr. Speaker, I listened attentively and with interest to the hon. member for Vasco. With the aid of statistics he spoke historically about the past. He also spoke speculatively about the future. He mentioned many points which stimulated my interest. I should very much like to conduct a debate with him on some of the points with which I do not agree.

You can do so now.

I am a little mistrustful, however, for I think the hon. member may have pursued this course because he wants to shy away from the present. We are here to discuss the problems of the present and not those of of the past in this debate. Today we are not interested in past history, nor do we want to speculate on what the future will bring. Today we are discussing the present crisis in our economy.

†On Monday the hon. the Minister of Finance asked this House to vote nearly R1000 million on Part Appropriation. Members would expect an hon. Minister who asks for such a vast amount to make some attempt at justification and to offer the House some explanation for this major increase. After all, the trade gap is now a yawning ravine. Exports have been virtually stagnant for three years now. Our imports are a growing avalanche. Our importers are bewildered by the conflicting decrees they receive from month to month. Price inflation is now becoming terrifying to rich and poor alike. Productivity and investment are at a virtual standstill. Our industries are paralyzed by uncertainty. Political obsessions crush economics. Only yesterday we had an example of this. We than discussed a possibility whereby, by erecting an offshore loading plant, South Africa would have been afforded the possibility of gaining an extra R387 million, calculated on contracts which have already been written in black and white but not yet signed, in the years 1975 to 1980. This would have involved a basic expenditure of R47 million, leaving aside other developments already contemplated. This prospect, in the dire situation in which we find ourselves and with this enormous import-export gap and our enormous deficit on balance of payments, was turned down in favour of another project which must in any event come, but is not now vitally necessary; which is not now a big earning factor and has no immediate potential. Sir, here again you have the obsessional driving out the realistic. In all this the hon. the Prime Minister, like a latter-day Caesar, offers us bread and circuses in the form of irrelevant political firework displays while the economy is crumbling around our feet.

Lastly, at this juncture we have devaluation, a desperate remedy requiring urgent exploitation. We devalued seven weeks ago, but since that date no single practical measure has been announced. On Monday the hon. the Minister made a speech containing no real proposals and when we asked him why, he said, “Don’t you know that the Budget speech will be six weeks from now?” Sir, six weeks plus seven weeks make 13 weeks, which is one quarter of a year. Devaluation will not wait for us. It will get away from us. If we are to take the gap, as the hon. the Minister of Finance says in rugby parlance, then I would say to him, in golf parlance, that he is deep in the rough and that he has lost his ball.

Let us examine the quite extraordinary speech of the hon. the Minister on Monday. It was an astonishing speech in the circumstances. It was an unreal and otherworldly speech, a speech in a dream. It was remote from the realities and the urgencies of this world in which we live. I am sorry to say this, but I considered it an evasive speech. It was an intellectual smokescreen, full of illusions, diversions and contrivances.

Let us examine this speech, and the House may judge for itself whether I exaggerate when I say these things of the hon. the Minister’s speech. Let us see whether my charges are fair. The Minister starts by admitting that there is a considerable increase in the Revenue and Loan accounts on Part Appropriation. Last year he asked for R685 million on these two accounts. This year the sum on these two accounts is R950 million. That is an increase of R265 million on Part Appropriation. This is an increase of nearly 40 per cent. The Minister said, in a throwaway line—

For example, R20 million is required to meet interest on new stock issues. He added, in passing, that the Post Office, the Railways and the Provinces also have made additional demands. Members should consider the size of this increase, which the Minister did not mention or explain in his speech, namely R265 million or 40 per cent, and the justification which he offers. Is the hon. the Minister playing with us? Does he think we are incapable or too idle to look up last year’s figures?

The hon. the Minister goes on to identify and admit three major weaknesses in our economy. He referred to inflation, the balance of payments and the slow growth rate. The United Party identified these very factors years ago. We have repeated them year after year, and Hansard proves it. The Minister has denied or minimized these arguments and warnings year after year. Hansard proves it. Now the Minister has identified three factors which he says create a weakness in our economy. Inflation is his first admission. On inflation, he contends that the rise is not really 7,1 per cent as the Department of Statistics says, but 4 per cent. Why? How does he calculate it? Well, Sir, he quotes this immortal phrase from the Reserve Bank Quarterly Report for December. I quote—

*Mr. Speaker, hon. members may perhaps find it difficult to follow this sentence. I must admit that I myself found it difficult to analyse. I therefore tried to translate it into simple Afrikaans, and then it reads as follows—

These winged words will be a source of comfort to every housewife in the country.

†Sir, 4 per cent is a semantic joke. Even 7,1 per cent is not real. When the cost-of-living figures are put together, there is an averaging effect in which certain low cost items are thrown together with certain high cost items, and one is given a general figure which conceals some of the very real and high increases which the ordinary consumer has to pay.

I would like to give a few examples, Sir. This again is on the authority of the Department of Statistics. The cost of living in South Africa has risen 7,1 per cent in one year. Education now costs 16,7 per cent more. The cost of communication has risen a massive 25 per cent. These shock figures, in which the December, 1971, cost of living is compared with the cost of living in December, 1970, were released by the Department of Statistics. The biggest price jump was in communications, but alcoholic beverages came a close second, with an increase of 24,9 per cent. Sir, these are official statistics. Tobacco, cigarettes and cigars now cost 13,9 pr cent more. The price of fish rose by 12,8 per cent, milk products and eggs by 11,4 per cent. Sir, it is no use taking a moral line and saying that we should not use tobacco or alcohol or fish or eggs, as the case may be; these are the actual increases on prices we have been paying, and I would say to my hon. friend, the member for Vasco, that when Brakpan considers how to vote, the housewife of Brakpan will bear in mind these figures, as well as the considerations he mentioned.

The hon. the Minister then goes on to argue that the imposition of increased taxes and State-administered prices in the second quarter of 1971 is worse if a comparison is made between January, 1971, and January, 1972, than it would be if a comparison were made between, say, May, 1971, and May, 1972. Sir, this black magic does not go very far. The addition of State-administered prices and State-imposed taxes, he says, occurred on a single occasion, and if you shift your accounting year—the period in which you look at these prices—then the impact is not so great in the one period as in the other period to which you have shifted. Sir, this is a marvellous expedient! Every commercial company in the country would be delighted to be able to shift its financial year from one set of months to another set of months in order to prove that its situation was far better than it would like to admit; or, alternatively, maybe the hon. the Minister would like to give the companies licence to do this for the purpose of calculating their tax year. This kind of specious reasoning, I think, underrates our critical faculties. It is a special pleading, a kind of synthetic rationalization, and we must be forgiven if we push our irreverent fingers through this cardboard façade which the Minister has erected.

In the Army they call it “dodging”.

Sir, I come now to another gem, and I hope the House will listen to this one, even though we are discussing economics, because this one is really good. The hon. the Minister quoted the Reserve Bank as follows: He says there are clear indications that “the official monetary and fiscal policy of reducing excessive demand was slowly but surely achieving its objective. A slowdown in the rate of increase in the aggregate domestic demand for goods and services was accompanied by a discontinuation of the strong upsurge in imports”.

Sir, one must pay attention to the words “the rate of increase” and “a discontinuation of the strong upsurge”.

*Sir, let me once again explain this in a simple way. Suppose I had driven along a very dangerous stretch of road at a speed of 50 miles per hour the day before yesterday. Yesterday I drove along the same stretch of road at a speed of 60 miles per hour. Therefore the increase was 10 miles per hour. But today I travelled along the same stretch of road at a speed of 65 miles per hour. Therefore it is an improvement in the situation; it has become more safe, because there was an increase of 10 miles per hour between yesterday and the day before; between yesterday and today, however, the increase is only five miles per-hour, which is of course much safer.

†Let me turn now to the question of the balance of payments. The hon. the Minister admits that the figures for our export trade are disastrous, but he claims that resolute action had brought about some improvement in our current balance of payments—until a further blow fell. I am sorry to say it, but I cannot agree that the Minister’s historical account of what happened in the first three quarters of last year is an accurate account. The way he tells it, the situation was steadily improving; from the first to the third quarter everything was beginning to look rosy, when suddenly came this dislocation of currencies and the whole thing was thrown into disorder and we had to devalue. The way we get at the true facts is by looking at the quarterly report of the Reserve Bank itself, and that tells a very different story. The Minister, in making his case, referred specifically to the current account. If we look at the balance of payments on current account it does to some extent justify the Minister’s claim, but he uses the capital account also, as I will show later on, when it suits him, and I will do so now. If you take into account current account and capital account you find that there was a steady deterioration during the first three quarters of last year. The net losses on gold and foreign reserves—which reflect the net position—show a steady decrease in our reserves. It was getting worse every quarter and if you leave out certain windfalls like SDR allocations, you find that there is a very alarming deterioration; all this before the international dislocation of currencies took place. The hon. the Minister returned to devaluation in his speech, and so will I. He said—

This is exactly the situation which obtained in the Republic—

Sir, this is pure United Party doctrine. We have been saying it steadily from these benches during the last three years. Now, what is the Minister’s justification for a steep devaluation? Why is it good for South Africa to have had this big devaluation? The Minister says it was not because the rand was weak, but because a big devaluation is good for South Africa.

Then why not make it bigger?

He produces arguments in favour of this. He says that the gold stimulus was necessary after 20 years of static prices, but if this was a motivating factor, why does the hon. the Minister choose this particular moment to devalue, when the gold sales for the first time in a long period were actually getting a stimulus in price on the free market without devaluation? If he felt that gold needed a stimulus during all these long and lean years, why did he not do it before? It was done after gold had received its stimulus and therefore I cannot really accept the Minister’s argument that the gold stimulus justified devaluation. Then the Minister goes on. He says that in recent weeks, from the date of devaluation up to 4th February, our balance of trade position improved by R49 million. This, he says, excludes the revaluation of gold and foreign exchange and the advent of SDR’s. Fair enough. Like the hon. member for Constantia, I would like to ask the Minister this: In calculating this R49 million improvement, did he take account of capital flow? Did the take account of leads and lags? The hon. the Minister has made great play of leads and lags. He has justified decline by saying that the leads and lags operated against us. In other words we were paying early and getting our money back late. But now we should see the other side of the coin. We have paid our “lead” share and after these weeks it is now time for our “lag” money to start coming in. Hence the pendulum should swing in our favour. When the hon. the Minister says that he can see an improvement of R49 million, or R7 million per week, does he take account of these things? Will he please tell us, when he replies, whether this is so?

The third phenomenon which the hon. the Minister mentions is that of slow growth. What does he say about slow growth and what are his remedies? He says—

Right, so we slowed down the economy; we are now poised for a great leap forward, because we have had devaluation and we know we must not waste any time. The hon. the Minister admits that our growth situation is highly unsatisfactory, but what are we going to do? We wait breathless. We wait upon the hon. the Minister with bated breath. We have been waiting for seven weeks and we are going to wait another six weeks.

We are not going to wait much longer.

We do hope that the hon. the Minister will produce the answer. What should the hon. the Minister do? We believe he should do what the United Party, what we on this side, have been advising him to do for a long time, what every economist in this country has been advising him to do, what every business leader has been advising him to do.

The period between devaluation and presenting the Budget will be three months. If the hon. the Minister has any real proposals we want to hear them; the country is waiting to hear. If the hon. the Minister does not have concrete proposals, we certainly have. We say that the hon. the Minister must now, without delay, stimulate productivity and not strangle it. If South Africa is to achieve in the year 2 000 the per capita income now enjoyed in Western Europe, our manufacturing industry must grow at the rate of 6,9 per cent per annum in real terms. We shall need four million workers as against one million. We shall need an annual increased output of 3,2 per cent as against 1,8 per cent. Our manufacturing growth in 1971 was somewhere between 2 per cent and 3 per cent. I would remind the House that our population growth is nearly 3 per cent. This means that we are steadily showing a loss; we are moving backwards; we are retrogressing.

We pretend to be running, but we are standing still.

How can we achieve a higher growth rate? We must free our means of production. The means of production essentially are capital and labour. We cannot wait any longer; we must free the means of production or we must go back steadily and then we will destroy our economy as we sit here looking at it. We must outgrow inflation. We are mesmerized by this inflation phenomenon, but countries outgrow inflation. I should like to say to the hon. member for Vasco, who is not here unfortunately, that you cannot look at inflation in isolation; inflation is merely a factor which is less or more important according to the population growth rate and according to the production growth rate. We cannot look at inflation by itself. If you have an inflation of 4 per cent, shall we say, and your economy is growing at 8 per cent, the inflation is not serious. If you have inflation of 4 per cent and your economy is growing at 2 per cent, the inflation is serious. I conclude by saying that we have no confidence in the economic policies of this Government as enunciated by the hon. Minister on Monday. We believe that his theories are wrong and we believe that they are being proved more wrong every day that passes. On Monday we had apologetics parading as economics. We have the feeling that the Government bears a grave responsibility for the systematic damage which is being done to our economy. South Africa should at this tage be poised for a great leap forward. We enter a period where expansion is vital and where population growth and the other factors demand an enormous upsurge in productivity. We can see nothing happening, however. Under this Government, we are in the locust years. The last three or four years have been eaten up by ideologies, lack of policy, inflation, setbacks of all kinds, and confusion. South Africa cannot afford this. History and the voters will judge. History will judge what has happened or what has been done to South Africa in these years. The voters will judge and I hope that the voters will make their judgment long before the historians.

Mr. Speaker, the hon. member for Von Brandis, who has just resumed his seat, mention inter alia at the beginning of his speech that he did not agree with the statements made by the hon. member for Vasco because he had given an historical survey and that that side of the House was not interested in history or in speculations about the future. If the hon. member is only interested in the problems of the present, I think he should be realistic and concede that one also has to deal now with the causes of the problems confronting us at this stage. I shall come in a moment to some of the causes of our present financial problems. The hon. member also stated in his speech that our export position had remained stagnant during the past three years, that there had been no increase in the quantity of our exports. But I think the hon. member has lost sight of one matter. One read about it in Commercial Opinion of November, 1971. I quote—

That is precisely what the hon. the Minister of Finance tried to accomplish last year with his Budget, i.e. to avoid creating any disturbances in the smooth functioning of our economy. When we come to the problems confronting South Africa today, we must also consider the causes of the problems. When we take a closer look at the tactics of the United Party, we will see that there is one very clear indication which has emerged. The Opposition is not coming forward with new productive ideas or new suggestions.

Where were you?

No, I have been here all the time. The United Party is sowing despair among the electorate. This was demonstrated a few times during the past week, and last week as well. The hon. member for Parktown, who spoke this afternoon, said inter alia that after the Part Appropriation of the hon. the Minister of Finance the public outside has been demoralized. I want to go further. Last week when we were dealing with the Land Tenure Amendment Bill, the hon. member for Newton Park said inter alia that there were misgivings among the general public. The hon. member for Pietermaritzburg District referred to the Agliotti affair and said that our people could not forget the Agliotti scandal. Now I ask myself why the hon. members of the Opposition are trying to demoralize our people. The hon. member for Parktown said that there was demoralization, but it is in fact the Opposition which is trying to cause demoralization among our people. It is the hon. member for Newton Park in fact who is trying to rouse misgivings among the people about the Department of Agricultural Credit and Land Tenure. The hon. member for Pietermaritzburg District cannot understand why the people cannot forget the Agliotti scandal. He is co-instrumental in bringing the matter to the attention of the public day after day. Last year, after the Budget was introduced, the hon. the Leader of the Opposition said that inter alia it was “the Budget we did not want”. It was a Budget he did not want because the United Party wanted a harsher Budget, for that is what they had predicted and that is also what they had been told to say by their Press. It is no surprise to us that the hon. member for Parktown is again disappointed this year with the Part Appropriation. Today he is posing as the man who asked for concessions. But it is in fact the measures the Minister of Finance introduced last year to counteract inflationg, which is one of our problems, which members of the Opposition now want to allow to disappear.

The problem in South Africa is inter alia due to the increasing cost of living. But this increasing cost of living is internationally known by another name, i.e. inflation. International economists regard this inflation problem as the greatest dynamic problem since the 1929-’33 depression. The hon. the Minister of Finance is, with his measures, counteracting this inflation in South Africa to a most highly effective extent.

But we also have to cope with an imported inflation. Because South Africa is an importing country the increase in the cost of living in other countries has a great influence on the level of prices here in the Republic of South Africa. In this way South Africa’s imports amount to 28,8 per cent of its gross national product, as against 22,1 per cent in New Zealand, 10,8 per cent in Australia, 18,3 per cent in Canada and 3,8 per cent in the United States. The tendency to import is therefore higher in South Africa than in most countries of the world. As far as local conditions are concerned, the inflation problem is caused mainly by a too high consumption. Consequently that is also the reason why the hon. the Minister of Finance asked the general public last year to save more. During the past year our population has consumed more than has been produced. It is quite correct that there has been too much spending and insufficient saving. When we come to the idea of encouraging savings, I can recall very well how the hon. Opposition scoffed at the call for increased saving in South Africa after the Budget was introduced. I can remember very clearly how the hon. member for Transkei called out in a surprised tone of voice. “Why should we save in South Africa?”

With what?

Some of the other hon. members said that people were unable to save, and asked how they were supposed to save. But the public of South Africa has proved during the past year that it wants to respond to the call made by the Minister, and they did in fact do so. In Die Burger of Monday, 14th February, a very brief report appeared under the heading: “Mense spaar meer”. According to the report the average amount South Africans saved at building societies last year amounted to R1 053, as against R986 the year before last. That shows an increase of approximately 6,8 per cent. This side of the House is grateful to the general public for having responded to the appeal made to them to save.

Mr. Speaker, the Opposition now has a so-called 13 point plan, if one can call it that, a plan which does not cohere to bring about a smooth functioning economy, as we read about in the Commercial Opinion. It will bring about a disturbance of the smooth functioning in one sphere, and will have prejudicial consequences throughout the system. The hon. members for Parktown and Von Brandis regard this devaluation of the South African rand as a panic measure. But we know, and all economists ought to know that devaluation is only effective when it comes as a shock. Devaluation in South Africa, and particularly the percentage came as a shock. It is for that reason that devaluation for South Africa is already proving effective. If hon. members of the Opposition still have doubts about the effectiveness of devaluation, I want to mention only one example to them. In a single week the wool prices increased by 17,5 per cent. That is an improvement in the situation which can be regarded as being sensational. If we consider the wool prices which have been paid since the present auction began, we see that there has been an increase of 46 per cent altogether. To what may this increase in the wool prices be attributed? I am being quite fair when I say that it is not only attributable to the devaluation of the rand, but it is also attributable to the fact that Japan has re-entered the wool market. It is also attributable to the fact that there is a fear that our auction system in South Africa may be changed. But I think that at least 70 per cent of the success of the wool market can be specifically attributed to the devaluation of the rand.

Mr. Speaker, the hon. member for Parktown complained inter alia about the excessive spending of this Government. However, the figures indicate that government spending in South Africa is relatively low. Out of 24 leading industrial countries, South Africa occupies the fifth lowest place in this regard with a figure of approximately 12,45 per cent as against an average of 15,4 per cent in the 24 countries. The figure for Australia is 10,8 per cent, Canada 15,26 per cent, Germany 15,75 per cent, The United States of America 20,9 per cent and New Zealand 14,63 per cent. The fact of the matter is that private consumer spending in South Africa is among the highest in the world and that the Government spending in South Africa is among the lowest in the world. The tax burden in South Africa is also among the lightest in the world.

The hon. member for Von Brandis said inter alia that the voters of Brakpan should take note of the increase in the cost of living. Let us just see how South Africa compares, in regard to cost of living, with other countries of the world. Between 1963 and 1970 the cost of living in South Africa did in fact increase by 27 per cent, but as against 30 per cent in Switzerland, 30 per cent in the United States of America, 51 per cent in Japan, 46 per cent in the Netherlands, 62 per cent in Spain and 36 per cent in New Zealand. As I have said, it increased only by 27 per cent in South Africa. To come more specifically to the actual essential items in South Africa, let us take white bread as an example. In South Africa it costs 4,75 cents per lb. as against 7,1 in France, 7,55 cents in the United Kingdom, 11 cents in Western Germany and 16,4 cents per lb. in the United States of America. That is one of the essential items we require every day.

Let us take another example, i.e. that of milk. Here the prices compare as follows: Calculated in cents per pint it costs 7,1 cents in South Africa, 7 cents in France, 7,9 cents in the United Kingdom, 7,4 cents in Western Germany, and 12,3 cents in the United States of America, as against 7,1 cents in South Africa. I am certain that the electorate is not only going to take note of this, but that they are aware that we in South Africa are still maintaining one of the highest standards of living in the world and that the tax burden in South Africa is one of the lightest. Let me take another example. An increase in the price of petrol is expected, but let us see how the old prices compare. Premium petrol in Cape Town costs 9,1 cent per litre, in Australia it costs 8,17 cents, which is a little lower, in the Netherlands 11,7 cents, in the United States 12,9 cents, in France 15,1 cents, in Western Germany 12,9 cents, in Sweden 14,3 cents, in Italy 18,5 cents and in the United Kingdom 13,2 cents.

Why do you pick Cape Town?

That is all I had available. These facts indicate that the hon. the Minister of Finance, with the steps he is taking, specifically against increasing standards of living, is bringing our economy into smooth operation which will one day ensure that we can once again maintain a sound export policy.

As far as the agricultural sector is concerned, there is one section which, as we know, falls under this hon. Minister, i.e. the Land Bank. One immediately wants to acknowledge with appreciation the service which the Land Bank has rendered in the past, is still rendering and must still render to South Africa in future. When one goes into the history of the Land Bank, one finds that shortly after Union in 1910 when the Land Bank was established—I think it was in 1912 or 1913, this autonomous body had approximately R4 500 000 at its disposal which could be spent for emergencies in those days. A maximum amount of R4 000 could be allocated and the loan could not exceed two-thirds of the value of the security of the applicant in question. In the course of its history this entire scheme has changed to such an extent that last year applications of approximately R131 million were made to the Land Bank. This entails that applications to the value of approximately R11 million per month are received. One notes with appreciation the fact that the hon. the Minister of Finance, in the previous Budget, made a further R10 million available to the Land Bank at an interest rate of 2 per cent. This concession by the Minister made it possible for the general rate of interest to remain at approximately 6 per cent, after the manager of the Land Bank had had to appeal to the private sector as well for funds. As a result of a new awakening in regard to the mechanization of agriculture in South Africa, I think the time has come for the hon. the Minister to consider further concessions in respect of the structure of the Land Bank. In this regard one does not want to be so irresponsible as to ask the Minister to make larger amounts available to the Land Bank. Over the years we have learned that the investors in South Africa are very selective, but we have also learned that the investors in South Africa are very loyal. When I speak of the loyalties of investors, I think in particular of the loyalty of the farmers, some of whom, fortunately in today’s circumstances, have reserve capital. The South African Agricultural Union estimates that there is today an amount of approximately R700 million which farmers have invested outside the agricultural sector.

I myself am hesitant to accept this amount, because I do not think it is that high. However, what we do want to ask the hon. the Minister is to consider creating opportunities for the farmers to invest money with the Land Bank, with a tax exemption on the interest earned. When these farmers, who have reserve capital, are able to invest it with the Land Bank so that they can receive a return of approximately 8 per cent, I feel that the loyalty of the farmer will result in the Land Bank having at its disposal the funds which it could possibly require in future, not only in respect of long-term loans, but also in respect of short and medium-term loans. We would like to ask the Minister to examine and consider very sympathetically this tax exemption on the interest earned on money invested at the Land Bank.

In spite of the fact that the United Party said last year that there was no money for savings in South Africa, that people did not feel like saving, I think that prospective farmers should be afforded the opportunity of saving with the Land Bank for the day they become practising farmers. We know that there are many young men today who nurture the idea of being included in the agricultural sector one day as farmers, but who are not certain whether they will inherit a farm one day or whether they will be in a position to buy a farm. I believe, however, that when these prospective young farmers, who are really inspired with the idea of going farming one day, can be afforded the opportunity of investing with the Land Bank in a scheme which more or less amounts to a savings account, the Land Bank will also attract funds which will then be available in cases of a real emergency which has to be alleviated. If one assumes that there are, for example, approximately 20 000 such young men and each of them can save approximately R100 over a period of a year, the amount already totals approximately R2 million per annum. One also realizes that there will be an agreement between the Land Bank and the commercial banks and that the Land Bank must not trespass into the sphere of the commercial banks. I believe, however, that with the good relations which existed in the past, and which I hope will continue to exist in future, this concession could also be given favourable consideration by the commercial banks. I am certain that the prospective young farmer is in future going to keep on responding to the appeal made by the hon. the Minister of Finance that we should save for the future.

Last year the hon. the Minister for Coloured Affairs, when he participated in the Budget Debate, said that there was only one solution for South Africa, i.e. work harder and save more. When we talk about increased productivity we must take into consideration that bringing about increased productivity is not effected by the masses, but by the individual. Since the advantages and benefits of saving more also lie with the individual we think that with a possible concession as far as the Land Bank is concerned, the prospective young farmer will realize that he, too, should save for himself and for the future.

As for the Opposition, we think that they will again be dissatisfied with the Budget which is to be introduced later. The hon. member for Parktown said that there were six weeks to go before the Budget and asked why the hon. the Minister did not lift the cover a little so that they could get a glimpse of the circumstances which could be expected. They do not see their way clear to waiting six weeks. They have been waiting for 23 years; they will probably have to wait another 23 years to be able to sit on this side of the House. Where the Minister has decided not to lift the cover six weeks before the Budget is introduced, we know that, as with devaluation which came as a shock, a surprise which comes as a shock is just as pleasant.

We want to ask the Minister of Finance please to consider the interests of the Land Bank in this respect, to create opportunities, particularly for the agricultural sector, for also making investments and in that way receiving a tax exemption on the interest earned.

Mr. Speaker, all that I can say is that this hon. gentleman is very easily satisfied. He felicitates the hon. the Minister on his success in combating inflation. But this is precisely what we have been talking about all day. Inflation last year ran at a rate of considerably more than 7 per cent. As the hon. member for Von Brandis pointed out, if you correlate this percentage with our growth rate which is only in the region of 4 per cent, it is a situation that should cause the country, the Cabinet, and hon. members on that side, very considerable concern. But he is happy about the situation; he is very easily satisfied. He makes the point that as a result of devaluation, we are now getting something like 15 per cent more for our wool. This might well be so, and obviously the wool farmer under these circumstances stands to benefit, but if there are these immense benefits associated with devaluation, then as we have said before, the country might just as well devaluate every second week. Why should we only do it once, and why does he not tell us the other side of the story, namely that with regard to Japan—he says we sell wool to them at such a considerable figure—the difference in our currencies is now something like 24 per cent, and technically we could be asked to pay as much as 24 per cent more for our imports.

The hon. gentleman again raised the issue of the low rate of taxation in South Africa. This I do find surprising, too, because why pull a statistic like taxes out of the air unless you relate them to the social benefits that are available in the country concerned? When you make that sort oí comparison, you find that as far as subsidies and transfers to households are concerned, in Sweden as much as 17 per cent of G.D.P. is paid over. In South Africa it is only about 3 per cent. But that is the kind of comparison that is obviously not made.