Mr. Chairman, I rise to deal with a statement made by the hon. the Prime Minister in the course of the debate on Monday. The hon. the Prime Minister stated his concern about the dangers of breaking down the free economy of South Africa.

The system.

Yes, the free enterprise system of South Africa. He was reported in the Press, and I quote from the Natal Mercury of Wednesday, 25th, which is substantially what the hon. the Minister said; I have checked it against his Hansard—

Now, Mr. Chairman, I agree entirely with what the hon. the Prime Minister has said, except in respect of one thing which mystifies me as much as the reporter was mystified at what the hon. the Prime Minister said. Is the hon. the Prime Minister suggesting that I have come very close to advocating a reallocation or a redistribution of assets in South Africa, in the context of his statement?

I spoke about socialism …

Is the hon. the Prime Minister suggesting that I have ever advocated that we should break down the free enterprise system of South Africa? Is the hon. the Prime Minister suggesting that I have ever supported or promoted socialism in South Africa, because this is what is implied, if not actually said, in the hon. the Prime Minister’s statement. I sincerely hope that this was not the hon. the Prime Minister’s intention. I do not believe it was, and therefore I shall sit down at this stage to hear from the hon. gentleman.

Mr. Chairman, if the hon. gentleman will refer to my Hansard, he will see that I said that that was my impression. That was the candid impression I gained whilst the hon. member was speaking. If the hon. member tells me now across the floor of the House that that is not what he thinks and that that is not what he had in mind, then naturally I accept his word as an hon. member unreservedly.

May I ask the hon. the Prime Minister a question? May I ask him what gave him the impression that the hon. member …

I have just told you.

But what gave you the impression? What was it … [Interjections.] How can the Prime Minister make a bald statement like that?

Order!

Mr. Chairman, I did not say that this was not my intention. I said I hoped it was not the Prime Minister’s intention to imply that I was one of those who had come close to suggesting the changes in South Africa he mentioned. This is what I am objecting to. I am making no apology for anything I have ever said in this House. If the hon. the Prime Minister is suggesting that I have come very close to advocating socialism or changing the free enterprise system in South Africa, then, Sir, I do not propose to answer those charges because they are so nonsensical that they do not require any refuting at all. My record is well known in the House and my record is in Hansard. I have pleaded in this House ad nauseam to the Government to give the private sector a fair share of the capital resources of this country, and for the Government not to take more than its share. I think the hon. the Minister of Finance will be the first to accept that situation. But, of course, in terms of the hon. the Prime Minister’s economics, this may be socialism; I do not know. I am also on record as having said that it is time we put the profit motive back into business because I believe that businesses must be entitled to make profits. This is the system I was brought up in, the system I have lived in, the system I sponsor. I have suggested that the Government should stop taking steps that in effect affect the profits of the private sector. Is this socialism, Sir? It is true, I have pleaded for a better deal for the less privileged people in South Africa, but this is not socialism; this is the way to prevent socialism. That is why we have pleaded for a better deal for the less privileged people. I have also asked for better wages. It is true; I have done so.

Mr. Chairman, may I ask the hon. member a question? Does he not think that we on this side of the House could have gained the impression that he is advocating socialism because of the continual pressure on this Government to provide social services completely out of … [Interjections.]

Mr. Chairman, life gets more interesting every day. Now social services constitute socialism ! Does the hon. member want to do away with pensions? That is a social service. I have also, as I have said, asked for better wages, but I agree entirely with the hon. the Prime Minister, and I have said so in the House. It is useless just increasing wages unless you increase productivity. My very words were that low wages are merely a symptom of the disease. We have to tackle the disease itself, which is low productivity. No, Mr. Chairman, I may be accused of many things, it is true, but I certainly do not think that anybody can accuse me of ever fostering or promoting or aiding or suggesting that we should change the system in this country so that it should become socialistic. As a matter of fact, our complaint is that the Government is becoming socialistic. This is what is happening. My friend, the Minister of Finance, would be horrified if I were to tell him how many of his very good friends in the higher hierarchy of business, finance and commerce of this country, have said to me: “When are you chaps going to stop this creeping socialism that the Government is practising?” That is the situation, Mr. Chairman. The Government with the IDC and its other established organizations, is taking a hold over a great deal more of the economy of the country than we would like to see. Sir, this is socialism. Let us get the situation clear once and for all. To accuse me of socialism indicates that the hon. the Prime Minister should really keep out of economic debates, because every time he enters them all we get is a lot of folly.

Sir, in 1970 this House appointed a Select Committee to go into the Stock Exchange Control Bill. It was my privilege to serve on that Committee. We investigated the matter and came to this House with an almost unanimous report. There was little difference of opinion on certain aspects. There was a difference of opinion, for example, on the question as to whether certain companies should be allowed to act as brokers, for example, Barclays Bank, Sagit and Syfrets and perhaps one other. Those differences existed, but the important point is that in general there was agreement concerning this Bill, which eventually became law. The basis of all this was simply to highten the esteem in which the Johannesburg Stock Exchange is held by our people; to bring our people under the impression that business dealings can be conducted on business principles at this Exchange and that their interests will be protected. I want to mention one important matter here and that is that we recommended in the report, and this recommendation was accepted, that the Registrar of Financial Institutions have a seat in the Exchange Committee. In other words, everything was done with a view to causing the principle of honesty—if I may use that word in its widest sense—to prevail. The fact that the Registrar of Financial Institutions now has a seat in the Exchange Committee, has created confidence amongst our people, but notwithstanding all this, to everyone’s disappointment, we recently experienced a shock in financial circles in South Africa, and I think I may rightly say, in financial circles in the world, because of the Chweidan affair.

Sir, I do not wish to elaborate on this affair; I shall just say this: One takes all precautionary measures, but then it is still possible for something of this sort to happen. Sir, I just mention this here as a background. Attempts were made on the very highest level to keep up the prestige of our Stock Exchange in South Africa. It is good that we did so, Sir, but I think the time has now arrived for us to give attention to the very opposite side of the picture, too. Naturally we shall not find a solution to all problems, but I think that it is our duty to draw, from this House, the attention of South Africa to the fact that we wish honesty to prevail at all times in respect of all our dealings in the business world.

To begin with I want to say that we do not wish to plead for new or extra legislation in respect of this matter; I want to put this quite clearly at the start, but I think that the time has arrived for us to give serious attention to this matter. The hon. the Minister, together with the Registrar of Financial Institutions, has to find ways and means of doing this; they have to work out a formula on what to do in this connection. Sir, since the end of the previous century, but particularly since the beginning of this century, we in South Africa have had a complete revolution in regard to our way of doing business. There were the days when people who had money, hid it in a chest under the bed, but that state of affairs has given way to the position as we know it today, where people chiefly make use of financial institutions, with particular reference to commercial banks, so that their business dealings may be facilitated by means of cheque accounts.

Sir, we believe that this way of doing business is an easy and a very effective way; that it is a way in which we can do business far more simply than in the years gone by. I think that it is an important day in a man’s life when he opens a cheque account for the first time and gets a cheque book to carry in his pocket. In my part of the world, Sir, where I grew up, the position was that an “R.D.” on a cheque was equivalent to stock theft. That was the position in the days gone by. To my regret I must say that in South Africa today we have the position—and I refer to the town in which I live, a very small town—where the petrol attendant tells you: “No, Master Koot, I cannot take a cheque; I am afraid it will bounce.” That is the position which has arisen, Sir. Today it has become common that this important instrument, the cheque book, is misused by so many of us in South Africa, and I think the time has arrived for us to give attention to this matter. I am unable to suggest what we are to do, but I can just tell you that I have found it striking, since this thought first occurred to me, that so many boarding houses and hotels and places of business and wherever else one may come, display notices on which it is stated very clearly, “Cheques are not accepted here.” The effect of this is that the important role which the cheque account and the cheque book should in fact play, falls away. I say again that I do not know how we are to tackle this matter, but we shall have to find a formula. People must realize that it will be regarded in a serious light if they present someone with a cheque in the knowledge that the necessary funds to cover the cheque are not available.

Perhaps I should rather put it like this: In most instances the funds are not in fact available, but one does arrange for the necessary funds to be available when the cheque is presented for payment. I want to appeal to the hon. the Minister, to the Registrar of Financial Institutions, to the commercial banks in particular and to every young man and woman in South Africa to give serious attention to this matter so as to reinstate the cheque book in South Africa to its rightful place of honour in order to enable us to use it freely throughout the length and breadth of our country.

When the debate on this Vote was adjourned some fortnight ago, I was emphasizing the fact that as long as we have a state of affairs where the rate of inflation is exceeding the rate of interest on Government loans, there is absolutely no inducement for private individuals to invest their money in Government loans. Since then the cost-of-living index for March has been published and the position has become worse in that the gap between the rate of inflation and the rate of interest on Government loans has become wider. Sir, I do not want to create the impression that I do not want to see individuals investing in Government loans. Nothing can be further from the truth. I would like to see South Africans supporting such things as national savings certificates, premium bonds and so forth, and having a stake in the capital growth of the country, but I do not see that happening as long as the situation persists where there is this gap between the rate of inflation and the rate of interest. I want to make this suggestion to the hon. the Minister to combat this problem, which must become a serious problem which he is going to have to face; I want to suggest that he should make available for public subscription by individuals a loan the repayment price of which, in comparison with its issue price, would vary in proportion to the variation in the cost of living between the time of subscription and the time of repayment.

That is an interesting challenge.

In this way, Sir, the real value of a lender’s money would be protected, and only in this way can it be done on a fixed interest loan.

At present investors are becoming exceedingly inflation conscious. I believe that inflation is becoming a greater consideration with investors than tax considerations. I believe that inflation is almost as great a consideration as security of capital. For that reason I believe that a loan where the erosion of the lender’s money was protected would be a popular loan and therefore the interest rate could be set at a comparatively low rate and it would be unnecessary to offer inducements such as tax-free interest. In making this suggestion I believe that such a loan would only be embodying the principle of equity, the principle of paying back the real value that you have borrowed, paying back in kind what you have borrowed in kind. This is a principle which the hon. the Minister has already nibbled at when he issued the premium bonds which carry a premium on repayment providing the loan is not redeemed within a minimum period. But the fact that he only nibbled at the principle, has meant that these premium bonds have, particularly in recent months, had only limited success. I suggest to the hon. the Minister that if because of continued inflation future generations have to find more money units to repay a loan that is raised at the present time, it is only fair because the future generation will have the benefit of the asset which is created by the loan, whether that asset be a road or a school. That asset will no doubt have appreciated in value; so to repay the money that has been used to acquire or create an asset which has appreciated, in a currency which has depreciated, to my way of thinking is not equitable, and can only in fact be described as inequitable. I do not believe that there would be any hardship on future generations if they were called upon to find more money units to pay a loan raised today because if inflation is to go on, future generations are going to adjust themselves to a depreciating currency. Their incomes will become adjusted to it; the money supply of future generations will become adjusted to it. I put this suggestion to the hon. the Minister. If he feels he cannot go the whole way, I suggest that he should at least go part of the way. If he is not prepared to accept the suggestion, I can only interpret that as meaning that his fears of inflation is a thing that he cannot afford to meet in future.

Now I would like to go on to another subject in the time available to me, and that is the continued control of interest rates by the Reserve Bank, interest rates on deposits with the banking institutions, building societies and the interest applicable to building society shares. I question very seriously whether the continued control of interest rates is in the best interests of the country as a whole. Surely the function of an interest rate is to bring into equilibrium the supply of funds available for investment on the one hand with the demand for those funds for spending on capital and other projects on the other hand. At present the supply of funds, of savings and of capital, exceeds the demand for those funds at the rates of interest that has been laid down as being the maximum permissible rates of interest. In other words, the controlled rates of interest laid down by the Reserve Bank are not effective under the present circumstances.

If the position were to be reversed and the demand for these funds were to exceed the supply at these interest rates, then I suggest that it would be inevitable that some of the supply of these funds would leak out of the banking system and would go into investments in the grey market and into uncontrolled investments generally. All this means that control of interest rates is of very limited effect.

I think the hon. the Minister recognized this in 1970 when he released the banks from voluntary control of deposit rates. In August, 1970, he said (Hansard, col. 1538)—

I find it quite incomprehensible that the hon. the Minister has decided to hang on to control of interest rates. If this step has been taken to protect the banks from competition for deposits in order to keep down the level of interest on deposits and therefore on banks’ lending, I think the concept is quite erroneous. Surely, the banks under present circumstances need no protection from competition. I think there has been more growth in the banking sector of the economy than in any other sector. Bank profits have been increasing; banks are predicting still further increases in their profits. It is in the banking section that we have seen rights issues of shares. It is only in the banking section that we have seen public issues of shares, and public issues of shares have been highly popular. Surely, the best way of ensuring that the country has the best banking service, and included in the best banking service I would say are the factors that lenders should get the best return on their deposits that they lend to the banking institutions and borrowers should at the same get the keenest borrowing rates … [Time expired.]

Mr. Chairman, the hon. member for Constantia dealt with an interest rate matter. I think he agrees with me that it is not the Government’s intention to continually apply interest rate control. I think, however, that he agreed with the principle of control to channel the flow of capital to the right sources. It is a very difficult and delicate matter to handle. It will need a delicate study before a decision can be taken about that. I therefore do not want to speak about that any further; I think the hon. the Minister will deal with it further.

However, I want to refer to the hon. member’s idea about how to protect the capital investor against inflation. In speaking about the capital investor, I mean the person who invests fixed amounts. It is a problem that is generally acknowledged. The hon. member for Paarl and many others have already advocated that. I believe the hon. the Minister and the Government are as aware of that as any of us are, because the fixed investor of capital is the one who has the hardest time under these circumstances. That principle which he mentioned and which he is recommending to the hon. the Minister, is a principle that has, of course, already been laid down, as he said. However, it also embodies many dangers if one wants to accept it as a general principle.

On the other hand, I want to say that there is also another method by which relief can be given, i.e. the method of applying tax concessions. The Government has already gone as far as taxing building society dividends on the same basis as ordinary industrial share dividends. There are, of course, tax free shares, but the tax free shares are basically offered to draw capital to the State coffers. But I do want to link up with the hon. member for Constantia by asking the hon. the Minister to view the possibility of there being a measure of tax concessions to people who draw interest on fixed investments so that the concession can be used for reinvestment with the capital sum. This could then become a growth factor in their capital investment. If a fixed mortgagee gets back his bond after 20 years, he could get back, together with the investment, a certain amount that grew out of that. I am mentioning this because I believe it to be a problem that is bothering us all. That is about the only point I agree with the hon. member for Constantia about.

When the hon. member spoke the week before last, he said certain things that I cannot let him get by with. The hon. member referred to the hon. member for Paarl and then referred, inter alia, to devaluation. He made the following remarks, inter alia (Hansard, col. 4757)—

It is quite all right to say that, but the hon. member contradicts himself a sentence or two later. He said, inter alia,—

He also said—

But that is the whole point.

It was not necessary.

It was necessary. How can the hon. member say it was not necessary? I am now going to prove to the hon. member …

Because of a bad Government.

Oh no, I at least expect a better remark from the hon. member for Yeoville. Let us look for a moment at what the situation is. Let us take a brief look at the situation throughout the world. Do hon. members realize that all our big trading partners throughout the world have devalued since 1967? Britain has devalued twice, the first time by 14%, and subsequently it floated by 10%. In other words, the pound was devalued by 24%. In 1969 France devalued by 11%. The United States devalued by 8% and Japan by 7,6%. Thus I could name one of these countries after another. Do hon. members now want us to sit around doing nothing when those people devalue? In other words, if we enter the ring and they tackle us with pieces of iron and sticks, must we be quite satisfied with our bare hands? I want to tell the hon. member that devaluation is the only effective way in which one can protect one’s economy on the international level. There is no other method. The old methods are dead and gone; they are no use. The only way one can restore the situation and can again strengthen one’s economy is to devalue along with them. We would have been in such an unfavourable position with respect to Britain that it would have cost us 25% more to purchase our products from Britain, which is exactly what happened to us then. Our position weakened, the standard of exchange was against us, or rather the “rate of exchange”, and how can one change that? One can only change it by way of devaluation. For that reason we devalued, and now it has become apparent that our devaluation was successful. But now, after its having happened quite a while ago, the hon. member comes along and says it was “excessive”. That is surely an arbitrary statement without any value whatsoever. Once one has devalued, all that counts subsequently is whether it was successful or not. Taking a look at devaluation, I want to congratulate the hon. the Minister in that connection. I have already mentioned this before, and I want to reiterate that he read the signs of the times absolutely correctly. He was right on the beam, and the devaluation was very successful. It was so successful that today we find ourselves in a very strong position. The fact that one does not have to devalue at the present moment is always a sign that one is financially stronger than the next man. Today this cannot even be said of America. It also had to devalue. I want to tell the Opposition that I think that when they adopt that attitude they are harming South Africa. It actually reveals to me a poor understanding of the whole situation. If they were to have been in power, they would have had to take precisely the same steps.

Today is the first opportunity I have to congratulate the Minister on this Budget which he introduced. I think it is an excellent Budget, in spite of the fact that it is probably one of the most difficult budgets one could submit under the circumstances that prevailed. It seems to me as if the I whole situation has eluded some members of the Opposition. The hon. the Leader of the Opposition even called it a gamble. I do not believe he could clearly have understood what the Budget was all about. I think that the gist of the whole Budget lies in the fact that 4½% of the present rate of inflation of 7,4% is a cost inflation factor; 2% is attributable to increases in food prices, over which the Government had of the Opposition. The hon. the Leader no control. The actual demand inflation rate was only 1%. This fact is the key to the inflationary budget, i.e. though inflationary conditions prevailed, and though the inflation rate was high, the hon. the Minister could still nevertheless introduce an inflationary Budget. That is the secret of the whole situation, which those hon. members cannot understand.

In the time left to me, I want to say a few words about the fine statistical survey that was supplied together with the Budget. I want to tell the hon. the Minister that it is a fine piece of work, that it is a handy reference work, but I also want to advocate a little more information. The reason for that is that we are moving out of the year 1973 and will then be entering the year 1974 with a totally new dispensation concerning the Bantu homelands. Time does not stand still and policy evolves and moves ahead. The 1959 Act in respect of the Bantu authorities has already made great strides. They have virtually achieved political independence. I think that the year 1973 is going to be known as the year of the great divide, the year of real separation between the Black peoples of South Africa. The year 1974 is going to be the year when the Commonwealth of States of the Republic of South Africa will come into being. Next year we will know precisely where the boundaries of the states are going to be. In other words, we are going to have a situation in which we are going to have numerous states in the country, each with a representative legislative council with economic content, which will be one step away from independence. [Time expired.]

Mr. Chairman, I do not intend dealing with high finance or talking about the effects of devaluation with the hon. the Minister. I was interested, though, in the closing remarks of the hon. member who has just sat down, when he referred to a commonwealth of Southern Africa. Presumably he is including in that commonwealth the separate Bantu states which are to be established by this Government. It is on that point I wish to address the hon. the Minister. I have raised this matter with him on other occasions in years gone past—I refer to the allowances paid to civil servants who are seconded to the Reserve Governments, and particularly the Transkei Government. What I say concerning the Transkei Government will in due course affect the other territories as they become self-governing. I have raised this question every year in this House and hon. members will realize by now that those officials who are seconded to the Transkei Government are paid a housing and family allowance. The complaint of other Government officials like the Police, Railways, Transport and the Post Office officials is that they do not get the allowance. This complaint of theirs is a justifiable one. It has resulted in ill feeling on the part of those officials who do not get it towards the civil servants who do get it. Their allowances are considerable. I have given them in the past and I do not intend quoting them again. When I queried this allowance with the hon. the Minister of Transport, who unfortunately is not here now, originally his excuse was that he could not treat the railwaymen in the Transkei differently from the railwaymen in the rest of the country. I pointed out to him then that the railwaymen in South-West Africa were paid a special allowance as were railwaymen who were transferred to Natal, although those who are transferred to Natal only get it for a certain period. The Minister’s excuse was that in South-West Africa railwaymen had become used to it, because it had been paid for some time and that certain special conditions prevailed, for example the cost of living was higher. The Minister said there were certain disabilities. I do not know what the disabilities are that railwaymen suffer under in South-West Africa and whether they differ in any way from those suffered by railwaymen in the Transkei. I am quoting railwaymen because the Minister of Transport is the gentleman who interfered with the Minister of Finance. He persuaded the Minister of Finance to take away certain allowances which were being paid by this Minister to his officials in the Transkei. I have pointed out to the hon. the Minister of Transport that it was not only seconded officials who were getting the allowances, but that officials of the Department of the Auditor-General were also getting it. When the Minister of Transport heard this he said he would put a stop to it, and he did. So these gentlemen who were getting the allowance had their allowance taken away from them. These are not the only people who have had allowances taken away from them; there are also certain others who I will deal with just now. What I want to point out to the hon. the Minister is that he knows it is difficult to get industries established in the Transkei and in the other Reserves. He makes tax and other concessions to industrial concerns in order to attract them to the Reserves. One of the reasons these companies find it difficult to transfer their concerns to the Reserves is that their White employees are reluctant to go there. In the March edition of the Financial Mail instances are given of where firms have experienced difficulties. I am only going to quote from an interview with one gentleman, the managing director of Westvaal. He said:

Of course, Brits has its disadvantages, which may be due to the popularity of their member of Parliament; that may be why it is not as likeable as other areas. I quote further:

This reluctance to go to the Reserves does not only apply to employees of companies, but also to officials. The Cape Province in fact found that it could not get teachers to go to the Transkei. You see, railwaymen, policemen, postmasters and officials of the Department of Transport cannot refuse to go to the Transkei or to the other Reserves, because they are employed by the department and have to go. But teachers in the Cape are not posted to different posts; they apply for them. The Transkei found that they could not get teachers. So what did they do? They gave them an extra allowance, a special allowance, to go to the Transkei. This was enforced in July, 1970, by a Proclamation in the Gazette. The allowance was made retrospective to April, 1969. Then, in 1972, the allowances were stopped. They continued to be paid to the teachers who were presently receiving the allowances but new teachers would not get them. I then took up the matter with the Minister of Finance. I wrote to him because the Province blamed the Treasury. The Minister of Finance handed my letter to the Minister of the Interior. I then received a letter from the hon. the Minister of the Interior saying—

That is the letter I received from the hon. the Minister of the Interior. But now I am appealing to the hon. the Minister of Finance himself to take the matter to the Cabinet. I want to know from him why the allowance was paid to the teachers in 1970 and stopped in 1972? Why was there a change in policy? These teachers were not seconded. Why was it in the first place considered necessary to pay those teachers? I am told the departments are finding it difficult to get teachers in the Transkei. They are going to apply to this Government again. I appeal to this Minister to appreciate the problems in the Transkei. This position will pertain to the other Reserves as well. After all, the hon. Minister is interested in the industrial development of the Reserves. He must be. But he is not going to get companies going there with their White employees unless the amenities and facilities are there. These facilities the White management will want will be schools with qualified teachers. They will want proper communication, a proper postal service and a proper railway service. They will want protection and therefore a proper Police Force too. If the policemen and the railwaymen are reluctant to go to the Transkei or other Reserves they are not going to give proper services. The hon. the Minister should know that in the country areas of the Reserves the White people are leaving, including traders, doctors and attorneys. There is no more social life. Golf clubs, bowling clubs and tennis clubs are closing down. These people must be compensated, i.e. the people who are forced to live there. It is of the utmost importance to South Africa that there be the best relations possible between the Africans and the officials who come into closer contact with the Bantu than civil servants who are seconded. [Time expired.]

Mr. Chairman, I have listened with interest to the debates which have been conducted here up to the present time. I do not believe that I am making an irresponsible statement when I say that for this year at least, the question of inflation has been exhausted as a subject for debate in this House. In fact, I believe that this question has received attention in time which could more profitably have been spent on questions of much greater importance. Earlier this week I said that the lack of financial realism on the part of members on the opposite side of this House disturbed me. As a politician it is indeed my endeavour to present the lack of any great ability on the part of members on the opposite side of this House as even more severe than it in fact is. But as a representative of the people it is, after all, my first and foremost task to seek the good of the people who sent me here. In this connection I should like to put forward a few ideas on the question of prosperity.

In my first speech in this House I tried to put it to you that economic prosperity in South Africa was inextricably bound up with the state of the world economy, and that the state of the world economy was being threatened by monetary instability and the conduct of irresponsible trade unions. I do not believe that it serves any purpose to go into those factors as far as our economy is concerned. I want to confine myself more particularly to questions of a more local nature here in South Africa. In South Africa, inflation and a low growth rate do constitute a problem for us. If we want to solve these questions, we must in the first instance be realistic and we must also be straightforward. It is for this reason that I take it amiss of hon. members on the opposite side of this House when they put up a sham fight, when with the one hand they seem to combat inflation while with the other they fan the flames of inflation even further. I believe that by this time it is clear to everyone in this House that what we have to deal with at present is cost-push inflation and that we are seeking the solution to this through higher productivity. If, however, we were to double and triple the wages of non-White workers without taking the market mechanism into account, we would aggravate this problem of inflation for ourselves in both the cost and the demand aspect, and the very person who would suffer far more from that would be the non-White worker himself. These unrealistic wage increases would have the further result of weakening our competitive position on the export market substantially as a result of an increase in costs. It would also weaken our ability to raise the standard of living of those non-White workers. Once again it would be the non-White worker who would eventually suffer more as a result of his own wage increase.

Earlier this week I tried to make it very clear that this Government could never be opposed to attempts to raise the standard of living of workers. But if such attempts were to take place outside the framework of the market mechanism, without our taking higher productivity into account as a cause giving rise to wage increases, then surely a wage increase of that kind would be pointing unmistakably in the direction of socialism. In reaction to the hon. member for Parktown I want to say that one need not necessarily propagate socialism deliberately in order to promote ultimately the socialistic idea. If we take the so-called “poverty datum line” or the bread-line as the only criterion for wage determinations, without taking into account the wage which the market determines for us, then I have no option but to point to this tendency as being a socialistic tendency. And now I want to put one thing very clearly: We must not think that we can have the luxury of prosperity wage demands on the consumer side without that socialistic element working through to the production side. If the entrepreneur must produce for the market, then he, too, will have to determine his wage demands in terms of the laws of that market. I readily want to concede that the market mechanism does not set exact prices and wages. I want to concede that the market mechanism leaves certain gaps when wages and prices are determined. We can further assist and support that market mechanism by means of the determination of minimum wages, but these minimum wages must in fact be established in sympathy with the market mechanism. If we set the minimum wage higher than the equilibrium wage as determined by the market mechanism, then unemployment and inflation will be the undeniable effect. I do not believe that this could be the ideal of any realist in this House. No, Sir, if we want to increase the prosperity of any worker in South Africa, then we must strive for higher productivity. This greater number of products made available as a result of higher productivity, can then be divided among the workers and the productive worker, by having a higher wage, can buy a greater number of products and services. But, Sir, we must always take into account the fact that we can promote productivity only within a framework of political order. I said earlier this week that we were prepared to forego a certain amount of production for the sake of this very thing— long-term economic prosperity and political stability. Any attempt to attain extra production or profits over the short term by endangering the political order, and therefore long-term economic stability, I can only describe as economic piracy and gross irresponsibility.

Mr. Chairman, in the first place I should like to thank the hon. members for Paarl and Pietersburg for the kind words they addressed to me in regard to the financial policy in recent years. I shall not say much more on the subject, because it might cause my hon. friends on that side to accuse me of immodesty. But I may just say in this debate that the view expressed by the hon. members in that respect, not as far as it concerns me personally, but as far as it concerns the Government, is a view which is held by many financiers in all Western countries and in America. I am very glad to be able to say that there are financial and monetary experts who regard the policy followed by South Africa so far as a very sensible policy, and I want to predict that in a few years’ time hon. members on that side of the House will adopt this policy as their own. I recollect that I had the privilege several years ago of piloting a certain Bill through the Other Place; that Bill was in connection with the decimal coinage system. Hon. members will know that that Bill was vehemently opposed by that side of the House.

By whom was it first suggested? It was good old United Party policy.

The Second Reading of the Bill was vehemently opposed in the Other Place by hon. members of the Opposition, and when the Second Reading had been taken and the Third Reading came up for discussion, one of the members on the other side got up and said, “I want to congratulate the Minister on this Bill and I want to congratulate him on having adopted the United Party policy.”

You are making progress.

That hon. member did not even have the patience to wait a few years; only a few minutes later he adopted our policy as his own, and I want to predict that in four or five years’ time my hon. friends on that side will say that they are the real architects of the monetary policy of today.

†Mr. Chairman, I just want to come back to the speeches made by the hon. members for Parktown and Constantia. I do not think this is the place or the time to make Second Reading speeches again. We have discussed the question of inflation and devaluation, etc., time and again. I am quite prepared to challenge hon. members who want to discuss these matters again, but I do not think this is the time to do so.

I want to deal with a few matters which have been raised by the hon. member for Parktown. The hon. member for Parktown, in the first place, raised the question of the employees in the Office of the Registrar of Financial Institutions. I fully agree with him; we also regret the fact that the numbers of public servants in this Office have decreased in the last few years. He has observed, correctly, that there has been some up-grading of posts. That has been done, of course, in an attempt to retain more of the higher-graded public servants there. The reduction in numbers has taken place in the lower grades, and this is exactly where we cannot find staff. We know that that Office is completely understaffed; they are working very hard and they have a very responsible task to fulfill. The Office is completely understaffed but they cannot recruit the number of people of the calibre they need for this particular work. I can inform the hon. member that the Public Service Commission is now making a special study of that Office and we hope that something good will come out of it. We also hope to combat the competition we get from the private sector. The young men who are capable of doing this very technical work, in regard to building societies and pension funds and banks, are easily absorbed in the private sector and it is very difficult to retain their services. I agree with the hon. member, and I hope that next year we will be able to report some progress in this regard.

Then the hon. member came to a subject on which we seem to disagree. He nods his head in agreement already. This concerns the Stock Exchange. From the question of the staff of the Registrar of Financial Institutions he glided over to the matter of the Stock Exchange. I do not want to go into all the differences between ourselves and the hon. member on this point. I just want to make a few statements in this regard. I want to tell the hon. member that discussions have been going on between myself and the Stock Exchange and between the Registrar and the Stock Exchange on this very delicate point for quite a number of months. These negotiations concern various matters. They concern the matter of the safeguarding of scrip and the matter of the guarantee fund, of the auditing of brokers’ funds, of the tasks of the brokers themselves and quite a number of other points, most of which are at issue now. We have had quite a number of discussions and we have reached a certain amount of agreement on many points. Unfortunately—and I hope the hon. member will appreciate the fact—I cannot disclose now what it is because the president of the Stock Exchange first has to discuss these matters with his own members, and when he has done that, he will refer it back to us and then we shall be in a position to disclose to Parliament what happened and we will possibly have to come with legislation if legislation is necessary. However, I do not think much in the way of legislation is possible. I think a great deal of what we want to accomplish can be accomplished by way of changing the rules and regulations of the Stock Exchange. Much can be accomplished in that way. I can also set the mind of the hon. member at rest. I know that he has strong feelings in regard to section 13 of the Act. I can set his mind at rest. So far all the investigations have not yet been completed in regard to the Chweidan and the Poplak cases, but so far the investigations show that only a very small percentage, if any, of the malpractices concern that particular section of the Act, that even if that section had been in the form in which he wanted it to be, these malpractices would still have taken place because they were of a completely different nature. I do not want to go into this because we do not want to raise any controversial matters at the present moment. So it is not so much a matter of amending the Act, although we may have to do so. We are waiting for the final report of the discussions, but we have already gone to great lengths in discussing these matters with the officers of the Stock Exchange.

Does the hon. the Minister think he will be able to give the House some information on these issues before the end of this session?

I hope that before the end of the session we shall introduce a Bill dealing with financial institutions covering matters regarding the building societies and insurance companies, possibly, and the Stock Exchange. On that occasion I trust that we shall be in a position fully to disclose what has happened so far, in so far as we can disclose it at that particular juncture.

The other matter raised by the hon. gentleman is whether the time has not arrived where we should consider discontinuing exchange control, or, rather, relaxation of exchange control. In reply to that I may say that we are already relaxing exchange control gradually but we must be very cautious in abandoning it or in relaxing it too fast. There have been occasions in the past when I myself considered relaxing it very quickly. That was in the year 1968 when our reserves were very high, but then we had the problem of not having the foreign exchange, because we had the gold problem, and in 1969, as hon. members know, we had the gold agreement and after that we had the whole débacle with the Stock Exchange. Now we are at a stage where our reserves are fairly high again. Apart from the official reserves, if we should value our gold stocks at the private market price, we will find that we have another R500 million extra in our reserves. So they are fairly high. However, I think this time again is a very dangerous time internationally. As a matter of fact, we find in the times in which we are living now that most countries of the world are actually imposing exchange restrictions. I know of no country in western Europe and America which has not strengthened its exchange control measures in the last few months, mainly because of the inflow but also because of outflow of money. We are living in very, very dangerous times and I think it would be rather risky at this moment to consider any relaxation of significance in our exchange regulations. However, I can tell the hon. gentleman that we shall keep this matter in mind and I shall be very happy when the time arrives, because I do not like these controls, when we can abolish these controls. I may perhaps say that at the present moment it is in our interest to retain these controls. We find that the problem in most countries these days is not so much a problem of the outflow of money, although they all have outflow control—even America and Great Britain and Switzerland have such control. The problem today with these masses of short-term obligations floating all over the world is that you have inflow of money which plays havoc with the currencies in many countries. We might be confronted with this very same problem if we have no exchange control. We might be flooded with money of this nature, money which we do not want and money which leaves a country as quickly as it comes there. We know that other countries are at present combating this very problem. The fact that we have exchange control in regard to the outflow of money is a factor which deters this hot money from coming into our country. I think that at the present moment we have to study this matter and that we should be very careful, although we are gradually relaxing controls in the sense that we are allowing persons who wish to invest outside to do it under certain conditions and we are allowing in many other ways a greater outflow of money whenever we think it is in the interest of the country. I think that covers more or less what the hon. gentleman asked me.

I now come to the hon. member for Constantia, who has also raised a few very interesting points. It is again the problem of inflation which has now been raised by the hon. member in another way. What worries the hon. member for Constantia is the fact that we have reached the situation where the rate of inflation is higher than the interest rate on Government stock. The hon. member says that this is very detrimental to Government stock because nobody would buy Government stock at present on account of the interest rate which is lower than the rate of inflation, and eventually when the buyer gets his money back, he gets back less since his money will be less in value than at the time when he bought such stock, even if he has received interest on his money. It is a very interesting theoretical argument. I say “a very interesting theoretical argument”, because we all know the limerick—

The hon. member has produced a few figures, but I do not think he has produced the facts of the case. He says, for instance, that as far as his memory goes, this has never happened before in our history. It is very important to know whether or not it has happened before. In any case, the hon. gentleman agrees with me that he has said that as far as his memory goes this has never happened before.

It has not happened recently.

The hon. member says that it has not happened recently, but we will see about that. I will come back to that just now. Let me remind the hon. gentleman that it is not the first time that it has happened in South Africa that the rate of inflation is higher than the rate on Government long-term stock. I can give the hon. member several instances going back even before 1952. In 1950, for instance, the rate of inflation was 4% and the rate on long-term Government stock was 3,55%; in other words, the rate was just a little bit lower than the rate of inflation. On going back a little further we will see that in 1949 the rate of inflation was 3,8% while the rate on long-term Government stock was 3,45%; in other words it was almost a half per cent less. Going back to 1948, the magic year, the rate of inflation was 5,7% and the interest rate on long-term Government stock 3%. Yet, we are still all alive! The Government has succeeded in getting money all these years in spite of all such facts. Here I have examples of five years where what is happening now has happened before in South Africa. South Africa is not the only sinner. I can quote recent examples of other countries, since the hon. member has said that it has not happened recently. I was not able to go back further than 1967 since the figures were not available to me. In 1971 the rate of inflation in the United Kingdom was 9,5% whilst the interest rate on stocks was 8,79%. In 1969 the rate of inflation was 7,4% in the Netherlands whilst the interest rate on Government stocks was 7,04%. In 1971, and this is also a recent figure, the rate of inflation in the Netherlands was 7,5% whilst the interest rate on Government stock was 7,05%. In Sweden we had the same position in 1970. In Switzerland, the mecca of finance, we find that the rate of inflation in 1971 was 6,6% whilst the interest rate on long-term Government stocks was 5,27%. That was the position in Switzerland. What is very interesting are the figures for New Zealand. For New Zealand I have the figures for 1967, 1970 and 1971. In 1971, the rate of inflation in New Zealand was 10,4% whilst the interest rate on long-term Government stock was 5,52%—almost half of the rate of inflation. Therefore, what happens here in South Africa is not an exceptional feature of our own financial system; it is something which has occurred in our country quite a number of times and which is occurring all over the world. The hon. member thinks that for that reason people will no longer buy long-term Government stocks …

Not individuals.

… but they will. Why will they do so? In the first place because they have the security of capital and of interest over a long period of years, over a period of 20 to 25 years. They know that for 20 to 25 years they will have certain interest paid to them, no matter what the rate of inflation is going to be and they will have their capital back after 20 to 25 years. However, they do not know that in the case of other investments. The hon. gentleman suggested that they may go to shares, for instance. Right, they may go to shares in these times, but nobody can guarantee that in the course of the 20 or 25 years these particular shares will retain their value when he eventually wants to sell them. Nobody can guarantee that these particular shares will have the same yield over that long period of time. The security of capital and of interest over a long period of time, all these things taken together, is one of the main factors which make for the investment in Government stock by individuals, companies and funds rather than in stocks, shares or property. We have experienced this situation in the past; we have seen it in other countries and we know that it works. I agree with the hon. gentleman that it is not a thing which we like. We do not like this high rate of inflation; we do not like the system, but you cannot say that you cannot live with this system and that people should not, or would not, invest in Government stock.

I wish to put the record straight concerning a particular matter which I think is very important. Over the last few days we have been hearing about rates of inflation of 15%, 16% or 17%, I think, over certain months. I think that in this regard I must express a word of warning. It is wrong and not in the interests of the country that we should take the rate of inflation of one month and point to that particular rate of inflation and that month, because one month cannot give you the right picture; one must see inflation over a period of months or over a year at least to get the true picture of what the rate of inflation is. We have been talking about 15% and 16%. Just to put the record straight, I want to give hon. members the facts. If we take the average rate over a year—I think that that is the right thing to do—we find that from January to December, 1972, the average rate was 6,5%; from February, 1972 to January, 1973, it was 6,6%; from March, 1972 to February, 1973, it was 6,8%; and from April, 1972 to March, 1973, which are the latest figures we have, it was 7%. So it is not as bad as it seems when we only take one month into consideration.

Lastly, the hon. gentleman made a suggestion to me that we should devise a form of Government loan whereby we pay —I am not quite sure as I could not quite hear what he said—an interest plus an amount equivalent to the cost of living for that particular year. In other words, we should pay an interest which makes good for the rate of inflation. That is the principle of the matter. As far as I know this has never been done successfully in any country in the world. There is only one argument I want to put to the hon. gentleman in this regard. If we should now issue a loan for this year and we should offer a certain rate of interest, say X, plus the inflationary factor which fluctuates, what about the loans we have made prior to this period? We have old loans in our books at about 3% or 4%.

And 2⅞%.

Yes. Should we not go back then and compensate those …

No.

The hon. member says we should not go back. Well, then it is a matter of equity, but it still poses the question of whether one should go back or not. I agree with him that one should not go back in such cases, because we do pay higher interest rates today than we paid in the past. The other question I want to pose to him is this: If the State pays an interest rate—what would the hon. member suggest? —of, say, 3%, 4% or 5% plus a factor for inflation which is, say, 8%, which would give one a total of 13%, would the hon. gentleman expect the business world to do the same or should only the State pay that high rate? If only the State pays the high rate, is that right, considering the interest of other business borrowers? Should they not pay too?

May I ask the hon. the Minister a question? Why do you think businesses issue convertible loans rather than issuing straight interest loans? Does the Minister not consider that they do that to look after the inflationary factor the way I have suggested?

I am sorry, but I do not quite follow what the hon. member means. I want to point out that in the rate of interest that the Government now pays, in the long term, there is already a built-in factor to compensate for inflation. My hon. friend for Parktown has mentioned that we have had loans in the past with a rate of 2⅞%; we are now paying up to 9%, which means that we are already compensating for inflation. There is already a built-in factor in the interest rate over long periods. However, I do not see how we can do it by simply varying the rate according to the fluctuating rate of inflation. I do not see how one can do it practically and I do not see how only the Government can do it, because the Government will get all the funds. I do not think it would be right if everybody does it, because there are as many lenders as there are borrowers. I think it will be a bad thing for the borrowers if we did it in that way.

This brings me to the last point—interest rate control. On this score I also agree with the hon. member, I do not like these things, I do not like these control measures and I have said so in the past. Sometimes circumstances develop when an institution like the Reserve Bank is forced to take certain steps, because we have to consider the interests of the borrowers. If we want the borrowers to pay a rate of interest which is not exorbitant, then the lending institutions should not pay too high a deposit rate. But once the lending institutions start competing with one another in respect of deposit rates and pay higher and higher rates to get the deposits from the man who has money available, we find that the lending rates accordingly go up and up to the detriment of the borrower, to the detriment of industry and commerce, while it also becomes a factor in the rate of inflation. Then we find ourselves reluctantly constrained to enter into a form of control. It has been found in the past that voluntary control of interest rates does not work. We would have liked to see a more voluntary one and would have preferred that to the other, but it does not work in that way. Unfortunately all institutions do not stick to the rules. So, if we want to ensure a certain interest rate we must enforce it by law.

Lastly, I come to my friend the hon. member for Transkei who talked about the allowances paid to civil servants in the Transkei. This is actually a matter for the Minister of the Interior under whose department the salaries and wages of all civil servants fall.

You make the money available.

I make the money available, but he is the man who pays it out. I think the hon. member can raise that matter again under his Vote. I can only point out the difference. There are two kinds of officials working in the Transkei, and he knows that. The one is working under the South African Government and South Africa is the master of these people. But there are others who work under the Transkei Government, who have been seconded to the Transkei Government; they do not work under the South African Government. These people working under the Transkei Government have higher allowances because they work under a different Government. That is the line of division. It is not a case of whether they work in the Transkei but whose servants they are. The line of division is whether they are servants of the Government of the Transkei or servants of the Government of the Republic.

Does the hon. the Minister suggest that I should raise it under the Vote of the Minister of the Interior? In that case will the hon. the Minister give me his support?

I can only promise the hon. member that I shall go into this matter again in order to see whether any relief is possible in this regard.

Votes agreed to.

Revenue Votes Nos. 8.—“Provincial Administrations”, 9.—“S.A. Mint”, 10.—“Inland Revenue”, 11.—“Customs and Excise” and 12.—“Audit”, S.W.A. Votes Nos. 3.— “Inland Revenue” and 4.—“Customs and Excise” and Revenue Vote No. 47 and S.W.A. Vote No. 27.—“Augmentation of Salaries, Wages and Allowances”:

Mr. Chairman, I wish to raise with the hon. the Minister of Finance and the hon. the Deputy Minister certain matters regarding the financing of the provinces. It is fortunate that the hon. the Deputy Minister was at the spending end recently in the provincial council as an M.E.C. and now is at the paying end in so far as the provincial finances are concerned. The question arises as to whether the system which was introduced recently by this House is an effective way of providing for the control not only of the requirements of provincial councils but actually of the expenditure by provincial administrations. The hon. the Deputy Minister will know that as a result of the legislation that was passed a year ago in regard to the removal of taxing powers from the provincial administrations we find that they have now not only legislative powers removed from them but also taxing powers. The cushion which existed in provincial finances between the amounts which were paid under subsidies by the central Government to provinces and the amount which the provinces had to spend had also been removed. Now, in the Estimates before us we are asked to vote globular amounts to the provincial administrations. There is no analysis of that figure as far as this House is concerned. I might say that the request to vote this amount is without any real motivation other than that it is within a formula which is an elastic formula in terms of the law. We in effect have the position of this House voting sums without really knowing what the motivations are and the other end not being really concerned as to what can or cannot be done. Now, Sir, let us look at the figures. The vote for 1972-’73 was R746 million. It was found necessary in the additional vote this year to add another R21 million.

In the Vote of the provinces before us, there is an increase of very nearly 20,% bringing the total allocation to more than R907 million. The motivation, as far as the general public is concerned, is that that is a figure which has been arrived at within the framework of an elastic formula in the offices of the Ministry of Finance. That is the motivation for it, added to the fact that there had been discussions with the provincial administrations concerned. Now, Sir, where is the responsibility for the forward planning and the forward financing? The hon. the Deputy Minister will know that the Cape Province found itself in some difficulties in that it had overspent. In 1971 it overspent somewhat on capital works. The figure given by the hon. the Deputy Minister himself in connection with this backlog was, I think, some R150 million. This amount, as I have said, was in respect of capital works. When a capital work is to be undertaken, and the capital has to be raised, there is interest that has to be paid and there is money that has to be provided for the payment of that interest. The problem I am raising now is this: Where is the supervision by a legislative body in so far as that expenditure is concerned? Where is there any real scrutiny? The provincial councils are not now responsible to the voters as to what they are doing, how much money they have and what they cannot do. If they cannot erect a school or a building, they say: “we are sorry; it is in the hands of the central Government.” As far as the central Government is concerned—I refer to this Parliament where this money must be voted—we do not have an idea of the motivation or needs for these amounts. As I have said, these are matters that have been settled in the offices of the Ministry.

It seems to me that this is a problem, and I want to raise a few matters by way of an example. I refer to certain capital works which have been undertaken. As I have said, I am concerned with capital works because of the effect this has in respect of the interest which has to be found from revenue, interest on that capital which must be paid. Let us take the position of the Nico Malan Theatre. The original estimate in regard to this project was R6,5 million. The final expenditure, however, was R11,7 million, and that makes a considerable difference to the province’s obligation when it comes to the payment of interest and the redemption of the capital loan. Let us take the case of the Tiervlei Hospital, which is a very necessary undertaking. It is essential not only to meet public needs, but also to cope with the expansion of training facilities for medical personnel. When that scheme was originally conceived, before this new dispensation, the estimate was that it would cost R17,5 million. It is now costing, so far as I know and according to what I have been able to ascertain, something like R70 million. Every penny of that may have been justified, but where is the supervision over the increasing cost, which we in this House must now vote to the provinces as a result of what has been done somewhere in the Ministerial offices? I believe that these are matters which tend to result in a lack of responsibility on the part of the spender, namely the provincial council, towards the electorate which put it into office. In other words, I refer to a provincial administration’s responsibility to the voters in that province. There is a buck-passing which is going on. As far as the public is concerned, I want to know whose baby it is. Whose baby is it if there is bad financing so far as provincial undertakings are concerned? Whose baby is it, for instance, when a loss occurs as the result of a builder going insolvent, without proper precautions having been taken? Whose baby is it then if there is a substantial capital loss? The province just shrugs its shoulders and says they are passing the matter on to the central Government because it is part of their necessary expenditure to meet that amount. It was not long ago that this new dispensation was introduced, but I do think that the time has already arrived when we must consider seriously whether we are not heading towards some type of hand-out, towards the provision of finance when there is a tendency not to accept the fullest responsibility at the other end when it comes to the implications involved and the methods according to which the money is spent. It is a problem in regard to which I would welcome an indication from the hon. the Deputy Minister as to whether he is satisfied with the machinery which has been established. Sir, one reads the Hansards of the provincial councils, and one finds that the easiest answer for any M.E.C. now is to say ,“I am sorry, the Minister of Finance did not give us the money.” He simply passes the buck to the Minister of Finance. It is bad for the functioning of provincial councils that that should be possible. This position has arisen, as we warned the hon. the Minister of Finance it would arise, and I believe it has arisen because of the cushion of taxing powers which the provinces had, a cushion which they could manoeuvre and through which show good government by using the revenue from that cushion between the subsidy and what their requirements were to serve their provinces properly. I would be interested if the hon. the Deputy Minister could indicate what provision is being made for this control. I think it should be made clear that there must be an acceptance of responsibility by the Provincial Administrations for the financial administration of their provinces, it should not be a matter of saying that they are tied down to what the hon. the Deputy Minister feels like allocating to the provinces in terms of the formula.

Sir, there is quite a bit of what the hon. member for Green Point said with which I agree. I shall also be expressing a few ideas about the question of capital works. However, I want to disagree with him when he says it is so easy for an executive committee simply to put the blame on the Government by saying there are insufficient funds available. I think Natal would have liked to do it under these circumstances in order to excuse themselves, but I do not think an executive committee can very easily run away from the responsibilities it has.

Sir, since 1910 a successful method has been sought by which to subsidize the provinces, and I think that we can now rightly say that a formula has very successfully been established according to which subsidies are allocated to the provinces. I think it is a very satisfactory method that has been found because this formula has a scientific basis. As far as my knowledge goes, particularly now that this formulary basis has had an opportunity to operate, the provinces are, in general, satisfied with it. From personal experience I can tell you that the provinces are now actually better off than they were previously when they still had taxation powers of their own. The big advantage of this formula is, however, also that it is adaptable, and because it is adaptable, there are two specific aspects I should like to point out to the hon. the Minister and the hon. the Deputy Minister, two aspects that I think could again be viewed to see whether the correct basis for allocation has been found in this formula.

The one deals with roads. With a view to the importance of roads in a developing country, and since we want to stimulate development, I am not all that convinced that sufficient funds are being made available to the provinces, not only for the making of the roads that are essential, but also to prevent a backlog from building up in respect of existing roads. A great responsibility has been transferred to the shoulders of the provinces as far as the de-declaring of old national roads is concerned. I referred to that in a previous debate, and I do not want to go into that again at the moment. However, I want to indicate the position of the Free State in respect of roads in that province. In the Free State, which is an intensive agricultural production area, there are about 22 000 km of tertiary roads, roads which are regarded as farm roads in other provinces. Because of the province’s tremendously high production and the very heavy traffic these tertiary roads carry, the executive committee of the province has always been compelled in the past to subsidize these roads. These roads were not included in the formula and consequently the Free State is in a position of still having to assume responsibility for a large number of kilometres or miles of road because provision is not made for that in the formula. I would be glad if the hon. the Deputy Minister could perhaps just look at this and also ascertain for himself, at the same time, whether the subsidy in respect of de-declared roads is, in fact, sufficient not only for their maintenance, but also for reconstruction.

There is a second aspect I want to refer to, which could perhaps also be reviewed again, i.e. the way in which the basis was found for the allocation of subsidies in respect of education. The present basis is a calculation made per pupil. The basis is per pupil. I want to allege that it would be more realistic to choose the teacher as a basis, and I shall tell you why. If we take a province like the Free State, which has a large number of rural children and also nearly an equal number of urban children at school, you will find that this formula does not do complete justice since the child is taken as a basis, because education in respect of the rural child, since we are dealing with many smaller schools and also chiefly high schools, is much more expensive than the education per child in the urban school where we are dealing with economic units. We again take the example of the Free State just to illustrate the numbers. In the Free State 48% of the school-going children are concentrated in urban and in fairly large centres as against 52% on the platteland. But if we now look at the ratio of teachers, the picture is completely different. Forty-four per cent of teachers are allocated to the 48% of children concentrated in the urban and larger centres and 56% of the teachers are allocated to the 52% of pupils concentrated on the platteland and in the smaller schools. What it amounts to is that for the urban schools there are more or less 20 pupils per teacher as against 17 pupils per teacher in the rural schools, consequently that is proof that the basis calculated per child is, in my opinion, not a realistic one. Therefore I would be very glad if the hon. the Deputy Minister would give some thought to this.

In connection with capital funds we are still in the position we were in with subsidies as a whole, i.e. that capital funds are being allocated to the provinces on an unscientific basis. These capital funds are being granted annually so that a province consequently does not know precisely where it stands in respect of its capital funds for the following year. Everyone knows that if one wants to plan in respect of capital works, one needs a few years in which to plan ahead with a view to employing capital funds successfully. However, the provinces are now restricted to a year-to-year period. Although this formulary basis has been seen to be as successful as it in fact is, I want to ask the hon. the Minister whether he and his department would not consider our also finding a formulary basis for the provision of capital funds to the provinces, because then the provinces would be in a position to plan ahead and employ the capital funds much more economically than is the case at present. If a formula cannot be found—I immediately want to concede that finding a formula for the employment of capital funds will be much more difficult than it was to find this formula for the present subsidies, because there are so many aspects that must be taken into consideration … [Time expired.]

Mr. Chairman, the expenditure called for under Vote No. 9—South African Mint—is R656 000, an increase of R116 000 on the previous year. We on this side of the House have no quarrel whatsoever with those figures: in fact, we would complement the hon. the Minister and also the Director of the Mint on the manner in which the department is run.

However, I want to make reference to a comment by the hon. the Minister of Finance when he replied to the Second Reading debate on the Appropriation Bill a comment which really motivated my coming into this debate today. On that occasion he said and I quote from Hansard, 1973, col. 4365—

Having listened to that advice from the hon. the Minister of Finance, it set in train the thought as to how South Africans as individuals could themselves acquire a more sincere holding of gold. I again had concern for the fact that in America and Japan, just at this moment, there are more and more moves and also pressure on the Government to allow individual gold holdings. I know that in countries like Switzerland individuals can hold gold. So I started giving some attention to the role which is played in our monetary system by the Kruger rand, our two-rand gold piece and our one-rand gold piece. Again I should like to pay tribute to the Department of Finance and the members of the Mint for their courtesy in trying to accommodate me and also to the members of the Library of Parliament for their courtesy in making certain records available to me.

I do not believe that many persons among our public are aware just where they stand in their rights of acquiring either the Kruger rand in a mintproof condition or in a recirculated condition. The same applies to the two-rand and the one-rand piece. I find that in August, 1967, the South African Broadcasting Corporation made an announcement that a consignment of Kruger rand had been shipped to Switzerland. This was an historic occasion in our country’s history, and the Kruger rand today is more than merely a gold coin. It is the embodiment of this country’s coinage history. The coin itself as produced in 1967 bears on the obverse face Pres. Kruger’s profile, while the reverse carries Coert Steynberg’s famous “leaping Springbok”. We are all aware of the fact that Pres. Kruger was the last head of State of the old Zuid-Afrikaanse Republiek, and since his death he has become the symbol of a free South African Republic. The springbok is the internationally accepted symbol of our South African nation. These two symbols welded together in one coin have brought about a situation on a coin which is historical and is the embodiment of our country’s unity. I believe that a great deal of credit should be paid to the Mint itself and the officials for the production of this trump card. Hon. members remember that in the 1964 coinage and mint legislation provision was made for these coins to be produced. In those days the piece bore the clumsy name of “the trojan”. It was one of our South African Ministers who had the inspiration and had the name changed to the “Kruger rand”, which is an admirable name. At that time South Africa sincerely and badly needed a heavy gold coin which would be symbolic of the Republic. It is a fact that one of the questions most frequently asked by tourists in this country is what the heaviest gold coin is that they can purchase and which they can take away as a souvenir of our country. Today that gold coin is the Kruger rand, which is designated as “a one fine ounce gold piece”. It is a legal coin and a coin that has legal tender. The R1 gold coin and the R2 gold coin are again one-eighth of an ounce of fine gold and a quarter of an ounce of fine gold respectively. I believe that today we have in the Kruger rand a coin of which South Africa can be justly proud. As it spreads throughout the world, it does so as an ambassador, as it goes to countries which are both well disposed towards us as well as to countries which are not well disposed towards us. However, it does stand as the epitome of our South African unity and our solidarity in gold. But I think we are entitled to ask how does the South African individual stand when he endeavours to acquire rights to the Kruger rand? I was intrigued by the discovery I made. I thought that I hit upon a method of getting rich quickly, because certain individuals can buy the Kruger rand in a mint-proof condition from the Mint at a price of R60 per coin. The average man in the street, Jan Publiek, must go to his bank and he may acquire the recirculated Kruger rand which varies from day to day according to the London price of gold plus 8% for handling charges. At the moment that price would be approximately R69. I then wrote to the South African Mint and had it confirmed that there is a waiting-list of those persons who would like to acquire the mint-proof Kruger rand. However, to do so one must be a registered numismatist or coin collector; so not everyone could acquire that. At the moment the stock of Kruger rands as manufactured up to 1972 has run out and there is a waiting-list for 1973. The coin will become available in a matter of a month or two. In the case of the R1 and the R2 pieces, they are freely available to the public. What amazes me is that we are introducing such relatively small numbers of these coins. For a country whose people suffers under inflation and the devastation which takes place in the purchasing power of their money, one would think that almost every South African would want to hold gold coins as an edge against inflation. In fact, I find that the people whose names appeared on the Mint list for receiving regular sets were advised in 1970 that the new production of coins for that year was the following: Short sets, 4 000; long sets, 5 000; twin sets, 1 000; the gold R2 piece, 10 000; the gold R1 piece, 10 000, and the Kruger rand only 10 000. That does not indicate that a large number of gold coins are available to people in this country who are able to purchase coins and which they would do if this were more publicized.

Then I want to raise with the hon. the Minister an aspect about which I should like some information. In the magazine Bickels I see that—

I now come to my query—

I wonder if the hon. the Minister could possibly comment on that situation.

There is another interesting situation from the coin collector’s point of view: I see that in 1967 President Kruger’s head appears on the obverse side of the coin with the leaping Springbok on the reverse side and that in 1970 this was switched, the leaping Springbok appearing on the obverse side while President Kruger’s head appearing on the reverse side. I have heard some comments that it is not possible to buy the Kruger rand at R60. [Time expired.]

Mr. Chairman, I think it would be unfair of us to allow this Vote to go by in the House without mentioning the fact of the South African Mint’s 50 years of existence. Therefore I should like to say a few words of appreciation this afternoon about this department which has, since 1923, given South Africa first-rate service and has minted coins of quality, thereby gaining honour and renown for South Africa. The hon. member, who has just resumed his seat, referred to the Kruger rand and to the Kruger pound of the previous century. I think that after the adventure-laden era at the end of the previous century when the Kruger coins —and particularly the golden Kruger pound and the Field Sovereign—became known throughout the world, it would be difficult for any coinage to arouse international interest again. Therefore we are grateful for the fact that the South African Mint could, in fact, again succeed in arousing interest throughout the world for South Africa’s coinage and for the coins minted in South Africa. The South African Mint has grown and developed into a department known throughout the world today for their quality of our coins, the designs on our coins, their east of handling and their durability. Coin collectors or numismatists throughout the world appreciate, from a collector’s point of view, the way in which the coins are released. Thus the hon. member also referred to the Kruger coins that differed in the two different years. But from a collector’s point of view appreciative note is also taken of the depiction of historical phases in South Africa. Here I am referring, inter alia, to the silver Dönges rand, the silver Verwoerd, the Swart rands that were minted. One also thinks appreciatively of the release of coins during the period 1965 to 1969, when an almost equal number of coins were released in Afrikaans and English. Since 1970 we have also had the well-known bilingual coins. The value which South African coinage has achieved today, not only in South Africa, but also throughout the world is also a feather in the caps of the officials of the South African Mint. We only have to look at a few coins. The 1931 tickey or three pence, if it is available, is today worth about R750 in an uncircularized condition. This means that it has about 30 000 times its original value. The 1925 two shilling piece is worth R750 in a uncircularized condition. A much more recent coin, the 1962 2½ cent piece, which was still in the form of the old tickey, is today being disposed of at R20; this means it has 800 times its face value. The 1930 farthing, if it is available, is being disposed of today for R200, which means an increase in value of about 80 000 times its face value. Under the previous vote the hon. member for Constantia said —although I do not agree with the statement the hon. member made—that it is today only profitable to invest in land and in paintings. But I do not think there is a single section that one can invest in with so much certainty as specifically the coinage of the South African Mint. That is, after all, the sphere where the value cannot decrease.

I think it would also be wrong if we allowed this year to pass without a commemorative medal being struck to commemorate the 50 years of existence of the South African Mint. We are aware of the fact that the Act makes provision for the minting of a golden R5 piece. One would like to mention the idea here that consideration could, in fact, be given, for this fiftieth anniversary, to minting this heavier gold coin for South Africa and making it available. However, we are also aware that the Mint will soon be moving to a new building and that this R5 gold coin could then more fittedly be released when this new building is occupied. Therefore I should like to make another suggestion, and now I want to say that I am actually sorry the hon. the Minister of Finance is in the House at present. I would more freely have been able to make the proposal if he were not in the House. My proposal is that consideration be given to the minting of a gold coin which would be known as the “Diederichs rand”. Here I have in mind the standard gold rand piece that we have at present. In the future, or at least this year, that coin can be known as the Diederichs rand, and I believe that this Diederichs rand which I have in mind will not only symbolize the confidence which the hon. the Minister has always had in gold, but I also believe that this year, 1973, will be known as the year when the free market price of gold rose to $100 per fine ounce on the free market. Therefore I should like to suggest that this Diederichs coin be minted this year. I believe that the South African Mint is worthy of such a coin. I believe that gold is worthy of such a coin. I believe that the National Party, which has this year been in power for 25 years, is worthy of such a gold coin. I believe that Dr. Diederichs is worthy of such a gold coin.

Mr. Chairman, not being a capitalist, I do not want to enter into this discussion on the gold coinage. I would like to say about the Mint that I had the pleasure of visiting it during the recess in its new building. I found there a dedicated staff and a first-class modernized plant, something of which we can all be proud. Not only that, it produces some profits for us every year, because over the last three years it has had a profit of something like R3 million per year, which is very satisfactory. I was also glad to learn that arrangements are going to be made for the public to be able to visit the Mint. It is going to be similar to the position we have in the Stock Exchange, where people will stand on one of the floors and look down on the operations. I would like to add my congratulations to those responsible for the planning and now the operating of our new Mint.

I make no apologies for raising again a question I have raised before in this House, namely the taxation of an annuity purchased. This remains to me one of the most objectionable features of our entire tax legislation, because what does the purchase of an annuity really mean? It means that the taxpayer surrenders his capital in exchange for a monthly income during his lifetime. He purchases an annuity so that he will ensure that his resources, those which he has, will last him for his lifetime. He pays a lump sum of money to ensure a regular monthly amount for the rest of his life. This is the basic principle of purchasing an annuity. But the amount that he receives—although he receives it monthly—is not income in the accepted sense of the word. It represents, in part, a repayment to him of his own capital which he has paid for his annuity. Should you buy an annuity and die prematurely, all that will be paid back is pure capital; there will be no interest whatsoever. Yet under our income tax laws the monthly amount which a person receives from an annuity is taxed to the full extent. He is paying tax on his own capital which is being returned to him in installments. I have never been able to understand why this capital return should be taxable. I have never had a satisfactory explanation in this House. By no stretch of the imagination can you determine that the portion of a person’s capital which comes back to him should be income for tax purposes. It may be said that it is impossible or perhaps very difficult to determine what portion of a monthly receipt of an annuity is capital and what portion is income. But this is done in many countries of the world. In Rhodesia, England and other countries where an annuity is purchased only the income portion of the monthly income is subject to tax. The rest is not taxable. I do not think we should have any problems here. Any insurance company can tell you within a moment what proportion is capital and what proportion is income. I know that the hon. the Minister is keen that people should save-on occasions. Sometimes he likes them to spend but basically I think he is a supporter of thrift. I am sure he would like to encourage people to purchase annuities so that he won’t have any problems with his other colleagues, when they have to provide the funds to take care of people when they have nothing left. I believe the time has come when the law should be changed. We should modernize our tax structure and we should actively encourage saving. We should be able to say to people, that when they purchase an annuity, the portion which is return of capital will not be subject to tax. I hope I will have some reaction from the hon. the Deputy Minister in this regard.

Now I come to another matter which I raised in 1969 (Hansard, Vol. 26, col. 4928). This is what I said in 1969—

Now, I have not checked whether there has been any change in the definition of assessment but the current definition is very much the same; it reads—

Now, Mr. Chairman, this is very much the same as the section I quoted in 1969. The Special Court today can still not deal with such matters as the actual calculation of the amount of tax payable or determine whether the tax is payable at the rate applicable, say, to a married or unmarried person, or whether interest is payable or not. If a taxpayer seeks relief he has to seek refuge by refusing to pay his assessment. That is what he has to do. Then he waits for the Secretary for Inland Revenue to file a statement with the clerk of the magistrate’s court. Then he objects to the claim after which a whole process of law comes into operation. Now I am raising this question again because in 1969 I raised specifically the question of interest. We have had a decision in a very interesting case since then; it was reported in 1973. I refer to the case of Kruger v. The Secretary for Inland Revenue. This was finally decided in the Appellate Division. I do not want to go into the details of the case because it is a very complicated and lengthy case, and it is well known, I am sure, if not to the hon. the Minister, then certainly to the department. This issue started in 1952 and was resolved, as I have said, in 1973. The issue I am concerned with here is that the question of interest was raised in this case. It was questionable from what date certain interest had to be paid. When I raised this question with the then hon. Deputy Minister—who I think is now the Minister of Economic Affairs—in 1969, he told me, in reply to my request—

But, Mr. Chairman, we have had litigation going on in the case I have mentioned over all these years, all on a question of interest. That is because, in terms of the present Income Tax Act, you cannot deal with that aspect of an assessment before the special Income Tax Court. What is the purpose of a special Income Tax Court? Its purpose is to make the challenging of an assessment by a taxpayer simple, fast and easy. But we are denying the court those powers which I think would help us and would certainly help the Secretary for Inland Revenue as well.

After all, he does not want a matter dealing with the question of interest— which was, I admit, only a part of this whole issue—to take all these years and have to go to the Supreme Court, only to have to be sent back to inferior courts, to go to the magistrate’s court and back to the special tax court again. This case gave rise to a most involved situation, but the point I want to raise is simply this: I believe the time has come when we should change our law and give the special Income Tax Court greater powers. They are the specialists. Why not let them deal with these things quickly and efficiently? Why not save time? Why not save costs? Why not allow a matter such as this to be resolved quickly?

There is one last item I want to raise, and that is the question of sectional title. There is a great deal of concern regarding the position of a taxpayer who has held a block of flats for many years as a capital asset, and who does not deal in property. Clarity is required from the hon. the Minister in connection with the following matter. Will such a taxpayer be liable to taxation if he divides his property into sections in terms of the Sectional Titles Act and disposes of the individual flats at an overall profit? [Time expired.]

Mr. Chairman, in terms of section 5A(3)(a)(i) of the Income Tax Act, two qualifications are laid down for a tax abatement in respect of students studying on a full-time basis, i.e. students above the age of 18, but under the age of 26 years. These two qualifications that must be complied with before the parents are granted a tax abatement, are that the student must be a full-time student and that he must be wholly dependent on his parents, with the emphasis on “wholly”. I am now informed that the income tax court gives a very strict interpretation to this expression “wholly”, but that as an administrative concession and arrangement, and out of the goodness of its heart, the Department of Inland Revenue accepts it as a matter of policy not to interpret this expression so strictly.

Let me just say this at once; this is a characteristic one does not actually look for in the Receiver of Revenue! We are nevertheless grateful for this goodness that is being displayed. The department has laid down, as partial compensation, that the parents of a child still qualify for the abatement provided that the means which the full-time student can contribute to his own support, for example by means of merit bursaries, etc., do not exceed R450 per year. This is a concession that is very much appreciated by the parents of young people who are studying, and particularly by the parents of boys and girls who have received bursaries. But implicit in this concession there is, however, the acknowledgment of the principle that a measure of relief is justified for the parents of students in respect of income tax. I therefore do not want to elaborate further on the principle of my plea. But would you please allow me. Sir, to advocate the extension of the degree in which this concession should be implemented. I must not be misunderstood; I am not advocating here an extension of the limit of R450 in respect of school-going children. I am merely asking that this abatement of R450 should also be allowed in respect of children at university who are between the ages of 18 and 26 years, even though they were to obtain bursaries that are in excess of this R450.

At present we find that when a boy or a girl receives a merit bursary of more than R450 per year, that abatement, which the parents were entitled to in respect of the child, falls away. This affects some parents very adversely. There are parents with low incomes who have very gifted children. Cases have come to my attention of parents who really cannot afford to allow such a child to study further, but because the child does well in matric, he is offered a bursary by some or other body. That bursary may be more than R450, although it most certainly cannot cover the full costs of the child’s studies. The parents then find themselves in a very unenviable position. As a result of merit the child receives an offer of R500, for example, or in the case of Public Service bursaries, R800. Because the parents feel morally compelled to utilize this opportunity for their child, they go without a tremendous amount to be able to afford the balance of the child’s study fees. It is conservatively calculated that to keep a child at university at the present time it costs one at least R1 000 to R1 200 a year. That is a great expense, and a big jump from the expense the parents incurred in respect of their child while he was still at school. Since it can be alleged that a child at school costs its parents R450 per year, if we take this abatement as the basis for that, it can be argued that a child at university costs one at least twice that much.

Sir, I hesitate to suggest a solution now, because I realize full well that when one tampers with tax formulas, one sets up a chain reaction, and that we as amateurs are not always aware of the full implications of what we are perhaps proposing. But I want to advocate, in the first place, that this abatement of R450 ought to be allowed, apart from the bursary which a student may merit while he is at university. That bursary is, after all is said and done, actually a loan. In the case of the Public Service, where the bursaries are in the vicinity of R800, the student is compelled, on completion of this university course, to serve the body from which he received the bursary for a specific number of years. If he were to leave the service before having completed that compulsory period of service, he is indeed liable for the pro rata portion of the money advanced to him by that specific body.

There is consequently no question of that boy or girl, or the parents of that boy or girl, receiving this money for nothing. There are also obligations involved. It must also be acknowledged that the State very definitely benefits from the fact that such a student equips himself better at a university, because once he has obtained a degree at a university, or when he has obtained a technical or technological qualification, he can enter the labour market in a higher income bracket and as a result pay a larger amount to the State in tax. Sir, I request that this matter be reviewed again. I do not want to say at what limit the amount should be set. I realize, as I have already said, that when one tampers with the formulas, one sets up chain reactions, the final outcome of which one cannot always foresee, but I want to ask the hon. the Minister and his department to go into this matter and see whether relief cannot also be given to the parents of children who are studying with bursaries at universities.

Mr. Chairman, I should like to refer to Revenue Vote No. 11, namely Excise. In this connection I should like to refer to the amounts paid to neighbouring countries in terms of the Customs and Excise agreements entered into with our neighbouring states. Sir, in analysing the figures we find that last year an amount of close on R30 million was voted in this respect, whereas for this year the amount has increased to R49 million. This amount, therefore, has increased by almost or perhaps more than 60%. This indicates, firstly, that an extension of the inherent economies of these neighbouring states is undoubtedly taking place; that as a result of their independence they are in a position to grow on their own initiative to such an extent that they are capable, when it comes to a division of revenue, of sharing to this large extent in the common pool created in terms of the agreement. But I think that this also indicates that these benefits are due chiefly to the fact that these states are neighbouring states of the Republic of South Africa; that they border on the Republic and that their economies are integrated with the economy of the Republic to a large extent. This fact is clearly beneficial to these states, and I believe that it ensures for them security and stability as well as a degree of equilibrium in their economies.

Sir, it also proves to us how a firm basis can be found for peaceful co-existence, for reciprocally beneficial economic co-operation, although there may perhaps be differences in the political sphere in other respects. This is also an example for those prophets of doom who see spectres in the policy for the future and in our relations with our own self-governing homelands. This proves on what a firm basis, on what a reciprocal and mutual basis of co-operation, bonds may be forged with neighbouring states on this basis and what benefits it holds for all the contracting parties involved. This agreement, as you know, has existed for as long a period as virtually 60 years and it has now been re-created in this new agreement. This proves what degree of uniformity and of mutual recognition and what degree of necessity is in fact necessary when states adjoin one another and when their interests are intertwined, and it is true, after all, that one does not quarrel with one’s bread and butter. I think that what we have here is a very good example of an E.E.C. on a small scale here in Southern Africa which in the course of time may be developed much to the advantage of all of us who are involved therein. This is truly valuable to the less developed neighbouring states. It is designed to accelerate their economic development. It is designed to accelerate and to ensure it, to ensure diversification and further co-operation, and also to link the economies of these neighbouring states to that of the Republic, which ensures this degree of solidity for them, so as to enable them to resist the onslaughts from an uncertain monetary world.

It also ensures for them that acumen, the “know-how” which we have here in the Republic of South Africa and of which they may make use in this generous way. It even ensures that they may market their agricultural products on a co-operative basis, and this applies in particular to products such as meat, wool, timber, sugar, etc. While we do not wish to lose sight of our own interests, it is true that this controls relations and provides for custom-free inter-state traffic of goods without quantitative limitations. It provides for identical import duties and customs duties, and for the identical application of fiscal measures such as sales and excise duty. It provides for the levying of protective tariffs in respect of competition from countries and states which are co-members. In other words, this already incorporates the principles of a GATT agreement, as we know it in the widest sense. This holds the benefit of a distribution of the pool on a common basis and it ensures these states of a sum of money which probably is very valuable to them.

But in this connection I just want to point out that the economic position, particularly in an area such as Swaziland, is changing very rapidly at present. I think it is correct to maintain that to a state such as Swaziland there is a large and substantial inflow of capital from the Republic because there is a very large-scale ingress of business by Whites as well as non-Whites. This is taking place for obvious reasons, because the ownership of land is reasonably easy to obtain, cheap labour is available and there is plenty of water, etc., and also because of the provisions of section 2 of this agreement, which provides that there will be no quantitative limitations in respect of goods which are cultivated, produced or manufactured in the communal area. This gives them a very open and extensive market in the Republic of South Africa.

But I just want to put two questions in this connection in order to obtain clarity. I should like to know whether there is a degree of co-ordination in terms of the agreement in respect of import control as well. I would assume that this is the case, otherwise, I would assume, this might not only handicap our own measures in this respect, but might to some extent cause them to fail. Then I also want to ask to what extent control exists over the flow of capital from the Republic to Swaziland and to the other former Protectorates. I mention these aspects merely on the basis of the idea that one would like to guard against unfair competition and also on the grounds of the primary idea of the task we have been charged with, i.e. to stimulate the economies of our own homelands, too, so that we would not like businesses to be channelled in other directions, which could be established in our homelands. I am also asking this in view of the valuable benefits this holds not only for these neighbouring states, but also for our Republic.

Mr. Chairman, I want to reply to the debate in the same sequence in which hon. members participated in it, and then deal with the particular subjects as they discussed them. I want to point out at once that the hon. member for Green Point apologized to me for having to be absent. Nevertheless I want to reply to the points he raised.

Let me make the general statement at once that the hon. member was quite correct in saying that the provinces have, since the acceptance of the new formula, been primarily dependent for their funds on subsidies from the Government itself. Since I have said this now, we have to go back to the history of the matters shortly prior to the putting into operation of the new formula. We find that although the provinces at that stage had considerably more sources of revenue than directly controllable sources for themselves, it was clear even at that stage that the ability of their own sources to contribute to their financing plus the formula which applied at that stage was inadequate to enable the provinces to continue with the services delegated to them or to carry them out effectively. This was the case to such an extent that in most cases it became the practice that extra-statutory grants had to be made to the provinces from year to year, over and above the grants that had been statutorily calculated. In any case the percentage of the expenditure on their revenue accounts that the provinces financed from their own sources showed a downward trend. As I see it, there was thus a need for the establishment of a method which would enable the provinces to perform their functions financially.

There was also a second aspect which was of great importance in this specific regard. It was that the provinces, in providing these services, could not be left in a position in which they had to receive extra-statutory funds from the Treasury on an ad hoc basis from year to year. The argument used by the hon. member that the provinces are at this stage and with the formula now able to say that this is their capacity but that they do not have control over it themselves, and that the onus consequently rests on the Government, is in fact what happened in the past, but what are the facts? The facts are that since the acceptance and application of this formula all the provinces have on the whole been able, in spite of initial misgivings at the results of the formula in terms of funds, show surpluses over the years on their revenue accounts, and to apply such surpluses for the purposes of increasing funds or making funds available for the financing of capital works. The hon. member raised a second point, i.e. the effectiveness of control. I want to say at once that a debate on the allocation of subsidies to the provinces is in fact unusual in this respect that it may, since it represents a Vote in this Budget, be debated in this House, and may in fact be debated in its entirety. On the other hand it may also be debated in the provinces themselves, but the control measures to which the hon. member referred—and I want to concede at once that they are important—lie therein that the formula in itself is a control measure. It is a control measure in itself for it determines what amount has to be made available to a specific province in terms of the formula. The second control—and this is in respect of the actual spending of the funds—is the ordinary method, i.e. there is a Select Committee on Public Accounts as we have here, which goes into the spending of the provinces and which carries out parliamentary control over Government departments. As far as this matter is concerned, I do not think there is any case to be made out for there not being any effective control in terms of the new formula. I think that such control does in fact exist.

In the second place I want to say that the provinces still have a responsibility of their own for they must in any case finance their revenue account from the remaining sources. Although I concede that these sources are limited and are less than they were in the past, it is a fact that their own funds still represent more than 10% of their expenditure, and in terms of these amounts 10% represents a considerable amount. The second point is that they also have scope for appropriation to the extent to which their revolving fund provision enables them to have such scope. In any case the revolving funds are built up in terms of the formula as a percentage of their own revenue. For that reason the provinces in my opinion still have a clear and specific responsibility as regards the effective and efficient spending of these funds. However, there is one specific aspect we should not lose sight of. Apart from the argument I have already mentioned, this formula was also established as a result of another important consideration. That consideration lay therein that all the provinces were not equally strong economically, and that not all the provinces were able to find the same sources of revenue with the same rates and levies of taxation. There were constant complaints from the various provinces to the effect that the one stood in an unfair relation to the other in respect of the rate of its taxation. This formula has largely succeeded in eliminating the disproportionate taxability of the inhabitants of one province as against those of another, and has placed these people in a reasonable position as far as equal taxability in terms of money is concerned.

There is a third observation I want to make. The hon. member pointed out that there had been a considerable increase in the subsidies which are being paid out to the provinces this year. I think that the increase in the total for this year amounts to R103 million. He was quite right in observing that this represented an increase of 20%. If we were to look at the expenditure on the Estimates of the State itself, the increase on revenue account is in accordance with the increase in regard to the provinces. What is important here is that the provinces themselves are able to calculate what they will receive, except for certain cost factors which can only be calculated at the end of the year. For that reason they are in my opinion in the favourable position that they can work out a proper programme their work and the expansion of services.

I now want to refer to the speech made by the hon. member for Bloemfontein East. He mentioned two specific aspects in particular. He observed quite rightly that the provinces are reasonably satisfied as regards the position of the revenue account in terms of their revenue from the formula itself. The hon. member mentioned two specific facets. He referred to the position of the Orange Free State with regard to roads, and he singled out two aspects. The first was that the question of tertiary roads, or farm roads as he called them, was not included in the formula for determine the amounts the provinces have to receive. Secondly, he asked whether we should not reconsider the financing of the reconstruction and maintenance of the old de-proclaimed national roads. Let me first deal with the second point. Initially, when negotiations with the provinces took place in regard to the deproclamation of national roads, those negotiations were held between the provinces on the one hand and the Department of Transport, specifically the National Transport Commission, on the other. That was before the stage was reached where the formula had been worked out within which this specific function of the provinces also had to be accommodated in terms of money. At that stage an agreement was reached between the Department of Transport and the provinces on a specific amount which would accrue to the provinces in respect of the reconstruction of these roads which were de-proclaimed, and also in respect of their maintenance. In the process of devising the formula of the subsidy of the province on all its services, which consequently included the maintenance and reconstruction of these roads, new negotiations took place, which did not mean that the provinces would receive less money in toto, but which meant in practice that, in the initial years, the provinces would receive less money, but that this would gradually increase and that after the term forming the basis on which the amounts had been calculated had elapsed, the provinces would be in the same position as regards the total sum. I want to concede at once that in this specific connection it meant that in the initial years the provinces would have less money at their disposal per annum than they would in fact have had in terms of the old arrangement. I must also emphasize, on the other hand, that in toto their position remains the same.

Now, for the sake of the record, I also wish to say that the various provinces have conducted a correspondence with the department in this specific connection, and that we are quite prepared to hold future talks with the provinces in regard to making the necessary funds available. I have already indicated that it is possible for them to hold talks with us on this matter. But there is one other aspect which I must emphasize in passing. Although the funds allocated to the provinces in respect of their current expenditure during the year are calculated in terms of their standard expenditure on the various services for which they are responsible, the amounts allocated to them are in any case allocated as a lump sum. The application thereof for the particular service on which they want to spend it, or the percentage which they want to spend on a specific service, falls within the powers of the provinces themselves. Although problems do in fact arise, as my hon. colleague the hon. member for Bloemfontein East indicated, i.e. that a province has problems in respect of funds for a specific service, the provinces were all in a position last year, in terms of the overall amounts calculated in terms of the formula, to build up surpluses over the particular year, perhaps by means of savings or by means of judicious application of their funds, so that they were able to use those surpluses to finance a backlog in respect of their capital expenditure. In this way, for example, the Orange Free State, with the permission of the Treasury, succeeded last year in transferring an amount of R4½ million from its revenue account to its capital account. Now I think the hon. member will come to me at once and say that the fact of the matter is that the provision of loan capital for capital works was insufficient, and that for that reason the province was in the position that it was forced to do so. The hon. member asked, quite correctly, whether we could not work out a formula in respect of the capital account of the provinces as well. I want to inform him at once that I agree with him; I think it is essential and also desirable that, as with the revenue account of the provinces, we should also deal with them on an established basis in respect of their capital and capital work requirements. The hon. member will understand, however, that this is not such a simple process, and I should just like to illustrate this very briefly. The hon. member referred to the fact that in the Free State—I want to say at once that this is also true of the other provinces—there are small school units in the rural areas where the pupil quota per teacher is far less than the average for the country or than the average for the province. This obviously makes the running costs of education more expensive. I want to hasten to add that this is in fact one of the variable factors for which provision has already been made in the formula, for the whole basis of the formula is the concept of standard expenditure with concessions and increases or reductions of that expenditure according to changing circumstances which apply in certain provinces to bring them onto an equal basis with other provinces that do not have the same problem. In other words, I am quite satisfied at this stage that in respect of the current expenditure of the provinces, the formula in respect of education also makes provision for the exceptional set of circumstances to which the hon. member referred, and provision for this is also being made in respect of the Cape where the same circumstances are prevailing, and I think are prevailing to an even greater extent as regards numbers. The problem becomes a real and substantial one if a formula has to be found for the capital requirements of the provinces. This will have to be done on the basis of two principles. We shall have to lay down standards for the physical building in respect of surface area, for specific services. Secondly, we shall also have to attempt to determine a cost norm in respect of the specific service, whether it is education or hospitalization. I want to inform the hon. member at once that the department has already done the ground work in this specific connection. It has done so in the sphere where the greatest priority lies because this is one of the most expensive elements in the capital programme of the provinces, i.e. a training hospital. In this particular connection, because there are various provinces involved in the establishment of training hospitals, whether they are engaged in this at the moment or whether it is going to be done in future, and because this requires a large part of the available capital of the province, we decided that this should be the first item for which we should attempt to determine norms. Under Dr. Webb, the chairman of the Building Research Institute of the C.S.I.R., a committee has been convened whose special task it is to investigate the entire question of hospital planning in respect of surface area, and also in respect of cost norms. I want to say at once that this committee will, as its first priority, devote attention to training hospitals, and that they will subsequently devote attention to regional or local hospitals. They will repeat the same process in respect of education. In respect of capital provision there is a fundamental problem to which the hon. member for Bloemfontein East also referred, i.e. whether one may take the child as a unit there, something which appears to me at the moment to be problematical. I want to say at once that in this specific connection, as in the formula, we ourselves must ensure that the position of the provinces in regard to one another does not become disproportionate or disturbed. He may rest assured that we will give attention to this matter.

†I think the hon. member for Cape Town Gardens referred to the question of the Kruger Rand. He, as well as the hon. members for Parktown and Bethlehem spoke in complimentary terms about the South African Mint and its officials. I would hasten to say that I share their complimentary remarks about these people. I think it is a wonderful institution and I think that the staff attached to this institution is of a very high quality.

The hon. member referred to the fact that the proof quality of the Kruger rand is only available to collectors at R60 per coin. He wanted to know why other people could not buy it at the same price. I should like to explain to the hon. member that we cannot accede to his request for the simple reason that if we had to sell these gold coins to South Africans we will, for every one that we sell at R60, be losing at the present price of gold, $90 per coin.

The hon. member also mentioned the question of the coin as legal tender. That is really in fact a fiction. It is not used because the ordinary public in any event do not know from time to time what the prevailing price of gold is. These coins are kept for sentimental and other reasons. They are in effect not really circulated. I would like to point out to the hon. member that 51 933 of the proof quality coins have been manufactured by the Mint. On the other hand the uncirculated number of coins sold by the Chamber overseas and also through banks in this country since these coins were minted was 1 582 618.

*I think the hon. member will concede at once that it is important that this should represent large amounts.

†I also have to explain to the hon. member that although the proof quality coins are made available to the collectors, a price has to be fixed at the beginning of the year. Orders are placed at a fixed price. That explains why these coins are being sold at the fixed price of R60 per coin while you have to buy the others at the prevailing price applicable from time tp time.

Could the hon. the Deputy Minister tell us how many of the 10 000 proof quality Kruger Rands which were minted, went overseas, and how many were sold in South Africa.

I have already indicated that proof quality coins are made available to collectors. This is done by way of orders. Unfortunately I do not know how many were sold on the local market and how many were sold overseas. I shall have to obtain that information for the hon. member. The others which are made available by the Chamber of Mines comprise a far greater number. A very large number of these are owned in South Africa itself. I shall at a subsequent stage furnish the hon. member with full information in regard to how many are disposed of locally and how many abroad.

†Sir, the hon. member for Parktown raised three issues. I hasten to say that he was lucky in regard to one of these issues. He raised the question of the purchase of annuities and the taxability of annuities. I want to say that the department has found a solution to this problem, because the point is well taken that a man should not be taxed on the repayment of capital to him; he should be taxed on income. The department has found a solution to this problem, and when the Income Tax Bill is introduced this session, provision will be made for the circumstances to which the hon. member has referred to ensure that only that part of the payments to the annuitant representing income will be taxable, and that that part representing capital repayment will not be taxed.

Then the hon. member wanted to know what the position would be of owners of blocks of flats, in terms of the Sectional Titles Act, which came into operation recently, if they sell these flats. Sir, I hasten to say that it is not possible to give a direct answer to his question, but I can say that the same tests that applies now to determine whether a person is taxable on the sale of an asset, will apply in this particular case. In other words, each case will be dealt with on its merits.

I am satisfied; that is two out of three.

Well, the one was a concession; the other one is just a statement of fact. The test, as the hon. member will know, is whether the asset in question was bought with speculative intent, or whether it was bought with the intention of holding it for some time and not for speculative purposes, so the normal test will apply in this particular regard.

The hon. member has also pointed out, quite correctly, that in 1969 he asked in this House—I have read his speech—that the powers of jurisdiction of the Special Income Tax Court should be extended to give the court power to adjudicate on other issues and not only assessable income subject to tax. He has referred to the case of Kruger v. Secretary for Inland Revenue. He is quite correct in saying that this was an involved case and that it took up quite a lot of time, but I would like to point out that the question of interest, which was also an issue in this case, was in fact a minor issue. I cannot personally concede the point that he has made that the powers which are granted to the Special Income Tax Court should extend beyond the present limitations, and I say that for very good reasons. I do not wish to detain the Committee, but at this stage I would like to suggest that we leave this matter as it is for the moment. I do not think that the hon. member has made out a good case for extending the powers of the Special Income Tax Court.

He always makes good cases.

Whether one agrees or disagrees with him, depends, I suppose, on whether one is a colleague of his or not.

*The hon. member for Cradock referred to the fact that in terms of the existing arrangement, parents are entitled to reduce their taxable income by the appropriate amount if their children are not receiving bursaries in excess of R450. The hon. member pointed out, quite correctly, that the bursaries made available by the State or the provinces for students attending universities are in any case more than the R450 norm as laid down at present. The hon. member is quite correct when he says that there are two qualifications before a parent may deduct the specific amount in respect of the child from his taxable income. The first is that the child has to be a full-time student, and the second is that he has to be entirely dependent on the parent. On that score the hon. member is quite correct. He is also correct when he maintains that the term “entirely dependent” is interpreted in a very narrow sense. If a child receives a small amount of R20, for example, it would mean that that child is not completely dependent on his parents. But the Receiver of Revenue, in spite of the fact that one does not expect this of him, as the hon. member said, was in an accommodating mood in respect of this specific situation, and decided that if a child received R450 in the form of a bursary he would still be regarded as being entirely dependent on his parents. But now I want to hasten to say that in the first place we should take cognizance of the fact that the purpose of rebates for tax purposes is not to compensate the taxpayer, the parent in this specific case, for the actual expenditure which he incurs in regard to the maintenance, education and care of his child, but that this measure in fact has another basic motivation, and that is to adjust the tax payable according to the means of the taxpayer by taking his family circumstances into account, which is a different norm from that of enabling him to deduct the total expenditure which he may have in regard to the education of his child. If we were to accept this norm, as a whole or in part, it would mean that we would in fact be favouring well-to-do persons who normally spend more on the care of their children as opposed to the less well-to-do parents for whom this is actually of fundamental importance. But I also want to point out that the relief in respect of these amounts which are deductible from taxable income has been progressively improved, precisely for the reason mentioned by the hon. member. Initially rebates could only be deducted for children under the age of 18 years. That applied up to and including 1955. Subsequently this age was increased to 24, subject to the qualifications mentioned by the hon. member, and ultimately it was raised to 26 years. I therefore want to repeat that the objective here is not to compensate the parents for expenditure. That is not possible for it would in any case mean in practice that we would have to have a specific formula for each family, and with our tax structure that is a concession we could never make for then the costs of this control would in any case become impossible. But the hon. member is aware of the fact that we have a permanent commission on taxes and tax structures, and this commission devotes attention from time to time to the entire question of our fiscal measures under which this specific aspect falls, and I undertake to refer this specific aspect to that commission to see whether a method cannot be found to accommodate the specific circumstances to which the hon. member referred.

I have kept the hon. member for Bethlehem waiting for this moment because he made a very fine suggestion and I wish it was, at this stage, in my power to say at once that I shall accept this suggestion. His suggestion was that with the commemoration of the fiftieth anniversary of the Mint, consideration should be given to issuing a commemorative coin, a R5 coin or another unit, and calling it the Diederichs coin. I want to say at once that I really cannot think of a more suitable person, at present or in the past, to whom the name of the coin can be linked than the present Minister of Finance. I want to say at once that I am perhaps in a privileged position to have had the opportunity of experiencing with what high esteem our Minister of Finance is regarded in international circles. If the outside world has confidence in the future of this country, if it has confidence in its financial and economic planning and in its stability in various spheres, then it would be owing to the inherent factors which apply in this country and which make it a country with potential, those things which the Creator gave to it. Then I would be guilty of dereliction of duty if I did not say that it is to a larger extent attributable to the personal stature which Dr. Diederichs has built up in the outside world and in international financial circles in respect of integrity, and as a financial expert on local and international conditions. I want to say at once that I endorse the idea expressed by the hon. member, and that I support it. If it is within my means to take an authoritative decision in this sphere or to propagate the acceptance of such a decision I shall gladly do so on behalf of him, on my own behalf and on behalf of the House and our Fatherland. I think that such a proposal would be unanimously accepted by the entire country, if we could succeed in doing so.

The hon. member for Ermelo referred to the increased amounts budgeted to be paid out this year in terms of the coal union agreement with the B.L.S. countries. He pointed out that last year the provision had been approximately R30 million and that the expected expenditure for this year in round figures would amount to R49 million. According to his arithmetical calculation it means an increase of approximately 60%. I want to hasten to say at once that one needs to go a little further, in order to form an assessment of the amounts, than just to work out the increase budgeted for, for the budgeted amount does not represent only the amount which has to be paid out in respect of this year’s revenue to those countries. The fact of the matter is that payment in terms of the formula occurs on three occasions, according to an adjustment. It begins with an estimated amount which one cannot determine in advance in any case. At the end of the second ensuing financial year there is a first accounting which is not a final accounting. In the next financial year one has the final payment. In the amount of R49 million, which we are now debating, is included therefore this year’s estimated amount in revenue from this pool for those countries, plus the final accounting for 1970-’71, plus the first accounting for 1971-’72. It is consequently not an increase of 60% for the one year as against the previous year. However, what is true is that there is of course greater economic activity in progress in the three neighbouring countries, whom we have joined in this agreement. I can join the hon. member in enrolling this fact, for the more prosperous these countries around us are, the better it is for us as well in the overall picture. In fact, I want to agree with the hon. member that this is for us, as well, a very clear indication of another level of co-operation between our countries and other countries in Southern Africa to the benefit of all and the total set-up in Southern Africa, and that it also indicates a pattern for any possible future rearrangement of these measures as far as countries within our borders are concerned which are able to obtain independence in terms of our national and political policy. Therefore we have not only found a basis for that; we have in fact acquired practical experience of how it will in practice be possible to set about negotiations of this kind.

The hon. member also asked whether there was co-operation in regard to import control. The reply is that there is co-operation in that sphere as well.

The last question the hon. member put to me, dealt with the issue of the movement of capital. I want to inform him that there have been initial discussions in regard to possible negotiations on a financial agreement. These are matters which I cannot go into at this stage, and in any case I do not have the necessary facts at my disposal either.

Mr. Chairman, earlier this year in his maiden speech the hon. member for Malmesbury addressed us on the subject of the adjustment of transfer duties in property transactions. I endorse what he said on that occasion and I think he delivered what was a very fine speech here. I do not wish to repeat at this stage the arguments he advanced on that occasion, but I want to take the matter initiated by him a little further and possibly suggest a practical first step for rationalizing the question of transfer duties and stamp duties applicable to the registration of deeds of transfer and mortgage bonds. I want to suggest that we give consideration to the consolidation of transfer duties and stamp duties so that these may be paid in one transaction. Hon. members will know that transfer duties on transfers are paid in advance to the Receiver of Revenue. The conveyancer concerned first has to go to the Receiver of Revenue to pay the money there and then he has to go a second time in order to collect the transfer duty receipt. He then has to lodge this document together with his deed of transfer at the Deeds Office. Later, after the deed has been examined by the Deeds Office, he has to return to the Receiver of Revenue once again and this time he has to do so to purchase revenue stamps for the payment of the stamp duties. He has to check the stamps carefully, ensure that he does not lose them along the way, attach them to the deed of transfer and then these stamps which he has purchased with great care and which have been checked with great care by the Receiver of Revenue have to be checked yet again by one of the officials of the Deeds Office. The same applies when one deals with mortgage bonds. Stamp duties and office fees by way of revenue stamps must also be paid on mortgage bonds and on other documents in the Deeds Office. This practice we follow at present of paying twice the same kind of fees in respect of the registration of deeds, namely first by way of transfer duties and then again by way of stamp duties, has substantial adverse effects. Not only is there a wastage of man hours, the valuable time of officials as well as practitioners—to the extent that they have to go to and fro between the Receiver of Revenue and the Deeds Office twice—but there is also a wastage of time in the repeated checking of these stamps to be attached to the deeds. These stamps can be lost along the way and because there is a black market in these revenue stamps, there were cases where whole sets of deeds with stamps to the value of as much as R800 were stolen in the Deeds Office. The deeds were stolen so that the stamps might be removed and resold. This causes much inconvenience and irritation to the practitioner and I plead that we should seriously consider effecting a change in this situation. I want to suggest that we could readily consider consolidating the two duties, i.e. the stamp duty and the transfer duty, so that a single payment may be made to the Receiver of Revenue. Then it can be assessed just once and a receipt need only be lodged once together with the deeds when the documents have to be registered at the Deeds Office. I believe that in this way we will effect a saving of labour, not only for the practitioner for whom it will be a substantial relief from the burden which he is carrying, but also a saving in so far as the officials are concerned. We shall be able to eliminate the double checking of stamps by the Receiver of Revenue and the Deeds Office. As far back as 1963 this step was considered by the Law Revision Commission of Rhodesia. It was put into operation in Rhodesia by legislation in 1964. According to my information the system is working very well in that country and I can see no reason why we, too, should not rationalize in this sphere.

Votes agreed to.

Revenue Vote No. 31, Loan Vote H and S.W.A. Vote No. 18.—“Planning and the Environment” and Revenue Vote No. 32. —“Statistics”:

I would like to say immediately that we are very unhappy about the arbitary manner in which the discussion of some of these Votes is rearranged. It is not merely a question of just talking about the particular portfolio; and I think one should draw attention to the fact, that in this particular case, we have to discuss this particular Vote in the absence of the departmental report. Where you are concerned with a back-room department, one whose activities are often not in the limelight, you find the departmental report an invaluable one. Of course, when the Vote is put into a new position and the sequence is changed as has happened now, we find that it puts us at a severe disadvantage. We find, also, that the activities of this department are often integrated with other departments, and more particularly with the Department of Economic Affairs. It makes it much easier for us to correlate these activities if the Votes are dealt with in the right sequence. Nevertheless, we understand that the hon. the Minister is going overseas and that is why it is necessary to make this rearrangement. It would, of course, be of interest to the Committee to get from the hon. the Minister some idea of where he is going to and what his objectives are with regard to his proposed visit. I think that that would be of great interest to all of us. Having said that, let me say, also, that we wish him well on his proposed journey. We hope that it will be fruitful.

In the absence of the relevant information that I have referred to, it is of course necessary for us to deal with this department in rather general terms. In the short period of time available to me, I will be able to refer to only two issues. To begin with, I want to draw attention again, as I have done before, to the organizational structure of this department. We are not at all happy about it. There appears to be a plenitude, almost a plethora, of committees. They have Cabinet committees, advisory bodies and decentralization and growth point agencies. We are not at all certain that the activities of all these committees are properly co-ordinated. It has been said before that, if you work on a committee system, you often run into difficulties. It has been said that if Moses had had a committee, the Israelites would still have been in Egypt. Be that as it may, there appears to be a host of committees. In many cases the composition, the members, are virtually the same and the assurances that we have had from the hon. the Minister in this regard have been of a very, very general nature.

This department has now been in existence quite some time. In recent years we have had considerable extensions to its charter and I think it would be appropriate —and I want to urge the hon. the Minister to do so—if he were to make available as soon as possible a White Paper on the activities of his department. I think it would be important to see once again what its main objectives are and what its organizational structure is. I think it would be very helpful to us in assessing the effectiveness of the department and the extent to which it meets its various commitments. I would certainly like the hon. the Minister and his department to consider the issuing of such a general White Paper on the activities of his particular department. In the short time available to me, I would like to concentrate on the issue of decentralization of industry, which is one of the main activities dealt with by this particular department. It will be recollected that we have very many reservations about the way the Government was tackling this particular problem. I want to say right at the outset that we are not opposed to decentralization per se and we believe that a very good case can be made out for the decentralization of industry on social, on economic, often on political and certainly on strategic grounds. But we have drawn attention all along to the fact that unless the economic climate is conducive to growth, this kind of decentralized activity will obviously not be successful. Recently a study in depth was done, and I want to commend it to the hon. the Minister; probably he has seen it. This study in depth was made by the Financial Mail and was issued on March 30th. I think this is a document that all of us should look at, because I believe it is the first authoritative study that has been done in depth. It deals in considerable detail with the whole issue of decentralization. They make quite clear in this report, having studied the situation in depth, what their findings are. The heading is “A Sorry Story,” and they say the following—

This is an immense indictment and I think the hon. the Minister should take every opportunity to refute this kind of conclusion if he is in a position to do so. They set out the reason right at the beginning—

This is of course the issue to which we have continually drawn attention. It is not only a question of bungling, but there has been absolute confusion in regard to the implementation of decentralization and related issues. I mention only one facet of it, namely the question of the utilization of labour. Here we seem to have gone through the complete spectrum. When the Physical Planning Act was introduced, it was quite clear what the general parameters were within which an industrialist could operate. Then certain concessions were made. Then we had the Riekert report, in which certain racial ratios were determined. Then the hon. the Minister of Finance came and made further concessions. Right at the moment, quite frankly, I do not know whether any of the industrialists really know what they can do and what they cannot do.

Now let us look at the objectives of this policy of decentralization. I think these are some of the important ones. Obviously a basic objective was to curb the inflow of non-White labour to the metropolitan areas. Here I think the results are terribly meagre. I put a question to the hon. the Minister of Planning only the other day and asked how many Blacks have in fact been held back as a result of the implementation of this provision. The answer was a figure somewhere in the vicinity of 62 000. This is over a number of years, and this is the official figure. I would like to suggest to the hon. the Minister that for every single one of these they held back, probably two or three others came into the metropolitan areas via the back door. It seems to me to be a very meagre result in relation to the massive bureaucratic system that has been built up.

A further objective of this policy is to reduce unemployment in the homelands. Once again it seems to me that the results are meagre. Recently Mr. Kotzenberg, the chairman of the Decentralization Board, was asked a question about this. He was asked whether in fact the unemployment figures were lower than they were before. His answer was: “Yes, but not significantly.” I think there is every indication that in this field, too, not much progress has been made. Clearly a third purpose was to establish jobs in the decentralized areas. Here again, from the information which is now available to us since this was introduced, some 85 000 additional jobs have been created. If we relate this to the norms established by Prof. Tomlinson, we should have had over 300 000 at this stage. It therefore means a 25% success figure and actually most of these jobs were created in areas like Rosslyn, which for all practical purposes are part of the White areas. [Time expired.]

Mr. Chairman, the hon. member for Hillbrow, if I heard him correctly, wanted to know at the beginning of his speech where the report of the department was. I do not know whether I heard the hon. member correctly. The report of the department was laid upon the Table and has been in our possession for some time. I simply cannot understand why the hon. member made this remark. However, we are greatly impressed by the publications of the department. Mention of these has also been made in the report, with special reference to the magazine Beplanning. We appreciate these means of communication of the department and as the report rightly said, it creates a forum for all sections and offers members of staff the opportunity to make contact with the outside world. I really cannot understand why the hon. member for Hillbrow raised this objection.

As I have said, we appreciate this means of communication, and in this connection I refer specifically to the magazine Beplanning, which we receive from time to time. In the third edition of the magazine Beplanning, editorial reference is made to the following (translation)—

With this we partly agree. I will furnish the reason for that. We endorse the idea that this department is not a super-department, but that it co-operates with all other Government Departments and acts as a coordinator. With that we agree. Of course we also endorse the new name, i.e. the Department of Planning and the Environment. But I think that we must also say at this stage that we trust that this department will continue and at a later stage will also be vested with legal powers as in the case of other Government Departments so that its functions may be more clearly defined. We will then know precisely what the scope of the functions of this department is. But since this is a new department, we do not want to act over-hastily in this connection, and we want to link this with the visit to be paid overseas in the near future by the hon. the Minister, in the confidence that he will investigate what is going on in other countries and then reform this department of ours, viewed against the background of South African conditions, to do what is best for our fatherland. We want to wish the hon. the Minister and his mission well on their journey abroad. We are grateful for the co-operation which already exists between this department and departments overseas, again with special reference, in particular, to the C.S.I.R. and their associations abroad for the present. We trust that this visit by the hon. the Minister will be very fruitful for our department in particular and for our country in general. We should also like to express in a few words our appreciation for the composition of the Scientific Advisory Board as it exists at present. We have always felt a board of 48 members was a little unwieldy, and while this board at present comprises only about 32 members, we believe, when we observe the bodies and persons involved here, that this board will be an instrument in the hands of this department which will be very fruitful for us. Sir, we are grateful that we now have this department at our disposal. We believe that this first step by the Minister to go overseas to see what is being done there and what degree of success has already been achieved, will be of great value to us in the future. Mr. Chairman, you will not take it amiss of me if I make use of this opportunity to express only thanks and appreciation towards the Department of Planning in respect of the establishment of Coloureds in the province of the Orange Free State. As you know, Sir, there is not a surplus of Coloureds in that province, but in that province we do have, in most of our little towns and in the city of Bloemfontein in particular, Coloured families which have been established there for years.

Where do they come from?

… families which have on occasion lived there in difficult circumstances. The reason for this was that the Department of Bantu Administration expected all Coloureds to have been removed from the Bantu townships by December, 1972. It seemed that this was attempting the impossible. We therefore want to express appreciation towards this department for making it possible for us that these Coloureds may remain there until such time as they can be properly accommodated elsewhere. We would like to record our appreciation for the sympathetic treatment we received from the Department of Planning in that province so that, in co-operation with members of the House of Assembly, local authorities, members of the Coloured Representative Council and all bodies and persons in that province, the resettlement of these Coloureds in these various towns may be brought about as smoothly as possible. This department works in such close co-operation with us that I know of no single instance where any of these bodies or persons concerned have experienced problems in this connection. We trust therefore that in the years ahead we will succeed along this path to establish in the Orange Free State those Coloureds, who are a small minority group, to the benefit of themselves and also to the benefit of the communities in which they are living at present.

I do not wish to follow the hon. member for Smithfield except to correct something in relation to the report which was mentioned by the hon. member for Hillbrow. The hon. member for Hillbrow was absent from this House for a couple of days when this report was laid on the Table and it did not come into his hands, but he is now fully aware that there was a report. Unfortunately he did not receive it.

Apropos of the hon. member for Hillbrow’s statement about the plurality of committees, I wish to quote to the hon. the Minister from the little pamphlet Beplanning, a marvellous little magazine with good quotations in it, but this particular quotation is that if Moses had been a committee, the Israelites would still have been in Egypt. Now, Sir, we want to get out of Egypt and get to Canaan very fast, and this Minister went on record some time ago as saying that he would make a plan. I want him particularly, not only as Minister of Planning but also as a representative of a constituency in the Border area, to consider making a big plan for the Border and for the Eastern Province. In this connection I again want to quote from this same little journal, and I hope he makes a plan of this nature—

That is the type of plan which comes out of the Minister’s own journal and which we would like to see him make for the Eastern Cape and the Border.

I want to begin with Port Elizabeth because I represent a constituency which starts in the Eastern Cape and extends to the Border right to East London. Unfortunately it does not include the Western Cape as well. We know that Port Elizabeth has been declared a preference area for Coloureds as far as labour is concerned, but I want the Minister seriously to consider reconsidering this situation. We have a situation in Port Elizabeth at the moment where there is full employment among the Coloureds and the need to expand industry in the Port Elizabeth-Uitenhage complex is immense. I say it is immense there and it is immense in the East London-Berlin area because in that whole Eastern Cape and the Border area we are sitting with a terrible problem in that our non-White population is growing faster than the job opportunities that can be created by industrial growth. I want to quote here from a document which was provided some time ago by the Chambers of Commerce of Port Elizabeth—

Sir, I appeal most strongly to the hon. the Minister to endeavour to eliminate this red tape and re-inject the incentive for growth in the Port Elizabeth-Uitenhage triangle by having another look at this labour issue and creating a parallel labour system there.

Then there is the East London-Berlin complex. It is very impressive. I was looking through the annual report of the Industrial Development Corporation the other day. When one looks at the maps which are produced for the East London area it seems very impressive on paper. But it is a long time ago, quite some years, since the concept of establishing the new industrial area on the Berlin Flats and extending the Collindale industrial area were brought into being. Sir, very little growth indeed has taken place. I want to ask the Minister whether he can inject growth there by eliminating some of the problems which exist. I believe that one of the great problems there can be eliminated by firm action on the part of the Minister and the Minister of Agriculture. This is where the Department of Planning is in such an advantageous position because this Minister can act with many other departments. The problem is the threat that East London may be taken away as a wool port. The wool industry means a great deal to East London. It may not be as large as the industry in Port Elizabeth or in other places but it is an essential economic factor which plays a large role in East London. I want to appeal to the Minister to work with his colleague, the Minister of Agriculture, to prevent this happening and to make it very clear. The city council of East London recently sent a telegram, on the 30th March, to the Minister of Agriculture in this connection because there was a new scare going on, and this type of scare must be eliminated, if growth is to take place. Not only was the city council of East London upset by the Belgium wool mission not visiting East London, but so was the whole wool industry and the whole of commerce and industry in East London. To outsiders who wish to establish or to people who are established and wish to expand any type of industry, it is a severe setback when a large concern like this is affected. It also affects the morale of a city and of the industrial and commercial people in that city.

The hon. the Minister should act very strongly in co-operation with the hon. the Minister of Transport in this connection in an endeavour to plan the harbour of East London to a commensurate size with the planned industrial area that may grow in the King William’s Town/Berlin/ East London complex. I believe that although that harbour is not working to full capacity at the present time, if that complex expands to its fullest extent, as we sincerely hope it will, that harbour will have to be extended. I believe the planning of that should be done now in co-operation with the hon. the Minister of Transport. The distance to the main internal market, the Witwatersrand, should also be looked at. The matter of finding faster and cheaper transport should be looked at very carefully even if it means heavy subsidization, because here, I believe, the flashpoint of racial conflict in South Africa can occur if we do not get the industries and the jobs to absorb the population of the Ciskei and the Transkei. I think there should be a great deal of liaison with the local authorities and with the hon. the Minister of Finance in order to endeavour to provide the serviced industrial sites as cheaply as possible to industry. Perhaps they may even have to be given free to industry in order to get the people there. I believe that at the moment there are only three new industries on the Berlin Flats after all these years.

We must grow in the Border area and the Eastern Cape. I believe this hon. Minister thinks in the same direction. I am appealing to him to announce a big plan for the Border, but particularly in the immediate future even if he can do it in this debate. I want him to say it publicly, strongly, loudly and clearly that over his dead body will East London be closed as a wool port. At the moment that issue is causing one of the gravest matters of concern to East Londoners and the East London industry and commerce as a whole. This is absolutely essential and I sincerely hope the hon. the Minister will do it in this debate.

I should also appreciate it if he could provide for water in the future, by consultation with the hon. the Minister of Water Affairs and the hon. the Minister of Bantu Administration and Development because the next river to be developed is the Keiskamma River and that is right inside the Ciskei. This must be planned a long way ahead so that the catchment areas can be protected by the Ciskeian Government who has the authority to do that and not this Government. It will therefore have to be in consultation with the hon. the Minister of Water Affairs and the hon. the Minister of Bantu Administration and Development and the Ciskeian Government. However, that water will be essential in order to develop future industries in the whole area.

Mr. Chairman, I rise in order that I may, in the short time at my disposal, make a few remarks and put a few questions to the hon. the Minister in connection with the direct participation of the Department of Planning in the planning of the present Saldanha complex. After the announcement by the Government with regard to the Sishen-Saldanha complex I found it remarkable that an announcement was made by the Department of Planning regarding the appointment of an overall co-ordinating committee which would undertake the overall planning of these two complexes, the one at Sishen and the other at Saldanha. The committee concerned would serve directly under the Prime Minister’s Planning Advisory Council. On behalf of the community concerned I would like to express our gratitude to the hon. the Minister and his department for appointing this overall committee so soon after the announcement. The fact is that we have an opportunity here, under leadership of the Department of Planning, to come forward with planning of the highest order as far as these two complexes are concerned. The fact is that construction of this railway line will take a number of years and in my humble opinion this gives the Department of Planning the opportunity to create a new environment of the highest order by means of thorough advance planning. I have said on a previous occasion that there are two outstanding examples in this part of the world of a lack of planning in the past. The one is the refinery here at Milnerton and the other is the De Beers complex near the Strand. These two are examples of poor planning or a total lack of planning in the past. Here we really have an opportunity to create an environment of the highest order. I want to express the hope that the Department of Planning will proceed in this case and provide the proper co-ordination by combining various interested bodies to enable us to create an environment of the highest order. Therefore I want to thank the hon. the Minister for the appointment of this planning council which is going to undertake the overall planning. If my assumption is correct, a guide plan committee will be born from this. The guide plan committee will nay more attention to the detail of this situation. I would just like to tell the hon. the Minister that there is confusion at present in this particular part of the world concerning the composition of this guide plan committee and who will really be represented on it. I am really rising to ask the hon. the Minister what the detailed composition of this guide plan committee is. What bodies are represented on the committee and how soon will the committee be doing its detailed planning? For example. I want to mention a few of the aspects. Firstly there is, for example, the marine industry. In this particular part of the world it is true that the economy of that region has in the past been built on the marine industry with all its various facets, the white fish industry, the fish processing industry and the rock lobster industry. This operation which is going to take place here will have an influence on this important basic industry which formed the basis of the economy of this region in the past. Now I would like to know from the hon. the Minister whether the marine industry in its various facets is represented on this guide plan committee and who is representing it there. In the first instance there is Fishcor and the work which it has done. Secondly there are the sea fisheries and thirdly the organization of the fish industry itself. These people have an interest in the future of this region and I would like to know from the hon. the Minister whether the marine industry, as far as these three arms are concerned, will be represented on this guide plan committee.

Secondly there is the local development association. In our planning structure of today, progressively more weight is given to the power and the real co-ordinating power of the regional development associations. It is the regional development associations which link this region together, coordinate the interested parties and link the interests of the towns at a certain point. I am aware of the importance which the department, for example, attaches to regional development associations. I am reminded in passing of the last meeting at Saldanha itself, where a new basis and new impetus was given to the unfolding of development associations within the organizational structure of the Department of Planning. Now I would like to know from the hon. the Minister whether these development associations at the various points are represented on the guide plan committee.

Our arguments in the region concerned were that we would have to stimulate growth in this region from outside. One of the basic arguments we used, was that we should supply employment to the Brown people of the particular region or, seen more broadly, of the Boland. I take it that in this region provision will very soon be made for the nucleus of the development or unfolding of a large independent Coloured community. In other words, the dual pattern, the dual town system, in this region. This is a fact which to my way of thinking must be investigated at a very early stage. I would like to know from the hon. the Minister whether this idea of developing a dual pattern between White and Brown, is represented on this guide plan committee and who or which bodies or persons are really representing this idea.

Then there is the question of nature conservation. In this region the Langebaan lagoon is situate, and there are various bird islands such as Schaapen Island, Meeuwen Island and others. These islands are a very important natural asset of this region. At this stage there is still some uncertainty in this particular region whether or not naturalists are represented on this guide plan committee. There is a jealous love towards certain elements of nature which are a great asset in this region, and there is some concern whether this view is represented on the guide plan committee. If this is in fact the case, who represents this view?

Another aspect concerns the Department of Water Affairs. The Minister of Water Affairs announced a water plan for the Boland. He determined priorities in the development of that water plan for the Boland. The Minister of Water Affairs, however, suggested at that time that new priorities would from time to time have to be considered in respect of the list of priorities in the development of the Boland water system. In my humble opinion this situation as it is going to develop now, will set new requirements for the development of the Boland water scheme. To be specific, we must in the future provide in advance for the provision of water in this region, and we must do so within the very near future. I would like to know from the Minister whether this view is represented in the guide plan committee and whether the Department of Water Affairs is represented there when it comes to the development of this pattern.

Then, lastly, I have yet another question: In connection with the Boland system we are dealing with a line of development which is really developing from the Cape metropolis up along the West Coast. There are other points along this line of development, such as beach-front development and the Mamre-Darling situation. In other words, the growth or momentum which is being born here is really not just limited to the Saldanha situation. It extends far wider. It really runs along a line of development from Cape Town in the direction of Saldanha. The question posed by the inhabitants of this particular region, is whether it has not become essential, within this framework of planning issuing from the Department of Planning, for detailed planning to be undertaken, not only of the Saldanha complex but of the whole line of development as it is developing from Cape Town towards Saldanha. These are very important questions about which confusion exists, and in many instances a lack of clarity, among the inhabitants of this region at this stage. I would appreciate it if the hon. the Minister were to furnish answers to these questions and give us an idea of how his planning machinery will be applied in future and how soon there will be a final overall planning on the part of the department in this connection.

Mr. Chairman, I find myself at no odds whatsoever with my hon. friend, the hon. member for Moorreesburg, and I want with all the strength that I can command reinforce his plea for adequate planning in the Saldanha area. It has been said that nothing is constant except change itself and in the tremendous changes that will now take place because of the Sishen-Saldanha project we will unfortunately lose much of the charm, much of the heritage of what has been described as one of the most perfect natural harbours along our South African coastline. We have seen from the planning to date that there will be a tremendous project there and that tremendous changes will take place particularly affecting the Saldanha village area. But I want to make the point that the whole lagoon covers a vast area and just as we will now have a busy and active harbour, so thanks to nature we still can with adequate planning make provision for the protection and the replanning of the remainder of the lagoon itself. The Langebaan lagoon is completely unique. I would merely refer in brief terms to a letter to the editor of The Cape Times in which someone wrote as follows:

Not only has the village of Langebaan this atmosphere, which in any other civilized country of the world would be preserved as a natural heritage and a great tourist asset, but the entire coast-line from Langebaan up to the farm at the headland, Geelbek Farm, has this character. On the way one passes Lord Charles Somerset’s watering farm. We have something in that area that one can only compare with the best.

The whales come into calf, the sea-birds have their resting places there, it is a natural habitat for many kinds of fish and a crayfish sanctuary. In addition it is visited by yachtsmen sailing both small boats and deep-sea boats. It is visited by water skiers, it is visited by water surfers and it is visited by farmers. I would say that it is completely incomparable in relation to any other area of its kind in the country. With the tremendous advancement in planning that will take place in the industrial sense at Saldanha, the ripple effect for Langebaan will be that it will become an offshoot suburb of Saldanha. With adequate planning one can do much to preserve the natural scenic beauty of the area itself. One will have to make quite certain that the one threat to the Langebaan lagoon, namely the salt-pan project which comes up from time to time, does not materialize, that it will be critically examined and hopefully shelved for all time. One cannot afford to have industrialization on both sides of the lagoon. One has seen in many parts of Europe what can be done with an area of this type. I quote from a newspaper what was done with a seaside area in the south of France. They show two pictures, the one shows how overseas the massive swing to boating as a recreation has stimulated coastal property development. In 1965 in this area R100 million was spent. They show another picture with the sort of development that is taking place there today where an additional R39 million was spent. I know that most people who live in the Western Cape don’t regard Saldanha and Langebaan as merely the domain of the hon. member for Moorreesburg. Saldanha belongs to the whole of the Cape and is very dear to the hearts of all of us. I would therefore ask, if at all possible, that those persons who have the greatest interests in Saldanha and in Langebaan be brought into consultation and that the hon. the Minister should take the trouble to fly groups of persons up to the military airport at Langebaan Road and then take them down to the Langebaan coast and let them have a real, genuine and sincere influence on the preservation of that area as it is, making allowances for certain improvements that will have to take place. This will give the tourist groups, the sailing groups, the camping groups, the farming groups and the nature reservationists, an opportunity to have their say. Because of the tidal waters—and one has to know Langebaan in order to be au fait with these tidal waters—any oil spillage emanating from the large tankers and oil carriers tying up in Saldanha Bay, will float on the tide and be taken some seven or eight miles to the head of the lagoon. Once it is there, it will be very difficult to remove. One can only see these two conflicting projects as exciting projects for South Africa. We cannot deny the vision of the hon. the Minister of Economic Affairs and his team which brought to culmination the Sishen-Saldanha project. At the same time it is too high a price for South Africa to pay if we are going to allow the industrial project that we have at Saldanha to destroy the other priceless tourist asset and nature reservation area that we have in this Langebaan lagoon. I do hope that the hon. the Minister will visit the area himself and take with him those persons who have a sincere interest in it so that we can while there is still time, plan for the fact that in two to three years this area will be only three-quarters of an hour’s distance from the city. We will have a major industrial enterprise at the one end of Saldanha Bay. But let us weigh the scales fairly. What we take away from the fishermen, the fishing industry, the yachting industry, the boating industry and the tourist industry at Saldanha, let us preserve and restore when we plan particularly the Langebaan area of the lagoon so as to make the most of what can be achieved, namely a tourist area completely unique and comparable with the best that can be found even in the Greek Islands.

Mr. Chairman, since the hon. member for Moorreesburg and the hon. member for Cape Town Gardens have referred to Saldanha Bay, I should like to shift the focus to the other point in the Sishen-Saldanha project. I would like to associate myself with the thanks expressed by the hon. member for Moorreesburg to the Government and the Department of Planning for having appointed a planning advisory council to co-ordinate the overall planning of this Sishen-Saldanha project. I should also like to thank the hon. member for Moorreesburg for certain questions which he has put with regard to the guide plan committee. It is therefore not necessary for me to put those same questions to the Minister. Iscor has already completed its planning of the railway line between Saldanha Bay and Sishen. Tenders for the implementation of that planning have already been allocated. Since the tremendous development which is at present being effected by Iscor at Sishen will have far-reaching consequences and also presents tremendous possibilities with a view to future planning, with regard also to the region in which this area is situated, I should like to address a plea today to the hon. the Minister also to appoint a guide plan committee as soon as possible in order to investigate and submit a guide plan for future planning for the region comprising Kuruman, Hotazel, Sishen, Olifantshoek, Postmasburg and Danielskuil. Sir, I am addressing this plea to the hon. the Minister because the richest iron ore, manganese, lime, asbestos and diamond deposits in South Africa are situated in this region. I am addressing this plea because this region adjoins the Tswana homeland, and I am addressing this plea because this region has all the elements such as raw materials, labour, water, and transport facilities which make large-scale development for the future possible. I trust that if the hon. the Minister should find it possible to appoint such a guide plan committee for this region, he would, as advocated by the hon. member for Moorreesburg, also see fit to appoint local people to this committee and in so doing use their knowledge for the establishment of a guide plan for this region. Sir, the Secretary of Planning, Dr. Rautenbach, said two years ago at a joint regional congress of development associations at Sishen that the population of South Africa will double over the next 24 years; in other words, by the year 1995 the population of South Africa will consist of approximately 42 million people. At present the greatest percentage of the population of South Africa lives and works in about eight primary areas, viz. the Witwatersrand, Pretoria, Cape Town, Port Elizabeth, Durban, East London, Bloemfontein and Kimberley. In these primary areas, Sir, problems are already being experienced with a demand for space for schools, accommodation and recreation facilities because land is very expensive. Problems are already being experienced with transport as a result of large numbers of vehicles which must make use of roads and streets; parking problems are being experienced. They are experiencing problems with pollution; and from a strategic point of view as well I believe that it makes South Africa vulnerable to concentrate its people in such a small number of areas. Therefore, provision will also have to be made in the advanced planning for the decentralization of our population mass. Places which comply with the necessary requirements will have to be demarcated at this early stage in order to be indicated as growth points to carry the increasing population of South Africa in the future. A Greater Cape Town or a Greater Johannesburg will also bring about the demands of a Greater Langa or a Greater Soweto with all its social and political problems. Sir, this region, concerning which I am pleading for the establishment of a guide plan, lends itself perfectly to the establishment of such a growth point. Here a large part of the future White population of South Africa can establish itself in a White heartland; here a large part of the future Tswana population can establish itself in its own country, and here the Whites and the Tswana can complement one another as neighbours, adjoining one another, each living in his own country, by labour, acumen, etc. Sir, the largest percentage of industries and opportunities are today concentrated in and around our great urban areas, and this attracts the Bantu there in large number. The policy of the Government is to keep the Bantu peoples tied to their homelands; to keep them in their homelands as far as possible, and through the establishment of border industrial areas the Government has already succeeded in stemming the influx of Bantu into the urban areas. Sir, by means of meaningful planning the basis may at this early stage be laid in this region for the establishment of a White settlement area where the necessary growth points may be created, where the Tswana can sell their labour on a daily or a weekly basis and live in their own country with their own families in their own homes. And the Tswana can spend the money which they earn here in their own country and in so doing can also make the country economically viable. Mr. Chairman, almost all our great cities have arisen at natural harbours or in rich mineral bearing regions. The hon. member for Moorreesburg as well as the hon. member for Gardens have let their thoughts range over what they see at Saldanha Bay and I believe that a great harbour city will develop there. In this region, as has already been mentioned, lies South Africa’s and in some respects the world’s richest mineral deposits, namely manganese, iron ore, asbestos, lime and diamonds, in other words, the raw mate-rails which are such an essential element for development. In this region they are available in abundance. At present the raw materials transported from this region to be processed elsewhere constitute 10% of the total tonnage transported by the S.A. Railways. The quantity of ore transported from this region will increase within the next ten years by at least 30 million tons per annum. Water, which is another essential element, is already available from the Vaal/Kommagarra water scheme, which will bring at least 30 000 cubic metres of water per day to these regions from the Vaal River. At Kuruman, which borders on the Tswana homeland, there is the Kuruman dam which provides 4,5 million gallons of water per day, of which ,5 million gallons are at present being used by the municipality. As has already been mentioned the adjoining and nearby Bophuthatswana area can supply this region with labour. Escom power is available almost everywhere in this region. This region was once regarded as a remote region, today, with modern transport and communications, it is no longer remote. Within two years a network of tarred roads will have been completed, which will link this region with every other region in South Africa and South-West Africa. This region also has a rail link via Kimberley with all the great centres in South Africa. The Sishen-Saldanha railway line which is going to be built brings this region much nearer to the sea. The Sishen-Saldanha project also gives new meaning to the development possibilities in this area. To this fine project is also linked the idea of Iscor and Voest to refine ores to semi’s. Besides coal, this area already has all the elements necessary for the refinement or preprocessing of ores. Since this region supplies Newcastle with iron ore, coal may therefore be brought back from Newcastle to this region in the empty trucks. Thus this area, even at this early stage, offers itself as the most ideal place for the establishment of the fourth Iscor. It can serve as a starting place for the development of this region which, as I have said, can become the place of settlement for the future White population, or a large part of it, adjoining the Tswana homeland which can provide this area with labour, and in this way earn money and so become more viable too.

The last two speakers have dealt with the economic aspects of the Minister’s department. I would like to deal with the aspects of the Department of Planning which affect the human beings of South Africa, the ordinary flesh and blood of people. This naturally presupposes that I will devote my speech to group areas and I want to tell the hon. the Minister that experience in this House has taught me and many others that the delays in the planning and the proclamation of group areas is something which can no longer be tolerated. Many group areas have been in the process of being planned or proclaimed for numbers of years, and if the hon. the Minister would only cast his mind to the effect that this delay in planning and proclamation of group areas is having on the people concerned, he would realize the tremendous uncertainty that exists among the hundreds of thousands of South Africans who are affected. But, furthermore, I would like to say to the Minister that there is a great deal of lack of planning in the establishment of group areas. I am convinced in my own mind that this lack of real planning will only be solved if the hon. the Minister would agree to take into the Group Areas Development Board members of the various race groups affected. I do not believe that in the South Africa which is just beginning to emerge, one single race group can or should have the power to legislate on matters like group areas without the other races that are affected being represented on the board which sits to decide their destiny. Without this, what has happened in the past has brought about a great deal of bitterness and a worsening of race relations in South Africa. We have listened to the hon. the Prime Minister time and time again, saying how concerned he is about race relations, and I want to assure this House that the thing which destroys race relations in South Africa quicker than anything else is bad planning as far as group areas are concerned. There is a natural resistance to group areas, but when they are planned badly that natural resistance amounts to frustration and bitterness. [Interjection.] If the hon. member on the other side does not understand it, or does not believe it, I say that he has no experience of the matter at all. He should go and talk to the people who have been dislocated, who have been moved from their homes. I shall now give you evidence of the sort of thing that I mean. A number of years ago in the city of Cape Town, right near to us District Six was proclaimed an area for Whites. Thousands upon thousands of coloured people were displaced as a result. I would suggest to the hon. the Minister that if he wants to turn the clock back on the feeling of frustration and bitterness that exists in the Coloured community today, he could do no better—in fact, he would build a monument to himself and his department —than to return District Six to the Coloureds to whom it rightly belongs.

How many of them were there before 1906?

Oh, belt up! I have no time to deal with the delaying remarks by people who do not understand what I am saying. I am saying to the hon. the Minister—I have a great deal of respect for this hon. Minister and the treatment which I have had from his department has always been first class—that if his Government ever hopes to break through in the field of race relations and to create better race relations, then they will have to make real gestures and they have not made them in the past. The finest gesture they could make to the Coloured people in particular, because District Six is recognized right throughout South Africa as a symbol, would be to return it to the Coloureds. It is not too late to do so because the White people have not moved into District Six and the damage has not been done. He could therefore reproclaim District Six and a tremendous feeling of goodwill will emanate there from. I should like to warn the hon. the Minister that his Government and any Government in South Africa can come with high philosophical plans and policies but none of these will be accepted and none of them will work unless we at long last start to show the goodwill on the part of the White man. At the moment you can discuss this matter with any non-White, particularly Coloured and Indian people, throughout the length and breadth of South Africa and the answer in respect of group areas, population registration and the Department of Planning is that the White man has exercised his greed, because it always seems that the non-Whites get the areas which nobody else wants. I am not making this appeal emotionally, but what I say is for the good of South Africa and for the hon. member who made some insane remarks. It will be for the good of South Africa and it will be the finest thing that could have been done to restore good race relations if District Six were to be returned to the Coloured people. This will be a greater contribution towards better race relations than anything that ever has been done.

You do not even know the history of District Six, and yet you discuss it.

If it comes to the allocation of land, let me point out to the hon. member who comes from Natal and who should know better …

Where do you come from—from England?

… that areas have been proclaimed for the different race groups throughout South Africa. They have been planned on a map, but when one actually investigates many areas demarcated for non-White occupation you will realize that it is impossible to build on it, it is impossible to make any use of it. Hon. members on my side will agree with me that when you go to such an area, after you have looked at a map and noticed where an Indian area, for example, is situated, you will find that that is the case. In the city of Durban there is a very large area in respect of which the city engineer has told the Indian community that they will not be allowed to build on that land for another 18 years because of the conditions of the soil, etc., etc. It is no good making plans and drawing rings on maps and saying that this particular race group can go there and another race group can go somewhere else. As I say, the worst area is always demarcated for non-White occupation. It is not only the worst area, but if the hon. the Minister would look more closely at some of these areas, he would find that they are, in fact, absolutely useless. Therefore, I hope that when planning is taking place consideration is given to the actual area that is involved. It might be interesting for the House to know that here in Cape Town the Coloured population accounts for 60% of the total population; yet it has been allocated 21 % of the land.

Oh, you are dragging in that stupid story again.

In the province of Natal the Indian population of Durban accounts for 51% of the population and has been allocated 31% of the land. If the hon. member thinks that is fair, I should like to know what is unfair. Also the shortage of land which has been artificially created by the Government and by local authorities can be rectified by this hon. Minister insisting that these people release the land that they hold.

In the time available to me, I want to deal with another matter—the question that I have raised with this hon. Minister for longer than I now care to remember. I refer to the question of the release of Grey Street. I hope the hon. the Minister is going to tell me, when he answers to this debate, what is holding up the proclamation of the Grey Street complex in Durban. I understand that there have been certain objections. I would like to know who is objecting and what the objections are so that one can try to deal with them. It is unfair for an area as vast as this, an area upon which the Indian population of Natal depends to such a great extent economically, to be held in abeyance and frozen for over 12 years. If the hon. the Minister would only make the proclamation enabling the Indians to develop the Grey Street complex of Durban he would find that economically the Indian community would be uplifted and that the buildings which are now dillapidated through no fault of the present owners, would be attended to. I say to the hon. the Minister that this is something which he has promised for two or three years and, quite frankly, I believe that the time has come that he should fulfil that promise. If he has difficulties I would like to know what they are.

I would like to ask the hon. the Minister what is happening too in the Newcastle area. Newcastle is another area which is drifting along year after year. The hon. member for Newcastle should be able to tell us something about this, but all I want to say to the hon. the Minister in closing is that when the reproclamation of Newcastle is finally made, I hope that he takes cognisance of the views of the residents of every colour in Newcastle that they wish the Indians to stay where they are. When the proclamation is made I would like to assure the hon. the Minister that I will study it very closely to see how certain organizations who have bought options during the past few years stand to benefit.

Mr. Chairman, allow me, at the outset of my speech, to convey my congratulations to the Minister of Planning and his department. I have been struck in the short time this debate has been in progress, by the fact that we have been listening to everything except criticism. When criticism was eventually expressed after a compliment from the hon. member for Port Natal, it was criticism about District Six. What irony that an hon. member from Natal should come here and talk about District Six! What irony that he should come here and talk on a subject about which he knows nothing! Because it is very clear that he knows nothing about it. I challenge him to go and ask any Coloured—that is, if he will understand them—how they feel about the move. We know what conditions were like in District Six. Conditions were critical and conditions prevailed there which were disgraceful for any city. I think that Cape Town is grateful and that it will always remain grateful to the hon. the Minister and his department for the fact that they have cleaned up that breeding ground of evil and that more civilized conditions prevail there now.

There is another important matter which I should like to discuss and for that reason I leave the hon. member for Port Natal at that.

I want to plead for an area in the North-West where there are certain things which we must perpectuate and cause to grow. The first thing which there must be is a meaningful and harmonious co-existence between White and Brown. One can never discuss Namaqualand and then discuss one group only, because the two groups live alongside each other there, because they help each other to make a living and because they are interdependent of each other. It is true that if I am to discuss the Coloureds together with the Whites today, I would not get far in the few minutes at my disposal. For that reason I shall discuss the Coloured aspect of the matter under the Vote “Coloured Relations”. Today I want to confine myself exclusively to the White population of Namaqualand. I should like to say, however, that those two groups of people, while separated from each other, still live alongside each other. Those two groups of people in Namaqualand offer an example of co-existence in South Africa. When we consider that area, we must bear in mind that far more Coloureds than Whites live in the rural areas. I also want to plead—and I am very proud to be able to do this—that since this is a constituency which has made a large contribution to the Treasury for many years, some of that revenue should now be ploughed back into it. I think that that would be good business, no more and no less. We are not coming along with the usual request, “Give back what we have given;” we only ask for part of the yield to be ploughed back in order that that contribution to the Treasury may eventually be doubled, tripled and quadrupled. I think that it would be an excellent investment to plough back for a time a large part of the revenue from Namaqualand.

When we discuss that area, one is inclined to think that it is a very sparsely populated area. I want to say at once that it is true that I have the largest constituency in the country while I only have 8 000 or 9 000 voters there. But if I tell you that more than half of the White voters of Namaqualand live in the towns of Springbok, Nababiep, Karoolsberg and O’Kiep, which have a total diameter of 15 km and a width of barely 3 km, you will realize that this is a densely populated area with a very great potential. If I then add that around that small densely populated complex there is a rural Colouerd area of more than 1¼ million morgen where the Coloured is developing according to the pattern we want them to develop in South Africa in the future, I think that I have put my case when I ask the hon. the Minister to take an interest in that area and to be a little helpful towards that area. I may just mention that the development of that area has grown tremendously in the past decade since the completion of the national road running from south to north. The growth of Springbok has been phenomenal. If we consider that here we are dealing with an area which has four primary schools for Whites and two high schools for Whites—and all big schools—and that besides that we are planning for a technical school, the hon. the Minister will realize that here we are dealing with a community which is full of vitality and growth.

I should like to mention that I held a conference recently with the industrialists of Namaqualand at which we discussed the problems of growth, the bottlenecks in our constituency which prevent Namaqualand from making its maximum contribution to the finances of the Republic. Certain things became apparent from those discussions and these I should like to bring to the attention of the hon. the Minister. The first absolute requirement which was mentioned for growth, was, of course, transport—viz. road transport and rail transport. Particularly since Namaqualand has only one tarred road, namely the fine national road of a high standard which runs from south to north throughout Namaqualand to South-West Africa, it is absolutely imperative for this area to get a tarred road from east to west as well. In other words, it has become clear that the east-west connection must be improved.

I am glad to be able to say that the Minister of Transport is very sympathetic towards our pleas for that area and I trust that he will also bring it to the attention of the hon. the Minister that this is not a matter which can wait, but that it is a question of absolute urgency that those transport facilities which are an absolute requirement and the beginning of everything, should come at once. In discussing the bottlenecks at the conference, we also arrived at a second serious matter concerning Namaqualand, namely the question of water. The Department of Water Affairs is now laying on a water scheme for the mining towns and for Springbok which will also serve the Coloured rural areas Steinkopf and Concordia. That scheme will cost approximately R11 million. But right around that area we are sitting with an agricultural region where the water level is dropping to 300, 600 and even 800 feet. There are certain boreholes from which the subterranean water has disappeared altogether.

I think it has become high time—and I I am sure that we shall get this from the Minister of Water Affairs too—that very serious consideration be given to some scheme for supplementing the agricultural water and the industrial water, except for that region in which it is being supplemented now. While we were discussing matters there, we also realized that the economic supply of power had become a tremendous problem. It will be realized that in Namaqualand with its expensive transport every town and mine still generates its own power. In Namaqualand the most economic power remains that which is generated by means of coal. At Bitterfontein coal costs about half of what it costs in the mining towns, but coal is nevertheless still used for the generation of power. The need to have power in Namaqualand as soon as possible, will therefore be realized. [Time expired.]

Mr. Chairman, the hon. member for Namaqualand raised a few interesting ideas with regard to his own constituency, but since my time is limited and since I want to move in a different direction, I do not want to follow up what he said.

†When the late Dr. Dönges, then Minister of the Interior, introduced the Group Areas Bill he stated that the Act would be applied with justice and fairness to all race groups in South Africa. The late Dr. Dönges went further and said that unless a measure was applied with justice and fairness it had no possibility of succeeding. I wonder if the late Dr. Dönges were alive today and he could talk to the 50 000-odd Indians in Johannesburg who are being forced whether they want to or not, to live in a group area called Lenasia, whether he would feel that the Act was being fairly applied. I say this advisedly because we know that the Government unfortunately has adopted a very rigid and uncompromising attitude towards the question of Lenasia and I do not know why. We find that in February, 1967, the Ministers of Community Development, Indian Affairs and Planning issued a statement in which they said this—

I mention this because these three Ministers have come and gone. We now have a new Minister, a Minister who I believe is a very compassionate person, and I mean this quite sincerely. I hope sincerely that he has an open mind in regard to the whole question of Lenasia. I am going to give reasons for this. There is no doubt about it that the Indians in Johannesburg, I think, justifiably feel that they are severely discriminated against. Why must the Indians who have always been very loyal people and who have made their contribution in industry and commerce to the life of South Africa as a whole, be singled out and told that they have to live in one particular area?

We know for instance, Mr. Chairman, that we have 60 000 Coloureds in Johannesburg. These Coloureds have eight different group areas to live in. We know that the 800 000-odd Bantu in Johannesburg have at least six group areas to live in. If we go a bit further to Durban where approximately 50% of the South African Indian population is concentrated, you find that they have 12 different group areas to live in. Coming a bit closer to Johannesburg, we find that Pietermaritzburg with an Indian population almost similar to that of Johannesburg, has a variety of group areas. These areas are all situated very close to the places where these people work. Why this hide-bound dogmatic approach to the question of a further group area for the Indians in Johannesburg? I do not intend raising the question of land and housing as such. But I want to say to the hon. the Minister that the Indians feel very strongly indeed that because of the fact that there is only one group area for them they are being exploited in Lenasia. I have complaints from Indians living there and whom I have spoken to. There is no doubt that, because of the fact that they have no other choice, they have at times to pay exorbitant prices for land and for housing. I want to say again to the hon. the Minister that I do not at this stage intend going fully into the question of housing and land. I will do that under another Vote. But I want to make an appeal to him. I know what the policy is. But we are living in an adaptive society and not a traditional society. Now, if you live in an adaptive society there must be a great deal of flexibility both in attitude and approach. I want to say to the hon. the Minister that he should as a new Minister have another look at the whole question of Lenasia. Let us make no mistake about this. I have been to Lenasia. There is no doubt that the conditions there in some areas are too shocking for words. At times when it has been raining people virtually have to wade through spaces of water to get to their cars and buses. The area as such is not a satisfactory area. I am told that it sometimes takes 7½ years after having been on a waiting-list to get a house in Lenasia. When they do get that house they find that the conditions under which they must live are entirely unsatisfactory. I must admit that there are areas in Lenasia where there is a decent type of housing. In the main, however, housing for the ordinary middle-class Indian is entirely unsatisfactory. This is the biggest grouse of the Indians who have to live in Lenasia. They have absolutely no choice whereas all the other ethnic groups in South Africa have a choice as to where they want to live. The Indians are told that they have to live in Lenasia and nowhere else. I feel that in the age we are living in this should not be allowed.

Business interrupted in accordance with Standing Order No. 23.

House Resumed:

Progress reported and leave granted to sit again.