Mr. Speaker, in the debate on the Nusas report on Friday I used the words “despicable act”. These were in fact meant in an impersonal sense, in respect of a group of people in fact, but after having read my speech, it appears that they could perhaps have referred specifically to the hon. member for Yeoville. With this I should therefore like to withdraw those words “despicable act”.

Mr. Speaker, I accept that withdrawal in the spirit in which it was made.

Mr. Speaker, when the hon. the Minister of Finance introduced the Budget, he referred to a number of fables and I should like to commence today by referring to the definition of “fable”, as it is not inappropriate to this particular Budget. The Shorter Oxford Dictionary refers to a fable as a “narrative or statement not founded on fact, a myth or legend, a foolish story”. May I remind the hon. the Minister, who is well versed in the classics, of the warning that was given in respect of the itinerant tellers of fables in the 12th century, and I refer here to one particular gentleman called Trouvez. When he came around people said, “Beware of this teller of fables, beware if you are a maiden fair, a comely wife or an innocent young man.” It is in that spirit, Sir, of an innocent young man that I approach the words of the hon. the Minister on this occasion and the subject of the Budget which he delivered.

There are many troubles in the world around us today. We see a recessionary and even a depressionary tendency, we see currency problems, and those who have advocated that the only way to solve inflation is to have a depression with unemployment, find that this type of formula in Europe is no longer politically or socially acceptable and I believe it is neither politically nor socially acceptable in South Africa. We also had the old economists who believed that recession and inflation could not go together, and yet today, in the jargon of economics, stagflation has become an accepted term. We should also be concerned at the situation which exists in Great Britain, because Great Britain is a major trading partner of this country, and the reduction of trade between the Republic of South Africa and Britain not only affects us economically but has, in fact, serious political implications as well. When one speaks to people overseas who are not sympathetic to our cause, they will tell you that trade with countries in the rest of Africa is bigger than trade with South Africa and that the relationship with countries such as Nigeria, is becoming more important in some circles than the relationship with South Africa because Nigeria has oil.

The Organization for Economic Cooperation and Development has forecast inflation rates of over 20% this year for Japan and Italy, 18½% for Britain and 16% for France. The forecast for the world trade for the current year is by no means optimistic, as world trade is expected to rise by a maximum of 2% during the year, with a minimum price rise of 9%. There are other worrying features in Europe and this concerns the banking centres. We have had the example of the collapse of the Fringe banks in the U.K., we have had the collapse of two banks in Germany, also the collapse of American financial institutions and we have had very serious foreign exchange losses suffered by banks whose expertise in the past we have regarded with some degree of awe. Then there is serious concern about the whole structure and stability of the Euro currency market at the moment. In my maiden speech I referred to the movement of short-term Arab money which is becoming a political and not only an economical factor in Europe.

While we are talking about banks, it is appropriate I think to mention that the attitude of the World Council of Churches in trying to interfere with the commercial activities of banks overseas in their relationships with South Africa, is one which can only be deprecated by all right-thinking people, not only in this House but also elsewhere. It might be a good thing to remind the financial world and the World Council of Churches that South Africa amongst all nations is able to boast of a record of always meeting its obligations and honouring its commitments. This, after all, is what matters in the financial world; this is what counts when you borrow money.

In all this, Mr. Speaker, South Africa is in a strong position, and if we look back on the last year I think we can count ourselves fortunate in six particular respects. Firstly, we were fortunate in that, as far as our energy requirements are concerned, we have had to rely on oil to a lesser extent than other industrial countries. Secondly, we are fortunate in that we have alternative sources of energy in our country. Thirdly, I think we were fortunate in that we were able to get oil despite the boycott that was announced. Fourthly, we were fortunate in that at a time of world currency uncertainties the gold price rose to a very high level. Fifthly, Sir, we were fortunate in that at the right time commodity prices in fact rose, although at the present time the prospects in this regard no longer look very bright, and, sixthly, we were, of course, fortunate in that we had good crops at the right time as far as our economy is concerned.

A good National Government.

Sir, we are therefore almost unique in the world in that we are able to say today that we have a growth rate which is amongst the highest in the Western countries of the world, and yet I think we must look back upon the last year as being a year of windfalls, a year in which riches came from circumstances, and I think it is not unfair to ask what would have happened if there had been no rain; what would have happened if there had been no increase in the gold price, and what would have happened if commodity prices had become depressed at an earlier stage.

Sir, I think the lesson that we have to learn from this for the economy of South Africa is that South Africa is not a country which should depend only on windfalls; it is a country which needs greater stability in its economic life. Sir, the question that I want to ask in this regard is whether to a considerable extent we are not living on capital. We export our minerals, and minerals do not grow again as crops do; they are non-recurrent, and in any kind of business activity you would amortize this kind of disposal. I believe that the export of minerals, which have not been beneficiated, is a symptom of a relatively under-developed country and in fact a remnant of a form of colonialism, and I for one welcome the statement made by the hon. the Minister in regard to beneficiation.

I believe that we need more action in that regard, just as we need more fixed domestic investment in industry. I believe that what we have to look for in our economy is stability, not windfalls while Fate is kind to us. Sir, one is always prepared to take the kindnesses that Fate gives one, but one needs to be prepared in order to be able to deal with problems on a far more stable basis.

Sir, the hon. the Minister has in his own Budget set the Government’s objectives in regard to economic policy, and I think it is not unfair to say that perhaps the correct way to judge him is on his own objectives as set out in his Budget Speech. The first question that one must ask is whether there is in fact a philosophy behind the Minister’s objectives. I think I will be able to demonstrate that there is no real philosophy; that there is no real courage to take the correct steps, and that what is needed in South Africa is the sort of economic philosophy which I hope to put before the House later today. Sir, the hon. the Minister is, of course, a psychologist as well as a teller of fables, because he used the psychological mechanism of a wide range of minor concessions so that everybody in the community felt that he had got something and that it would be rather ungracious if, having received something, even if it was very little, he complained about what has been doled out. What has happened in fact, Sir, is that these minor concessions have softened the blow, but they have solved no problems. I say without any hesitation that this Budget will not substantially slow down inflation in our country. It is not a solution to encourage the increased production which South Africa needs in order to be able to meet demands.

It is not a solution to the problems which face us in regard to cost-push inflation and it is not a solution in regard to the plight of the ordinary man, in that whatever has been done has been done on the basis of a little something and not on a major basis in a courageous way to alleviate the lot of people who are hit by inflation in South Africa. I believe, Sir, that fiscal and monetary policy should not be just short term; it should be geared to plan ahead. You cannot train workers now to deal with an inflationary problem which exists today; you must do it today to be able to meet future requirements.

Sir, this country today is paying a high price and will pay an even higher price for the lack of planning on the part of this Government. We have not had adequately trained people in South Africa. We have not adequately used the work force which is at our disposal. We have not planned to meet the demand for goods and services of a growing population with increased requirements for higher living standards. In regard to many of our industries we not have had a policy which has resulted in the degree of rationalization and standardization which is required to save costs. On the contrary, Sir, we have had an acceptance of the concept that we must live with inflation, and political considerations have caused delays in action. We have had interference with market mechanisms without always appreciating the consequences of such interference and, Sir, we have had insecurity in respect of savings which has resulted in a philisophy of spending before prices go up. I may say that this has been accentuated by newspaper activity. I have here a number of cuttings to demonstrate this. In one newspaper, for example, it is said: “Die rand in jou sak is niks werd.” Another newspaper says: “Oor 30 jaar sal die rand een sent werd wees”. Sir, I can only say that this kind of stirring up of fear, this feeling of lack of security which is instilled in people to encourage spending before money loses its value is not in the national interest. We have not timeously taken the active steps which are required to be taken in order to improve productivity, and the Government itself delayed its decision in respect of an orientation towards growth until approximately two years ago. Then, Sir, there is also the fact that it has not been accepted until recently that industry and commerce in fact hold the keys to employment and opportunity in South Africa for the expanding population groups, and we now find ourselves in a situation where a failure to take timeous steps has created bottle-necks which have arisen in our economy and which in fact have affected us in many adverse ways. In other words, what I am saying is that this Budget cannot be judged as it stands alone; It must be judged and it must be assessed in the light of past Government action which has caused the situation or, at the very least, has contributed towards the situation which presently exists in regard to inflation. Sir, what actually does the Budget do to fight inflation? I venture to suggest that what has really happened is that the hon. the Minister has left the fight against inflation to the Reserve Bank, and the Reserve Bank’s solution has been to introduce a policy of tight and expensive money. The only other real steps which have been taken are the steps in regard to the training of workers, and those steps will take a long time before they become effective in this economy. Sir, there are no real incentives in this Budget for people to save; there are no real incentives to encourage people to increase production and to encourage greater fixed domestic investment in South Africa. There are no real, meaningful subsidies to alleviate the lot of the worker and of the middle class, and I say that the worker, the aged and the middle class man in South Africa see no answer to the problem of inflation in this Budget. Sir, if we look at the concessions which have been granted, if we look at both the tax concessions and the building society allowance, we find that they amount to an increase of some R52 million; the increase in social pensions amounts to R11,3 million and the increase in civil pensions to R6,2 million. Sir, this is out of a total revenue of R4 544 million. These concessions are therefore well within the limits of customary budgetary errors in budgets which the hon. the Minister has presented over the years. They represent 1,4% of the estimated revenue and these are not meaningful concessions.

Sir, if I may deal with individual matters relating to the concessions for a moment, may I ask why it should be that the social pensioner must wait until 1 December in order to get his increase? Is this not being rather petty? Is there not a case to be made out for reviewing the means test? Is it not fair to say that whatever concessions are being granted to the social pensioner, the impact that there has been on the savings of the individual as a result of the erosion of the purchasing power of money is of such a nature that there is very little left in purchasing power? If we look at the private pension funds and if we look at insurance policies and at retirement annuities, compulsory investment in Government stock causes a situation where when interest rates go up the capital value of the investment goes down, unless the stocks are held to redemption, by which time the purchasing power is even less and capital losses come about from these actions. If we look at sales duty, with great respect to the hon. the Minister, the concessions are far too small to have any real impact on the cost of living If we look at transfer duty and stamp duty this has no impact on a man who owns a home. It is only designed to assist the person who wants to buy a home, and with great respect to the hon. the Minister, his argument was that in fact a concession to allow people who pay interest on mortgage bonds, to have a portion of that deductible for tax purposes, was not fair, because it did not assist people who did not live in houses. Surely the argument in regard to transfer duty is equally apposite to that kind of non sequitur which I think the hon. the Minister suggested.

Sir, the concessions in respect of married women, even though they are of some slight assistance in respect of those who have to work, will not have the effect of bringing out additional people to work and will not cause women who do not presently work but who have the talent to do so, to devote those talents to the labour market. In any case, the effect of these concessions is in many cases nullified or reduced due to the reduction of the abatements by the inclusion of this income in the husband’s income, thereby often moving the husband into a somewhat higher bracket. Sir, I believe that earned income by women, which is earned on an arm’s-length-basis, should be separately assessed, and that there is every case for treating married women in that way.

Sir, in regard to the reduction of the surcharge the taxation bulge still exist and hits the middle classes, and in fact hits more people as inflation increases and decreases purchasing power. In regard to the increased abatements, I cannot see the logic of now again having to produce medical accounts instead of having a lump sum, particularly bearing in mind that people belonging to medical aid schemes have in some cases to pay some portion of the first rand etc., all of which leads to a multiplicity of records, more red tape and more work. I believe that the increased abatements are insufficient to assist in meeting the rise in living costs and the reduction of surcharges is on an inequitable basis. In fact, there should be an encouragement, if I may suggest it to the hon. the Minister, for the better-off to have more children rather than that there should be discouragement for people in the lower income groups to have fewer children. In most cases, in any case, the effect of these abatements is lost by moving people into higher income brackets or by reason of salary increases to meet inflation. If there are to be reductions in surcharges, then I think the level at which they should become effective should be raised to some R8 000 and the rate lowered to R1 in R10 in order to make this realistic.

Then, when it comes to housing the impact of the rising interest rate in respect of bonds is in fact not met by the suggestions which the hon. the Minister put before the House. Sir, there is little doubt that interest rates are rising. The subsidy is fixed; in fact we have a situation that in these circumstances there is an ever-increasing burden on the man who is the backbone of society—the man who owns his house, is a stable individual and one who ought to be assisted.

I may also draw the attention of the hon. the Minister to the fact that in respect of deeds of sale, these rates are linked to the building society rate, and there is no relief for this class of individual, which very often includes the poorer members of the community. I may also point out to the hon. the Minister that the effect of section 11(t) of the Act, which provides for a limited degree of financial assistance for housing by employers, is due to expire at the end of this year. I believe that that should not only be continued, but in fact increased.

When we look at the picture as it stands, I believe that the new savings bond is no answer to inflation. The rate of 8% is in fact lower than the inflation rate. It will compete with building society investments, which are at a lower rate, and the building societies already have enough problems in trying to attract money. I may mention here too that the concept of a higher interest rate for the rich and a lower interest rate for the poor, to which the hon. the Minister now appears to be committed, is one that we cannot support. I for one would like to see that removed as well. I think we should also look at food subsidies on a far more realistic basis. Certainly we should provide for equality of taxation and an equality of approach towards Black and White in this regard.

I think the hon. the Minister should also look at the consumer price index components. It is quite clear that the lower income groups have a completely different basket which makes up that cost-of-living index. I believe we must revise our whole approach to the consumer price index. I believe that with the increase in salaries to meet inflation it is quite clear that an indexing system for income tax payment is necessary. It is necessary because it will result in the exchequer showing to the public when in fact it is taking more money away. An increase which is equivalent to the inflation rate means that by the time you have paid the tax, by the time you have moved into a higher bracket, you are really not receiving enough of an increase to cope with the increased inflation which has taken place. I believe that with a system of indexing you would have increases which meet the pure increase in the cost of living, and if this were done you would in fact have an anti-inflationary measure, because salaries would not be increased to such an extent that the exchequer would again take a higher share. I would here recommend that the hon. the Minister takes a look at what Canada is doing at the present moment in regard to this form of indexing. If he did so, he would see that this would be a far more equitable basis of approach. It would fight inflation and it would show to the public what money the exchequer is really taking from the tax-payer.

Sir, if I may, I should like to draw attention to the fact that the position of the Black, the Coloured and the Asiatic people in the fight against cost-of-living increases is perhaps a more serious one because they are in the main in the poorer categories of the people. They of course spend far more money on food, on elementary clothing and on transport. The State already plays a part by subsidizing some of these matters to a certain extent, but I believe that enough is not being done in this regard in existing circumstances. I believe that since inflation hits the poorer people harder, taxation upon the non-Whites in the lower income levels needs review in order to have this taxation assessed on a proper and equitable basis.

Public expenditure is of course a matter which receives attention during every Budget debate. To some extent it is quite obvious that you must have a degree of increase in public expenditure, but the question which I want to pose today is: How much of South Africa’s public expenditure is being used to implement ideological, nonproductive matters? In fact, if we look at what is being spent on control boards and controls, if we look at what is being spent on the moving population, and if we look at the percentage of economically active Whites employed on ideological matters, we realize what the position really is. One day I would like to work out what I would call the “gross ideological product”, not a gross domestic product—in other words, a GIP—to determine what we are really spending on this type of ideology. I think the figures would shock and amaze us. It is remarkable that only a rich country like South Africa can afford this kind of escapade in respect of ideology. The question I pose is how well-off South Africa would be if in fact we did not spend this unnecessary money on ideological questions, things which are unproductive and unnecessary in the national interest.

But there is another matter one can draw attention to, because I cannot imagine that I can persuade the hon. the Minister to abandon this overnight even though time and changing circumstances and realizations of the truth will bring him to it. What about the red tape that surrounds the whole of the Public Service? What about the forms we all have to fill in, the permits we have to obtain, the licences we have to obtain, and the hundred and one things which use up the manpower of South Africa in an unproductive manner? In this regard I might mention one example. The recent Companies Act which was passed by this House has resulted in unending man-hours being spent unnecessarily. I believe these matters require urgent attention. If we are going to have inquiries, let us have some productive inquiries. I would commend to the hon. the Minister that he appoints a committee of inquiry on how to eliminate unnecessary unproductive expenditure surrounding this bureaucracy which is, in fact, foisted upon us at every turn.

One of the major things in economics as in most spheres of life, is the question of confidence. I believe that investors, businessmen and individuals in South Africa need a boost and an encouragement to their confidence. I believe that many businessmen are hesitant today by reason of a number of features. I believe they are hesitant by reason of the inflation; they are hesitant by reason of the money shortage and they are hesitant by reason of political consideration. I would like to examine some of these today.

There is little doubt that we have in our Budget today a fairly large amount to be spent on defence. This side of the House supports that expenditure on the defence of South Africa. As far as we are concerned and based on last year’s figures, we are relatively speaking still spending a small portion of our gross domestic product on defence. But we have in South Africa situations which are developing. I pose the question as to how our trade will be affected by political considerations in Africa and to an even greater extent by the events which are taking place in Angola and Mozambique. I pose the question as to what the problems are which will arise in regard to labour, not only from Mozambique, but also from Malawi, being employed in South Africa. I think we are going to need a reassessment of our approaches in respect of labour, because we are going to have to turn more increasingly to local labour in order to meet our demands. Quite new approaches to the employment of this labour will have to be adopted in order to satisfy the aspirations of the people in South Africa.

But there is another danger, one which I regard as being a defence danger, i.e. the danger of unemployment in South Africa. I believe, and many other South Africans believe with me, that the infiltrator, the saboteur and the terrorist very often finds fertile ground amongst the unemployed. Black leaders have given warnings in this regard stating that if people have little to lose they are in fact prone to be persuaded by people who wish to do our country harm. There are no really accurate statistics available in regard to unemployment amongst Black people in South Africa. One economist has forecast that there will be three-quarters of a million Blacks unemployed in South Africa next year. A university professor in the Orange Free State has indicated that unemployment will increase at the rate of almost 100 000 a year unless we create job opportunities for them. What we have are statistics which deal only with registered workseekers. I would like to quote just a few statistics in order to demonstrate a trend. Figures were given by the hon. the Deputy Minister of Bantu Administration, in respect of KwaZulu as at 30 June 1973, indicating that there were 11 760 registered workseekers. But now I have obtained information from the Director of Community Affairs in KwaZulu which shows that the registered unemployed are estimated at 26 000 at the present moment. Now, in respect of unemployed themselves, there are no statistics available. But Sir, that makes it quite clear what the trend is, namely in the direction of unemployment. It is indeed a very serious situation which is developing.

I would like to take one of the homelands as an example, because it falls within the province I represent, and because it has a particular strategic position at the present moment, and that is Vendaland. How is the problem of unemployment in Vendaland being solved and how is that situation being dealt with? There are virtually no industries in Vendaland. They would in any case take too long now to establish to deal with immediate problems. In so far as the development there is concerned, it is intended that it should be in the agricultural field. They are talking about tea plantations and matters of that sort. But none of these solutions will involve immediate action to deal with unemployment. I would like to advocate here to the hon. the Minister in the interests of South Africa and in the interests of the defence of South Africa, that a major public works programme be commenced in the homelands, like Vendaland, in order to deal with the unemployment problem that exists there. I believe that this is defence expenditure in the same sense as the buying of armament. I believe that the fight, as has been said, is a fight for the minds and hearts of people but that fight for the minds and hearts of people is also related to the fullness of their stomachs. I make this appeal in all sincerity that a public works programme to deal with unemployment in the homelands be a matter of urgent consideration for the Government.

There is a matter here, too, with which I would like to deal namely in regard to the outward policy of the Government. Sir, we have problems in Africa of which we make no secret, but there is one way in which I believe we can encourage an outward policy in Africa immediately. There is starvation and drought in West Africa today of the most serious proportions. We here in the south of Africa have been favoured with wonderful crops. I believe that it would be in the interests of South Africa if we offered help to the drought-stricken and starvation areas of West Africa. I would like to commend to the hon. the Prime Minister that he should consider sending a mission, perhaps an unofficial mission, to West Africa to see what aid we can give in order to alleviate the starvation of Africans. I say “Africans”, because I think it is necessary for us to show to Africa that we too are Africans. We are White Africans; they are Black Africans; and we have a common destiny in this continent.

Sir, before I overlook it and in the light of what I have said, I would like to formally move as an amendment—

1. (a) to take adequate measures to combat inflation, and in particular to protect the working man and the aged of all races against rising living costs;
2. (b) to create a society in which all people will participate in improved living standards; and
3. (c) to implement policies which will enhance confidence in South Africa’s political and economic future.”.

In the light of this amendment I want to talk about the philosophy that is needed and which should underlie this Budget. That philosophy is that there is a need in South Africa for a new economic order, for a new economic society. The problem of South Africa is to meet the demands of a large section of the population for real increases in living standards. To do this we need to produce more and the people who want higher living standards must help with this production in order to share in the fruits. The incentives for training which are offered in this Budget—which I presume the hon. member will tell us are not for Blacks only, but also for other groups in South Africa—are welcome but the time is short and the process is long. This alone will not solve our problem. What we need is a new economic framework, a new economic society. This does not mean upsetting existing situations but does mean the following:

1. (1) A firm and tangible plan for the improvement of living standards over a period of time that is realistic and offers real hope for the underpriviliged;
2. (2) an acceptance by the Government that the Blacks, Coloureds and Asiatic people together with the Whites form part of one economic system in South Africa;
3. (3) that within that system all must cooperate, work and contribute in accordance with their abilities;
4. (4) that there must be opportunity for advancement for all in accordance with their ability, in accordance with their willingness to work and in accordance with their willingness to accept responsibility and there must be true equality of opportunity;
5. (5) all types of work must be open to all and there should be no exploitation of labour by under-cutting;
6. (6) protection must not be given by reserving jobs, but where necessary by retraining or social security measures; and
7. (7) that an economy cannot advance at an adequate rate if artificial restrictions are imposed on productivity.

The acceptance of this concept means equality of opportunity and it means that one must aim at facilities for education and training in skilled and semi-skilled trades and professions being available for all. It means that the rate for the job when qualified must be in force, but the rate for job means equal contribution in work, in ability and responsibility. The acceptance by this Government of such a new economic approach and a new economic society would be and could be on a non-party basis. It must be done in such a way, however, that the non-White people of South Africa see it as a reality which will come about and not as a pipe-dream, as a hope never to be realized or as something merely designed to keep them quiet. With such a charter for a new economic framework, we should go a long way towards solving a confidence problem both in South Africa and abroad. There are other matters in relation to confidence that I want to raise. I think we need to ensure that there is in fact no industrial unrest in South Africa, and I have no doubt that the answer lies in trade unions. There must be trade unions to negotiate an economic basis and for economic benefits and not for political ends.

On the question of confidence, I wish to speak to a limited extent, if I may, on the money supply. In all fairness to the Governor of the Reserve Bank who will speak later this month, I do not want to anticipate the measures which he would implement, but I want to draw attention to a number of factors which arise. Firstly, I believe you must have a policy in terms of which money is channelled into the correct categories in which it should be employed. I think the Government has to see to it that where money supply is expanded, that money is in fact channelled into productive activity and that is not used for inflationary activity. The second matter is that I believe that there is a real danger with a squeeze in respect of money which has already existed for some time, i.e. that you may in fact find yourself with certain major bankruptcies on hand. Such major bankruptcies would have the result of destroying more confidence in South Africa. I think that this is a factor which must be taken into account. It is perfectly true that statistics can be quoted to show that even at the time of the squeeze there had in fact been expansions in the supply of money, but the small businessman, the man who really is the backbone of the society, from whom the growth will in many cases come, is the man who has felt it most. I would not like to see a money squeeze which would not enable the small businessman and the small industrialist to survive. I think that this is a matter which needs to be looked at very carefully. I believe—and I have always said this—that the control of the money supply is one of the major weapons in the fight against inflation. However, the control must be of such a nature that productivity in South Africa is not affected and that we do not in fact destroy the real way to fight inflation, viz. to have greater means of producing more for South Africa to satisfy demand inflation and, what is more important, to satisfy the legitimate aspirations of a large section of the population that presently does not enjoy all the fruits that others enjoy.

There is another matter which I think I need to draw attention to. Television will be introduced within a reasonably short time. It does not appear, as history has developed, that this is a particularly auspicious time to seek to obtain large sums of money in respect of the purchases of equipment that must be made. Estimates have been given. The managing director of one company said that some R300 million in additional money will have to be put into the economy in order to meet the requirements of television in a period of two years. I believe that we need to plan ahead to deal with this and that the hon. the Minister should give us some indication as to what he has in mind in regard to the money supply for this.

We and the hon. the Minister have spoken of the need to encourage overseas investments. The Budget contains a number of aspects which are designed to encourage borrowing. However, I would like to suggest to the hon. the Minister that the time to borrow is when money is plentiful and people want to lend it to you. The hon. the Minister knows of the queues of people there have been who wanted to lend money to the South African Government, despite the activities of the World Council of Churches. However, you must borrow when money is available and when rates are attractive. What is happening now is that we are encouraging people to borrow overseas at a time when money is in relatively short supply overseas and when rates of interest are not attractive. I think that, if Aesop had had this problem, I am sure he would have had a fable about having to store for the times when you need it. Certainly, Joseph encouraged the Egyptians to do so at the right time. You store when there is plenty, and you do not go looking for grain when there is famine. When it comes to new loans, I think the procedure of merely granting exemption from nonresident shareholders’ tax is not entirely satisfactory. I believe that in respect of new money coming into South Africa today non-resident shareholders’ tax on interest should in fact be abolished altogether. In respect of equity investment which I regard as even more important than loan capital, I believe that people overseas should be encouraged to take a greater equity stake in the development of industry in South Africa. I feel we need to have a climate which encourages this. Here I should like to suggest to the hon. the Minister that if in fact he wants to create a suitable climate for this, he should scrap the legislation in respect of foreign shareholding in financial institutions. I believe that the hon. the Minister can negotiate with the institutions in South Africa to bring about the results he desires without recourse to legislation. In respect of new institutions, the necessary powers are already available under existing legislation. I believe that this would do much to improve the climate. Secondly, I believe that he should also abolish non-resident shareholders’ tax on new approved capital issues for permanent investment in South Africa. This would also encourage investment.

I should also like to suggest that we should project South Africa as a free enterprise society overseas. We are actually one of the last remaining capitalistic states—this has become a dirty expression—in the Western world. Here I believe we must make it clear that it is not regarded as a sin in South Africa to make a profit. The first matter that needs to be attended to in this regard is the philosophy that a 10% to 15% profit tax, which is being advocated by certain Government departments, is adequate in these inflationary times. It clearly is not.

I should also like to suggest another matter in this regard. I should like to see steps being taken to make Johannesburg into a major world financial centre. I believe that the hon. the Minister should apply his mind to creating a non-resident gold market in Johannesburg in which non-residents can participate. Time prevents me from enlarging on this point, but I believe that we should create tax-shelter companies just as there are in the Netherlands, so that non-residents may hold shares in participation interests in companies here and abroad. We should also encourage off-shore banking systems for bond and other activities outside of the rand currency system. I also believe that we should review the whole situation in regard to the blocked rand, bearing in mind, of course, the restrictions imposed upon us of having a two-tier currency system.

There are also some matters in regard to local business which I should like to deal with briefly. Productivity can be encouraged by non-inflationary methods. Savings and plough-backs are essential and the present concessions are welcomed although not yet enough. I believe that we should allow 100% write-off in respect of machinery in the first year. I believe that we should abolish undistributed profits tax for manufacturing concerns and at the same time close the tax loophole in case of abuse. I believe there must be incentives for productivity, for new capital issue, for fixed investment in respect of approved types of activity. I would not venture on to the Johannesburg Stock Exchange today in order to raise more equity capital. I believe that in existing circumstances there are many things that need to be done.

Finally, one word about the gold mines. This is the goose that lays the golden eggs but we must not endanger its ability to lay more eggs in the future. There is a need to open more mines and they are dependent upon fluctuations in the gold price. I think that we must avoid a euphoria in respect of gold and in fact make greater concessions in order to enable new mines to be opened for the mining of lower-grade ores. I believe that the existing concessions and the rate of taxation paid by the gold mines are not apposite to this new type of mining development that is required. In any case, the whole of the labour structure in the mining industry will have to be reviewed, particularly in relation to what transpires outside South Africa. There are many things to do but above all what we need to do is to encourage productivity, to produce what we need to meet the requirements of our people. We will have confidence and peace in this country if in fact the stomachs of all of our citizens are full, if they have hope for the future and if they see that the cake is not being shared only among a few selected individuals but that it is being shared among everyone and is big enough to go around among all sections of the community, whether they be White, Black, Coloured or Asiatic.

Mr. Speaker, I wanted to say if ever there was a case where the mountain brought forth a mouse, then this was it today. But then it occurred to me that this was the first contribution by the hon. member for Yeoville to a Budget debate in this House, and for that reason I shall refrain from saying so. I should like to congratulate him on his contribution. I do not agree with all he said, indeed, I hope to make it perfectly evident that I differ from him considerably. I wish to pay him a compliment, he reads very well, but what I shall be dealing with here is the content of what he read.

At the outset I should like to be a little more positive in my approach and should like to convey my most sincere thanks and appreciation to the hon. the Minister of Finance, Dr. Diederichs, for the splendid Budget which he has once again presented to this House. You know Mr. Speaker, one can say in all truthfulness that it is not every Tom, Dick and Harry who can compile a budget, and most certainly not a Budget such as the one we are dealing with now. At the same time I should like to convey my appreciation to the senior officials of the Treasury and the Department of Finance, and others, who made such major contributions to the compilation of this Budget. In what a particularly conscientious and efficient manner both the Minister and the officials acquitted themselves of their task, is clearly proved by the fact that the Minister was able to announce that the estimated expenditure amounted to R3 486 million, while the actual expenditure came to R3 482 million—a difference of R4 million on more than R3 000 million. I have worked this out here myself and if my calculations are correct this is a difference of one-tenth of one per cent. This is how a budget is compiled on this side of the House!

You are a prospective candidate and you are therefore paving the way for the future.

Mr. Speaker, I wish to comment briefly on one aspect of the hon. member for Yeoville’s approach, and that is that whilst still in the middle of his Budget speech so to speak, the hon. member issuing Press statement on many of the points on which he was going to speak in this House. I want to suggest that whilst Parliament is in session, and particularly when an hon. member has the privilege of speaking, he should withhold himself from issuing Press statements and rather make his contributions in this House. I think this is in accordance with the best traditions of Parliament. I am afraid that the hon. member for Johannesburg North has followed his bad example there. [Interjections.] The hon. member for Umhlatuzana is the last member to speak to me across the floor of the House; if I Were him I would keep quiet for a very long time, after what happened in Natal to the hon. member. But it goes further, Mr. Speaker. On the eve of the Budget speech the hon. member, who has this moment sat down, issued a Press statement ...

The finance committee of the United Party in Parliament agreed to it.

Sir, let us get the record straight. I have the Sunday Tribune here, of 11 August. [Interjections.] You have spoken for an hour. You can now give me a chance to speak for half a hour. Listen to this—

Where does this group meeting come in now?

I do not write the headlines.

Let us get this straight. I do not want to treat this seriously, but how can the hon. member put up proposals to the Minister of Finance three days before he has to deliver his Budget and imagine that this can play a part in that Budget? What is the purpose of putting these things in the Press three days before?

Get on with your speech.

I will get on with my speech. I have quite a few things to say. [Interjections.] It is obviously a question, Sir ...

Why do you not play economics instead of playing the man?

Order! The hon. member for Yeoville must contain himself.

The hon. member’s temper is something which has often been mentioned to me and I have seen instances of it in the Press. I suggest, Sir, that he might be a little more courteous here. However, he will not put me off from saying what I have to say. [Interjections.] I think it is necessary, just as a sort of background, to have a look at the kind of world we live in and see what it amounts to in the context of this Budget. You see, Sir, if you look at the world, I can let you have any number of recent Press cuttings and reports, one of which was issued a couple of days ago: “Oil the cause of U.S.A.’s biggest trade deficit in history.” This is for the first six months’ of this year—a deficit of well over 3 000 million dollars in the United States. Sir, by all accounts the United States will end this year with a negative rate of growth; it will in fact retrogress, but I will come back to the growth rate in a moment again.

And you devalued the rand.

Then we come to Japan. The hon. the Leader of the Opposition has on at least two occasions while I have been here spoken in this House about Japan. He referred to Japan’s 10% growth rate and asked why we did not have a growth rate of 10%. Last year I think he came down to 8%. But here we have a recent report in The Argus: “Great Japanese growth era ends.” In fact. Sir, if you look at this report, Japan will feel extremely happy if she ends the year with a growth rate of 4% or 5%, where it has been 9% or 10% for several years. Another thing is this. Sir, if you look at the O.E.C.D., this authoritative body which represents virtually all the major industrial nations of the world, you see that they have recently issued a report on the state of the world economy and the economy of their members, and you see that on average for these countries the inflation rate will probably be something like 16% this year, with Britain round about 18% to 20%, Australia 16% and Brazil, which has also been mentioned here. 35%. There are others—you have America, for instance, where there is a great lack of faith in the ability to contain inflation with the result that it is rising very rapidly. I do not want to burden the House with too many statistics but the oil consuming countries, for instance, are faced with an estimated deficit in their balance of payments of beween 40 and 50 billion dollars. This is the effect of the oil debacle. This huge amount of cash is accumulating in the hands of the oil producing countries, and the trouble is that they are tending to invest that money in the richer countries rather than in the poorer countries. That is another grave cause of disequilibrium. That is exactly the sort of position the world economy is in. I could elaborate on that quite a bit, Mr. Speaker, but what I really want to do is factually to contrast that almost desperate position with the position in South Africa. The National City Bank of New York recently pointed out that their assessment was that America might be entering a depression; they used the word “depression”, and not “recession”. Against that sort of background I want to contrast the striking position of the South African economy today. If not the strongest, it must surely be among the two or three strongest economies in the world. That is a statistical fact which you can check. You can check it against the growth rate which, it is generally conceded, is at least 7% in real terms today.

As regards unemployment, I have said before in this House that there is virtually no unemployment to speak of in South Africa.

What about the Blacks?

There is underemployment. This is a feature of all underdeveloped or developing sections of countries. Unemployment is, however, a very scarce phenomenon in South Africa.

That is nonsense.

By contrast, in Britain there is a great fear—I have a recent report here—that unemployment is going to top the million mark again in the second half of this year, which we are in already. In America there is common talk that unemployment is probably going to reach between 5 and 6% by December. This means that millions will be unemployed. In Germany, which used to be the country that was regarded as an example of over-full employment until last year, there is great concern about unemployment at this moment. So one can go on. In South Africa, by contrast, we have the situation where we can, with great justification, talk of full employment.

The position is—and I shall come back to a few of the South African features—that the Minister, in putting forward his Budget statement, mentioned four objectives. He mentioned economic growth; he mentioned stability as a factor in the fight against inflation; he mentioned the balance of trade and the balance of payments, and the need to keep that position sound; and he mentioned the need to alleviate the hardships particularly of those less able to bear them as a result of inflation. I do not think anybody would seriously wish to join issue with the Minister on those objectives. But then, I want to say that a Government does of course have very substantial and very far-reaching obligations and responsibilities in this sphere. A Government, after all, has to endeavour to hold the balance between savings and investment and consumption. A Government has to endeavour to hold the balance between exports and imports. I do not mean to say that these must necessarily exactly balance, but there must be a balance which is meaningful. A Government also has a great responsibility to hold some sort of balance between the aggregate demand in the economy for goods and services and the aggregate production of goods and services. Those are the things which have to be borne in mind when one assesses any Budget.

Coming to the hon. member who has spoken today, I have here two Press reports. The one appeared in The Argus of 15 August and deals with a statement which he issued on the Budget on behalf of the United Party’s finance group. Be that as it may, I would much have preferred to have seen this dealt with today. Among the things he said, was the following—

He said that today.

I have just said that he said some of these things today. The point is that he says this will not stimulate growth. Is he then also saying that the more efficient training of labour which this Budget seeks to promote, the better bursaries which it encourages for training, the initial and investment allowances to industrialists, and the tax concessions both for companies and for entrepreneurs, in bringing down the marginal tax rate, are not calculated to be direct stimuli for economic development? It is easy to make a short statement which is dogmatic, but when you analyse the Budget in relation to his statement, you have to mention the relevant aspects of the Budget. Then the hon. member complains that total Government revenue will rise by 21%, which he also says is considerably higher than the rate of growth of the economy. Of course it is, but we also have to take into account the considerable increase in expenditure. I think the hon. member is implying in his statement that expenditure is too high and is causing inflation. He has said it again here.

Any economist knows that public expenditure is inflationary.

I want to deal with that. He says any economist knows that. Does the hon. member, when he complains about the rise in Government revenue, suggest that this should be a deficit Budget?

It is a deficit Budget.

No, it is not. We have put hundreds of millions of rand into the Stabilization Account. The hon. member picks and chooses from the Budget to suit himself. How can it be a deficit Budget when you put hundreds of millions into the stabilization fund?

That was last year’s money.

I am talking about this year’s Budget statement, not last year’s. You cannot have it both ways. If the hon. member is, in fact, complaining that expenditure is too high he must come to this House, where he has all the estimated expenditure before him, and say that this or that Vote should have been reduced here, or there, and by so much. He says that any economist knows that when you increase expenditure it is inflationary. I do not hold myself out to be a great economist, but I think that one should look at the facts before one. [Interjections.] Surely the hon. member was under an obligation when he came with this parrot-fashion criticism, which my hon. friend hears every year—If he wants us to reduce expenditure or not to increase it by a certain amount, he must tell us where and by how much. The biggest increase in expenditure is in respect of defence. Does my hon. friend cavil with the increase in defence expenditure?

Did you listen to my speech?

That side of the House is under an obligation to tell us exactly where expenditure should be cut. The second big increase is in respect of salaries and wages which runs through a whole number of Votes and which includes expenditure in this regard for the provinces. The hon. the Minister made it an objective in his Budget to attempt to alleviate the ravages of inflation where he could. Does the Opposition say that the public administration of this country should not have had salary and wage increases as the Minister set them out? Surely we are entitled to a detailed answer in this regard from them. In his maiden speech, according to a Press report, the hon. member put forward a plan which would beat inflation. He talked about a savings bond or certificate based on the cost-of-living index or on gold. It is not an original proposition, but it is interesting. I have one or two questions which perhaps the hon. member will bear in mind. Incidentally, he says that these bonds must carry a low rate of interest. But earlier today he berated us and asked whether we should have a lower rate of interest for one class and a higher rate for the other.

Do you not understand ...

Order! The hon. member for Yeoville must contain himself.

I do not think that I am as brilliant as the hon. member—I grant that—but I shall do my best. I just made a simple observation. He himself said it. Now he suggests a savings bond which clearly discriminates in interest. But I would like to ask him, on the basis of that low interest: Has he checked whether the appreciation in capital value will in time necessarily compensate for the loss in interest to the holder who is likely to be of the poorer, the less well-off section? The object of this plan is of course to guarantee the capital appreciation in terms of the cost of living or the value of gold. But he says that the interest must be low. Has he checked on the aspect I have mentioned? He can answer it another time, but I ask him that question because it is a very important one.

He also says that the individual limit to these bonds must be R10 000 in the aggregate. That makes it extremely restrictive. In other words, he is obviously intending this for the small saver. If this is to be an anti-inflationary move, as he says, how can he be so sure that it will be anti-inflationary if he excludes what I would call undoubtedly the greater majority of savers in the economy? These people who can afford up to R10 000 must make up the minority of savings accumulations. I put these issues because I am interested in the proposal. I do not wish to be destructive, but these are the questions that come to mind. Then, too, one is moved to ask: If you put forward a scheme of this kind, are you in fact not accepting the fact of inflation and are you not in fact taking part in a sort of a self-perpetuating inflationary movement? I think there is some truth in that as well. However, I shall leave the matter there. I do not wish to take it further at the moment.

I would in a few words like to give my own view, for what it is worth, of this Budget. In reply to the views put forward by the hon. member, I would say that to me this Budget undoubtedly is a sound, well-rounded and, to a considerable extent, a classical Budget. I say sound, because if ever there was a Budget which gave evidence of financial prudence and prosperity, and indeed, of financial soundness, it must be this Budget. You only have to look at the accounts in front of you. I say it is well-rounded, because there is in fact a great deal that is positive in it for many people in our society. Take the businessman. He receives greater initial and investment allowances, as well as a reduction in the incidence of company tax via the loan levy. He also gets, in fact, a much better deal for training his labour. Then the consumer gets reduced taxes, apart from anything else which one might like to read into it. The income tax payer gets a reduction in tax, because his surcharge is halved. The pensioner gets clear benefits, running into many millions. The housewife gets a bigger abatement. In fact, if she wishes to be more productive in the true sense of the word, she even gets bigger allowances for children. Also the saver, through higher interest rates, get a better return. In my view, this Budget is in the true tradition of South African budgeting, which is financially conservative. We are very thankful that it has been so over the years. In effect, this is a surplus Budget. It reminds one of Gladstone’s disciple, Robert Lowe, who became Chancellor of the Exchequor in England in the last century, who used to say that “the business of a Minister of Finance is to have a surplus. If he does not have a surplus, he does not fulfil the aim and object of his being”. Well, judged by that classical prescription, I think the hon. the Minister has done extremely well.

While I say this Budget is in the classical tradition, this Budget certainly spends more, but that is matched by revenue which the hon. member complains about. The spending, I would remind the House, is to provide for defence, which supersedes any mere economic consideration because it involves the security and stability of our country. The Budget provides relief against inflation—which the Minister said was his deliberate objective—by giving increased benefits to many people. It provides true growth incentives, as I said earlier. If you take all these things together, I think we can say it is an extremely sound document in that it has the funds which it can provide to balance the Loan Account and still have something left for revenue and for wiping out what was to have been a big drawing of a few hundred million on the Stabilization Account. That is the Budget as I see it.

In the minute or two left I just want to refer to one other issue which is very strongly inherent in the economic position. That is the balance of trade and the balance of payments which the hon. the Minister of Finance has to my mind rightly singled out. He said the sound maintenance of the balance of trade and the balance of payments was one of his primary objectives. It is suggested in some quarters today that our current account is in a bad way, that we are not getting capital and therefore ipso facto our balance of payments position cannot be sound. I believe that the facts show the reverse to be the case. I have the latest figures for the two quarters of this year up to the end of June. According to these figures the adverse balance on current account, including gold—gold has indeed stepped up very substantially—amounts to R160 million odd. These figures are not the final figures although I think the final figures will be very close. Then the Capital Account is in surplus. It is true that there has been a movement out lately, but the figures for the first quarter of this year showed quite a healthy inflow of capital. At the end of June there was still a balance on Capital Account of R106 million. The result is that the total drawing on the reserves for the first six months ended 30 June amount to only R47 million less than R50 million. For all practical purposes our balance of payments, in contrast to practically every country of the world, where deficits are enormous, is balanced, unless you want to cavil about R50 million. What I think comes out of it is how sound the current account, that of imports and exports, is. I say this because supposing the deficit on current account, which is now after six months R160 million, is R500 million at the end of this year, it will only be some 2½% of the gross domestic product. In 1971 that ratio was 11% and we are still thriving and healthy and we are still proceeding very firmly on our way in this country today. This is after all just about the peak of the business cycle and where you have such strong growth you must expect that the current account in a country like ours, which trades so widely with the rest of the world, must surely be in deficit. However, I think it is an extremely healthy position which merits having the attention of the House drawn to it.

In regard to the balance of payments, I should just like to add that when you come to gold and you take the average price of gold at $150 per oz., our gold production will be valued at R2 500 million this year. Last year our gold production amounted to R1 760 million whilst the year before it was something like R1 160 million. This is what gold will mean for our economy if we take it at an average price of $150 per oz. When people say that gold will be phased out of the monetary system it really sounds a hollow cry to me. Gold is, after all, in excessive demand. As the price rises very high, so the fabrication and industrial demand drops. That is true for any product. Then the investors and the speculators step in and up goes the price again. It is exactly what we have noticed. I would say that gold’s place in the world’s monetary system has been impeded, firstly, by what I think is a very shallow and a very superficial view in some quarters of the world, which ought to know better and, secondly, by the fact that the dollar remains inconvertible into gold. It is a real anomaly that this should be the case when private American citizens are now being given legal authority to buy and sell gold in America. But the dollar remains inconvertible into gold, while you have huge Euro-dollar balances floating, foot-loose, around Europe and Japan. I think that, if America can put those little matters right, she can leave gold to us and we will put the world monetary situation right, based once more on gold as the asset underpinning the world’s currencies. It is on that note that I want to end.

*I should very much like to give my hon. friend and colleague, the Minister of Finance, the credit which is due to him with regard to the gold policy which he has handled so effectively throughout the years. In addition, I should just like to tell him that, as far as I am concerned, this Budget which he introduced, deserves the strongest support of this House.

Mr. Speaker, I listened to the hon. the Minister of Economic Affairs very carefully. I listened to him for half an hour and I must say that, after that time, I find myself very disappointed in what a person who we believe is probably the heir apparent to the throne, had to say on economic affairs. I feel that the hon. member on the other side who usually speaks first in this debate, the hon. member for Paarl, could have done very much better than the hon. the Minister of Economic Affairs. There is really very little one can say about what the hon. the Minister has had to say. I would, however, like to comment on his remarks about the Press statements that have been issued by this side of the House. It has been normal practice for as long as I can remember that, immediately after the Budget has been introduced, the economic affairs group or finance group of the United Party issues a statement. This was not a personal statement by the hon. member for Yeoville, but a statement made by the group as a whole, I personally was party to it.

I have listened to this hon. Minister on previous occasions and one of the things that has struck me is the number of inaccuracies he makes on important matters when he is speaking. I would like to pinpoint two of these which he made this afternoon. He said that we enjoy a position of virtually full employment in South Africa. How can one make such a statement when there are no statistics in relation to unemployment amongst the African population to substantiate that statement?

How can you then argue? How can you state the opposite?

Every observation one can make regarding the position of employment in the homelands and in some of the urban districts indicates the opposite. Secondly, how can the hon. the Minister say that in this Budget, which we are discussing now, there is a surplus that is going to be transferred to the Stabilization Account? It is not going to be transferred to that account. What surplus there is of revenue over expenditure is going to be transferred to Loan Account and spent. The Stabilization Account is an account into which you put money to sterilize it, to hold it. That is the purpose of the Stabilization Account.

Surely you have not read the whole statement.

Last year’s money went to the Stabilization Account.

Had he been referring to last year’s Budget, he would have been correct. As far as this year’s Budget is concerned, that was one of his normal inaccuracies.

But he has been talking of last year’s Budget!

This Budget has been described by newspapers in various ways. One of them, I think it was The Cape Times, called it “A Budget of bon-sellas”. I think that that was an optical illusion. This Budget is actually a Budget of half-measures. At the outset, before dealing with these half-measures, I should like to say that I give the hon. the Minister full credit for one half-measure that he has taken, viz., the tax incentives in relation to training schemes for Africans in the White areas. This is definitely a move in the right direction. This is definitely a move in the direction that we have been pressing the Government to take for years.

Unfortunately, we have to call it a half-measure because this move has not been accompanied by all the other steps that would have made it a really effective Weapon in the fight for productivity. If it had been accompanied by a measure doing away with job reservation, if it had been accompanied by measures for the increased mobility of labour, had it been accompanied by the recognition of the permanence of African labour in the urban areas, had it been accompanied by recognition of the fact that Africans in urban areas require certain facilities such as family life and home ownership, then we would have seen a really meaningful step forward in the fight for productivity. However, I should like to give the hon. the Minister his due in this respect. He has taken a plunge from what is virtually water-level and we hope that next year he or whoever his successor may be, will take the plunge from the high diving-board.

In his Budget Speech the hon. the Minister identified four main objects of policy. I am not going to repeat them because they are well known. They are excellent objectives and we agree with them whole-heatedly. The last objective, the one he put at the bottom of the list, viz., to take steps to alleviate the effects of inflation upon the population, is one to which we would have given greater precedence. We would certainly have given it a higher priority. We on this side of the House and, I think, the public generally expected more meaningful steps to be taken to assist the less fortunate members of our society in their fight against the cost of living. We expected a greater measure of assistance in regard to food subsidies, in regard to pensions and in regard to reductions in sales tax. We should also have liked to see a reduction in the excise duty on petrol. The hon. the Minister had the wherewithal to do these things but he did not take advantage of his opportunity. The same principle applies to the other three objectives which the hon. the Minister had. He merely nibbled at the solutions that are really required to gain his objectives effectively.

When you have a surplus of R361 million available before you start giving away any concessions—this was the figure that the hon. the Minister had available to give away—you have the power, the resources to do the job properly. In conceding a total of only R71 million when you have R361 million available, to have concessions totalling only one-fifth of what was available to be conceded, when the country is crying out for relief from the cost of living, and when the country is crying out for greater incentives towards productivity, towards savings and towards investments, what the hon. the Minister has done has not even been to take half-measures towards solving these problems; he has simply given each a drop out of the medicine bottle.

Mr. Speaker, I want to deal with the Minister’s first objective, which was the maintenance of a satisfactory rate of economic growth with particular regard to the enlargement of our productive capacity. Let there be no doubt on the other side as to the importance that we attach to economic growth. At the rate the population of our country is increasing, the absolute minimum economic growth rate which we can afford is the rate of 5,75% envisaged in the economic development programme. This year, the year ended 30 June 1974, was the first year for the five years since 1969 that this growth rate was achieved. To catch up the backlog we now need a growth rate for the next four years of something like 6½% if we are going to average 5,75% over a 10-year period. What is more, if we are going to provide our growing population with jobs, with a living and with the possibility of a better living, what we need is continuous growth. We cannot afford to have ups and downs; we cannot afford to have any setbacks. Any measurable setback in our growth rate is unquestionably going to lead us into an unemployment situation.

I think the hon. member for Yeoville has expressed very fluently already the social, political and security dangers which unemployment amongst our African population would entail. Against this background, Mr. Speaker, I find it a very sobering thought that our gross domestic product, excluding agriculture—and I exclude agriculture for a specific reason—grew only by 6% last year in real terms. Agriculture did make a very substantial and a very welcome contribution, but unfortunately when you are projecting growth into the future, agriculture, due to our climatic experience, is an industry which cannot be relied upon to contribute regularly to growth. I also find it a sobering thought, Mr. Speaker, that the productive capacity of our country is not expanding sufficiently to cope with a continuation of growth at the present rate. Bottle-necks are already appearing, bottle-necks in plant capacity, bottle-necks in labour supply and particularly in skilled labour supply, bottle-necks in raw materials and bottle-necks in finance, all of which are starting to curb our growth rate. To my mind this is not only a sobering thought, it is a serious thought.

Let me say that we on this side of the House have unbounded confidence in the future of this country, in the future prosperity of this country, provided our economic affairs are properly managed. The position this year called for an imaginative Budget; it called for a bold Budget; it certainly did not call for this neutral, housekeeping type of Budget where a few crumbs were thrown to pacify rather than to satisfy the needs of the people and of the economy. It certainly did not call for a Budget which allows State expenditure to grow at a faster rate than the growth rate of the economy; in other words, a Budget which allows the State to take a bigger slice out of the economy. Not only is this highly inflationary, it is also highly unproductive, because the State is grabbing resources which could and should be used for more productive purposes and to expand the economy.

I appreciate the hon. the Minister’s problems when he has to provide for a large and very necessary increase in the Defence Account. I appreciate the hon. the Minister’s problems in cutting back and controlling expenditure in other spheres. I may say that when it has been necessary in the past for the hon. the Minister to cut back expenditure, he has shown himself quite capable of doing so. If he wants any help at the present time, let him call for an inquiry such as the hon. member for Yeoville has suggested, let him call on a Select Committee of this House, let him call in the private sector.

I can take the hon. the Minister to my constituency and show him where State money is being wasted on a huge scale. I have a housing scheme of good quality in my constituency which until recently was occupied by Coloured people. It is now lying empty because those Coloured people have been moved out under the Group Areas Act. [Interjections.] My constituency certainly did not call for that. There is room, as the hon. member for Yeoville said, for simplification of controls, for doing away with some controls. Influx control could be greatly simplified and certainly all the paper work in connection with the Companies Act could be greatly simplified. The present position calls even less for taxation and rates which produce a surplus of R288 million, even after the crumbs which the hon. the Minister has given away have been taken off. It is the taxpayer who needs this money. This surplus money surplus to what the Government is using for its own revenue requirements is needed by the taxpayer to help him meet his own problems with the cost of living. The taxpayer needs this money to help him finance the expansion of the productive and job-giving capacity of the economy which is so badly needed.

This brings me more specifically to the objective identified by the hon. the Minister of enlarging the productive capacity of the economy or, in other words, increasing fixed investment. Here we are certainly entering a sensitive, fragile and, I believe, highly vulnerable area of activity and decision-making in the economy. I believe that the hon. the Minister only scratched the surface in this regard in his Budget statement. Although up-to-date statistics are not available, there is a fair amount of evidence available which points to the fact that fixed investment in the private sector, particularly in the manufacturing sector, is not providing increased capacity at a rate which is going to sustain growth at the Economic Development Programme rate, and is not going to provide increased employment opportunities at the rate that is needed.

I find this sluggishness in investment in the private manufacturing sector very disturbing; remember that the private manufacturing sector is the biggest sector in our economy and the biggest provider of jobs in our economy. The latest statistics that are available, that is for the year 1973, indicate that fixed investment in that sector increased by only 1%. Over the last seven years fixed investment has increased in the private manufacturing sector by 51%, but this compares with 134% for the economy as a whole, including fixed investment by the Government.

The private manufacturing sector’s investment has therefore not been keeping up with our growth. Mr. Speaker, I have little doubt in my mind that this unsatisfactory state of affairs is due to three main factors. It is due to business uncertainty or a lack of real business confidence, it is due to a shortage of investment funds and it is due to the high cost of borrowing. I do not think this hon. Minister, who I am afraid is not listening to me at the moment, fully realizes what a shaking the economy and business confidence has taken over the past few years. Businessmen do not easily forget the “damping” measures which were introduced in 1970 and 1971, measures which were aimed at damping down inflation, but which in fact damped down growth and did not damp down inflation. Businessmen do not easily forget the devaluation of 1971 and the subsequent downward movement of the rand in 1972. Those were events, more than any other which sparked off the present critical state of inflation in South Africa. Businessmen have to cope with very real problems as a result of inflation and the way inflation affects their costs. Businessmen do not see the Government exercising the necessary sense of urgency in taking all the fundamental steps which are necessary to fight inflation, steps to increase labour productivity, steps to increase labour mobility and above all I think, steps to keep a careful rein on the Government’s own expenditure.

Businessmen are left with great uncertainty in regard to the Government’s monetary policies. They see on the one hand a Reserve Bank exercising a tight control, a squeeze, on credit. They see on the other hand a Minister of Finance advocating growth and applying ad hoc measures but also going along with the Reserve Bank. Where do businessmen stand? No wonder there is uncertainty; no wonder there is hesitancy to invest.

Apart from the difficulty which businessmen face in regard to bank credit for the expansion of the economy, they are also facing problems in regard to raising long-term capital to finance expansion. Personal savings, which should be a considerable source of long-term finance, have been declining very steeply. They have been declining because inflation has been acting as a disincentive to save. They have been declining because inflation has made it more difficult to save. They have been declining because the high marginal rates of taxation which have been prevailing have also made it more difficult to save. Corporate savings, i.e. savings by companies, which should be a major source of expansion in savings, have been impeded by the rate of company taxation which, although not high in relation to that prevailing in other countries, is very high in relation to what is required in a country that needs growth as much as we do. Corporate savings have been impeded by the fact that depreciation allowances take no account of the fact that the replacement costs of plant and machinery are escalating very steeply. Corporate savings have also, as far as private companies are concerned, been impeded by the undistributed profits tax. These are areas where there are very real problems affecting the vital cash flows of businesses which are so necessary to finance expansion. I certainly think that they call for much bolder steps than those which were actually taken in the Budget. The Minister’s measures to encourage savings by means of premium bonds and to ease the business investment position by means of investment and initial allowances and the small company tax concession were very half-hearted and did not go nearly far enough.

Finally, I must question whether the high interest rate pattern and the situation which is giving rise to it, are really wise and are really necessary. I am unimpressed by the argument that interest rates have to be raised in South Africa in order to reduce the differential between South African interest rates and those prevailing overseas in order to protect our foreign exchange reserves. The bulk of our long-term overseas borrowing is done by Government and semi-Government bodies and as such need not be influenced by any differential in interest rates. As far as private long-term foreign investors are concerned, what matters as far as they are concerned is security and confidence in where their money is going to be invested. They do not want to be messed around as foreign shareholders in the ban’s are being messed around and have been messed around. Foreign private investors look for potential for growth. The differential rate of interest between South Africa and overseas is of secondary importance to them. I think you find the same phenomenon domestically. Blue chip investments, blue ship shares, which offer security and good prospects for growth, carry far lower yields than current interest rates. I concede that short-term borrowings to finance international transactions are affected by differentials, but they are not affected by the size of the differential. Borrowers who are borrowing to finance imports and exports will borrow in the cheapest market, whether the differential is 1%, 3% or 5%. That position will remain until the differential disappears or is reversed. When it comes to the fact that demand for credit is exercising an upward pressure on interest rates, I believe that it would be wise for the hon. the Minister to consider gradually and carefully relaxing the credit squeeze by relaxing the banks’ liquidity ratios, so that the banks will be in a position, under directions from the Reserve Bank, to increase their lending on a selective basis to finance the expansion of the economy and to finance such necessary investment as plant and raw material. I believe that in South Africa the answer to fighting inflation by making the demand-supply equation balance lies not in reducing demand and in curtailing credit, but in increasing supply. Let there be no question in anybody’s mind that high interest rates are inducing a very dangerous investment situation. They may be self-correcting in the long run, but the process of self-correction is a very painful one. The higher interest rates go, the fewer are the businesses that can afford to borrow the fewer are the businesses that can afford to invest, and the fewer are the businesses that can afford to expand. This state of affairs inevitably will induce a situation of business contraction, and a situation of business contraction must lead to insolvencies. I agree with the hon. member for Yeoville that insolvencies are likely to hit the small business much harder than they will hit the larger one. I repeat that the classical steps which have been taken from time to time to reduce demand, as a means of fighting inflation, are not appropriate in South Africa. It has been shown that they do not work. What is needed in our economy are steps to stimulate supply.

Mr. Speaker, there is an old saying: “Beware the Greeks, even when they bring gifts; that is when they are at their most dangerous”. It is in this light that I view the remarks with which the hon. member for Constantia opened his speech.

I should prefer to make a few remarks concerning the hon. member for Yeoville, but before I come to that, I should first just like to pay tribute to the hon. the Minister of Finance. Last Wednesday, in his maiden speech, the hon. member for Yeoville referred to the possibility that this would be the last Budget speech by the hon. the Minister of Finance. Now, whether this is true or not I could not say, but if it were to be true, owing to the fact that the hon. the Minister of Finance is in the running for higher office, I just want to say that we could not have a better candidate. But there is no doubt that this House will sorely miss him when he is no longer Minister of Finance. Here we have a man who has never lost confidence in the sound economy of this country of ours, a man who has never lost confidence in the role of gold in our economy. With what skill did he not conduct those negotiations abroad, with all the talents at his disposal, to stabilize and strengthen the position of gold! This afternoon I want to pay tribute to him and to the very able officials at his side for what they have done to ensure that gold, which is of the utmost importance to our economy, takes its rightful place in international finance.

Sir, we probably all remember those fateful events in March 1968 when without consulting South Africa, the United States forced upon us the two-tier system of gold sales. I am sure all of us still remember how, in September 1968 and again in September 1969, our Minister of Finance and his officials tried to avert an impending disaster when they went to Washington to hold talks with the Monetary Fund and the American Treasury, but were unsuccessful. Then, in Rome, in December 1969, they succeeded in achieving a break-through for gold, when they ensured that the International Monetary Fund would be allowed to buy gold at the official price at the time, viz. 35 dollars per fine ounce. We were thereby freed from the obligation to throw all our gold onto the free market, something which could have forced down the price. In that way we obtained a floor price for gold and at the same time had the right to sell gold on the free market at whatever price we could get for it. These successful negotiations were the start of the break-through towards a tremendous increase in the price of gold. That is why I say this afternoon that I want to pay tribute to the hon. the Minister of Finance for what he has done to secure the future of gold for us. I also want to pay tribute to him as the man who has adhered to an economic philosophy throughout. He is not a man who applies ad hoc measures, first in this area and then in that, simply to plug holes, but is a man who has adhered to and built on an economic philosophy throughout. I also want to pay tribute to him for that very original step he took recently when he brought fifty of the business leaders of the country together to discuss the problems which inflation was creating for us and for the world. I think that this courageous step on the part of the hon. the Minister of Finance could in future be emulated to very good effect and with great success, for after listening to the hon. member for Yeoville and the hon. member for Constantia this afternoon, I came to the conclusion once again that these people were telling us what the dangers of inflation are. Surely it is unnecessary to tell this House about that, for surely we are aware of the dangers of inflation; in fact, I stated far back as 1966 that inflation was fast becoming the arch-enemy of the Western economy. We know this. The question is how one is going to solve the problem. That is not so easy. This afternoon the hon. member for Constantia spoke about the lack of confidence among businessmen, et al, and in his statement to the Press the hon. member for Yeoville also spoke about the crumbs being handed out and the lack of confidence which allegedly prevailed. All the hon. members in this House received copies of the statement by the president of the Chambers of Commerce, Mr. Christopher. The hon. member for Constantia spoke about the businessmen who allegedly had no more confidence, who had allegedly lost their confidence. Listen to what Mr. Christopher, the president of ASSOCOM, had to say—

I repeat—

And the hon. member talks about lack of confidence among businessmen! I quote further—

It seems to me as if the hon. members, who are always boasting that they alone are in touch with the business leaders in this country, are completely out of touch with the business leaders of the country this time. It is very easy to smash inflation, but this simply means causing a severe depression. Which of the hon. members is in favour of doing that? It would be easy to contain inflation if one limited credit to such an extent that the businessmen were unable to expand and unemployment developed, so that the man who still had a job would have to work just that much harder to ensure that he did not lose his job. Production costs could be reduced in that way because the worker’s productivity increases for the same amount of money or less. That is very easy, but is there one hon. member opposite who would recommend such a plan? No, Mr. Speaker, the only solution to this grave problem of inflation—which is plaguing not only us but the entire Western world—is, of course, greater productivity, more work for the same amount of money or less. When I say this, I do not mean that it is only the worker who should work more for the same amount of money, but also that throughout the entire economy, from top to bottom, everyone should be willing to give more for less, or for the same amount of money. The entrepreneur and management should be willing to take lower profits on their enterprises and preferably allow prices to drop. The worker should be willing to work longer hours and to work harder for the same amount of money or for less. Not only the poor worker, who is always being disparaged as allegedly not contributing his share, but everyone, throughout, from top to bottom, will have to contribute towards ensuring greater productivity for the same amount of money or less. That is the only way in which inflation could be solved overnight.

The Government is not merely talking about the solution to inflation by means of this Budget; it is really doing something to solve it. The most important point is the provision which is being made for the training not only of workers, but of everyone in the economy, from management down to the worker, training to make people more productive. The public service bursaries granted by the hon. the Minister, which are being increased from R800 to R1 000 per annum, are simply an attempt to increase the productivity of future management. The bursaries for technical colleges, which are being increased from R500 to R630 per annum, are of course intended to equip the technicians more thoroughly for the part they play in the economy. The concessions being granted to industrialists for approved training schemes for Bantu workers also represent a solution to the problem of unproductivity or low productivity among our Bantu workers. What those concessions in fact amount to is that an industrialist who participates in such an approved training scheme for his Bantu labour, receives a subsidy of 82% on the expenses he incurs by having his Bantu employees trained. In the economic development areas that subsidy rises to 92,5%. This is the only true solution to this tremendous problem of inflation which is today plaguing the entire Western world.

When the hon. member for Yeoville was appointed by his caucus as their new chief spokesman on financial affairs, I really thought that this new star of the North would bring with him into this House a fresh breeze of constructive financial criticism. From one point of view, of course, it is a tremendous vote of no-confidence in those senior members concerned with finance who have performed this task up to the present, that a newcomer, who became a member of this House only recently, should have been appointed over their heads as financial spokesman.

What about your position?

In my case it was a Minister. What did we get in the place of this fresh breeze of more positive, constructive financial criticism which we expected? The previous chief spokesman on financial matters, the former member for Parktown, and the Leader of the Opposition himself, criticized the Government ad nauseam in this House for having supposedly over-taxed the public and then used the surplusses to build up the Stabilization Account and the Capital Account. I should like to quote you just one example of this. I refer to Hansard, Volume 29, col. 1851, in which Mr. Emdin had this to say—

I now want to read to you what the hon. member for Yeoville said in the Press statement he made in regard to this Budget. Here he states—

Here we have identical words. It appears to me that the hon. member for Yeoville read Mr. Emdin’s speech before making his own speech.

The same man wrote his speech for him.

I ask you: What would the result have been if the Government had given effect to the advice of the former member for Parktown or the hon. member for Yeoville? What would the result have been? It would have been extremely inflationary, of course. If one were to dish out one’s surpluses to the man in the street, who would then inject it into the monetary system of the country again, that would be inflationary, surely. That is why it is preferable to use it for one’s Capital Account or one’s Stabilization Account. The hon. member for Yeoville went on to say: “In fact, the concessions are trifling”. The hon. member for Constantia spoke about the “mere crumbs being distributed”. Apparently these hon. members have lost all contact with their own people and with the English-language Press. The day after the Budget, excellent photographs appeared in the local English-language morning newspaper, under the caption. “Budget smiles in the street.” The hon. member for Constantia spoke about “mere crumbs”. He said they mean nothing. The hon. member for Yeoville referred to “trifling concessions”. Here the local morning newspaper says—

He said: “The tax concessions are fantastic”. Of course they are fantastic. If one looks at these concessions the hon. the Minister has granted, one finds that a married man with two children earning R3 000 per annum is granted a tax reduction of not less than 31%. Is that not “fantastic”? A married man with two children and an income of R5 000 per annum gets a tax reduction of 14%. On R10 000 his tax is reduced by 9%. I could go on like that. Truly, the hon. members of the Opposition seem to have lost all contact with their people, particularly with the man in the street about whom they are always making such a fuss as if they were the interpreter of his interests. It is no wonder that a few days ago the hon. member for Yeoville had to cry out here that the English-speaking voter in this country had become completely frustrated because he felt that he no longer had any share in the running of this country. I want to point out to him that it is by no means all the English-speaking people in this country who feel frustrated for that reason. Just ask the hon. the Minister of Economic Affairs whether he feels frustrated. Thus there are many English-speaking people who are most decidedly not frustrated. A person is only frustrated if he is unable to adapt himself to life in this country and to the creation of a nation of our own in this country to which one belongs on the basis of “South Africa first”. As long as people have that ideal, they will not become frustrated.

Mr. Speaker, this cry on the part of the Opposition that the Government must bear the blame for inflation, is now becoming a little ridiculous. I want to give them the assurance that their own people, too, their own economists, are beginning to laugh at them behind their backs because of these senseless remarks. In May last year, the former member for Parktown, Mr. Emdin, was predicting here that the rate of inflation the follwing year, viz. the year which has just ended, would not be less than 15%, and what is more he made this remark before the oil crisis. Mr. Speaker, I ask you and I ask all hon. members in this House: Can you think of one single product in which oil does not play a role at one stage or another? It is obvious that the fourfold increase in the oil price must have given inflation a tremendous boost, but in spite of that, in spite of the prediction by Mr. Emdin that the rate of inflation would be 15%—and probably 20% after the onset of the oil crisis—the rate of inflation was only 9,6%. Sir, now I am not referring to the figures of our Reserve Bank alone; I am referring, too, to the figures of the OECD. According to them, whereas our rate of inflation for the year was 9,6%, the rate in the United States was 10,2%, in France 13,2%, in Australia 13,6%, the United Kingdom 15,2%, in Italy 16,2% and in Japan, which the hon. the Leader of the Opposition is always holding up to us as a country with a high growth rate, 24,9%. Can you see now, Sir, why economists who are supporters of the Opposition are laughing them to scorn behind their backs when they put the blame for inflation on this Government alone? Hon. members of the Opposition should do their homework a little better. I can refer them to a very interesting booklet published by the Union Bank of Switzerland, Prices and Earnings around the Globe, in which the Union Bank of Switzerland, very effectively draws comparisons between the rates of inflation in various countries. Because there is such a great disparity between money values and incomes in the various countries, they devised this ingenious method of determining the incomes of a representative group of workers composed of primary school teachers, bank tellers, motor mechanics and secretaries—a representative group of the middle-income group.

White or Black?

They worked out how many hours of that group’s average earnings were required to be able to buy certain products in the various countries, and the most interesting of these was what they called a shopping basket. This shopping basket consists of 37 food, and drink products obtainable in all these countries. They took 37 cities of the Western world, and then they worked out for how many hours this representative group of workers would have to work in order to be able to buy this shopping basket. They found that this group in Johannesburg, the only city in this country to be selected, would have to work for 9⅓ hours to be able to buy that shopping basket. Then they went on to say that the same group in London would have to work twice as many hours, namely 18⅘, in New York 10, in Paris 19⅓, in Rome 22⅓, in Stockholm 22½, and in Tokyo, which is always being held up to us by the hon. the Leader of the Opposition as an example, no less than 25, as against 9 hours in Johannesburg. Sir, it is this overemphasis of or over-simplification or misrepresentation of the facts which is causing the economists and the financiers in the country to start laughing the United Party to scorn behind their backs. Now the hon. member for Yeoville tried to give a definition of a fable, and said that it means, inter alia, a foolish story. Let me remind him that “many a truth is spoken in jest”, and let me remind him of one particular fable by Aesop which was very neatly adapted by our own Aesop, C. J. Langenhoven, in which he describes how a certain man went out to sell his remaining donkey. He brought his son along to drive the donkey to the market. They had not gone far when they found the first fault-finder who told them that they were more stupid than the donkey. Why did one of them not mount the donkey? The father then allowed his son to mount the donkey and they had not gone much further when they came across the second fault-finder and he said that a young boy like that riding while his poor old father had to walk, should be ashamed of himself. So the son dismounted and the father remounted. After they had gone a little way, they came across the third faultfinder who told the father that he should be ashamed of himself because he was a grown man and he was letting that poor little son of his walk while his little legs were still weak. Then the father picked his son up and placed him in front of him on the donkey, and the two of them rode on together. Then they came across the fourth fault-finder, who said that they should be ashamed of themselves because the two of them were killing the poor donkey; they were two lazy louts because both of them were riding on the donkey’s back instead of walking. Now these four fault-finders were probably all four of them United Party supporters. This fourth fault-finder then went and reported them to the Police. In the meanwhile the father and son thought they might as well do something well, and they tied the donkey’s legs together, thurst a pole between them and carried the donkey on their shoulders. Unfortunately, the donkey’s ears dragged along the ground. Then the constable came along; he saw that the donkey’s ears were dragging along the ground and took them into custody for having maltreated the poor donkey. Then the constable himself sat on the donkey’s back and drove the father and the son in front of him. But fortunately another man came across them, and he displayed the common sense of a Nationalist and said quietly in the father’s ear: “Why do you not run away? After all, that constable on the donkey will never be able to catch you.” Sir, that is the attitude which members of the United Party are displaying here. They are always engaged in fault-finding, negative fault-finding, instead of making positive contributions to this debate. That is why I say that the financiers and economists in this country are laughing them to scorn behind their backs now.

Sir, I should very much like to convey my sincere thanks to the hon. the Minister of Finance for two further small matters. The one is that he is ensuring that the Stabilization Fund is being built up. You will remember, Sir, that two years ago I advocated that we should build up the Stabilization Fund in prosperous times in order that it may be used in less prosperous times, because such times are coming. Just as inevitably as the sun rises in the east and sets in the west, one gets prosperous times and less prosperous times in the capitalist economy. Now it is always true that when those less prosperous times occur and the State machinery has to be kept going, the Minister of Finance is obliged to impose higher taxes. Instead of imposing higher taxes under those circumstances in future, he now has a strong Stabilization Fund of more than R600 million which he is able to utilize in those lean times.

The second concession for which I want to thank him, because this is also something for which I have often pleaded in the House, is the concession made to those people who live on their own savings when they reach retirement age. This Government is doing wonders for our old age pensioners. In only fourteen months, i.e. from 1 October 1973 to 1 December 1974, old age pensions have been increased by no less than 39%. Civil pensions, too, have been adjusted, but for the poor wretch who has to live on his own income when he is old, there are no adjustments. Years ago I proposed that in his case, too, tax concessions should be made. Those people are now getting such tax concessions and on their behalf I want to say “thank you very much” to the hon. the Minister of Finance. Whereas previously they could only deduct an amount of R1 200 and later R1 500 of their income before being taxed on their income, the concession is now being adjusted to provide that rebates only begin to drop after their income exceeds the amount of R5 000. Therefore they continue to receive an abatement until their income exceeds R13 000. For these concessions I want to say “thank you very much” to the hon. the Minister. [Time expired.]

Mr. Speaker, I have for some time been looking for an opportunity to praise the hon. member for Paarl and to my pleasure I have discovered such an opportunity this afternoon. When the hon. the Minister of Economic Affairs sat down, there were some of us on this side of the House who felt that the hon. member for Paarl could make a very much better speech on finance than the hon. the Minister of Economic Affairs. But the hon. member for Paarl then displayed loyalty in the highest form, because he deliberatey went out of his way to prove that this was not the case. [Interjections.] He proved to our total satisfaction this afternoon, by this act of dedication, that he was not willing or able to make a better speech than the hon. the Minister.

On a previous occasion in this House I have dealt with the argument that inflation is not mainly an imported product but essentially of local manufacture. I believe that I have proved this to the satisfaction of the House because I have not heard this contention seriously challenged. Indeed, in the latest figures produced in the Statistical Survey, 1974-’75, we find that, although there is a narrowing in the gap between the prices of imported commodities and those of locally produced commodities, the local commodity still shows on the index a greater increase in price, consistently since 1963, than the imported product.

Today I want to say something further on inflation. In South Africa inflation is not only a special phenomenon, but is mainly of political origin. Inflation rages throughout the world. If inflation continues, it is likely to cause the destruction of the social, the economic and possibly the political fabric of present-day society. We recognize the gravity of it. However, although inflation rages around the world in different forms and in different degrees, it is also true that inflation is not of one single origin. Inflation differs in nature from country to country. If we stop to analyze the inflation which we have in South Africa, the inflation which rages despite a most favourable economic situation, we must come to the conclusion that inflation has essentially a political cause in South Africa and not economic causes. The consequence of this is that economic measures or purely economic measures cannot remedy inflation in South Africa. If economic measures could remedy inflation, if economic measures were applied with such severity that they nevertheless purported to remedy inflation, they would cause difficulties of a political nature which South Africa could not tolerate. They would in fact lead to a recession and to unemployment, which in our political climate in South Africa is completely intolerable and out of the question. Had it been the case that inflation in South Africa was purely of economic origin, if the causes were entirely economic, I believe that given the favourable circumstances in South Africa, the hon. the Minister would have been able to come to this House and, by various acts of economic surgery would have been able to cut back on inflation to a considerable extent. Instead of that the hon. the Minister has been obliged to come to this House to avoid economic surgery and, because of the causes and nature of this disease, to resort instead to acupuncture. He is an acupunturist. Sir, not a surgeon. I do not blame him, because he dare not use surgery on the politics and therefore acupuncture is all he can attempt. When I say that inflation has mainly political causes, I know that I am saying something which is perhaps radical in thinking to most people and I am prepared to substantiate it.

Firstly, in our labour situation, it is quite clear to everyone now, and I think it is almost unanimously held by the business community, that the employment of labour in South Africa is wasteful in its use, in transitory in its application, is impermanent in its employment, is unstable in its nature and starts from a poor educational base. Labour itself is psychologically insecure; it is permanently and institutionally harassed by a multitude of regulations and therefore, for all these reasons, unproductive. If you have unproductive labour, labour which is harassed, which is reduced in efficiency, then for all these reasons and all these causes, you have labour which is contributing directly to higher production costs. The way we use labour in South Africa is inflationary.

Secondly your capital resources are very often unprofitably applied. Our land, our buildings, are very often, as my friend the hon. member for Constantia has shown, left vacant in pursuit of some political end-objective. We find large tracts of fertile farmland lying fallow, land which has been vacated in order to make room for some future development but which in the meantime is lying idle and unused when it could have been maintained in productive use and could have been contributing towards the development of the gross product of this country, thereby reducing the pressure on our available resources. As far as we on this side of the House are concerned, we are for decentralization, we are for the development of our rural areas—we are for these things on logical economic grounds. We will do everything to support them, but in terms of that criterion of logical economic grounds, and not in pursuit of a theory which does not match the realities of our situation in South Africa today.

Thirdly, there is a curious dichotomy in the use of labour; we are trying to do two things at the same time. We are trying to create a separation of states, a constitutional end result in South Africa, which involves driving people apart, and we are trying to create an economically powerful State which involves bringing people together. We are trying to do these two entirely opposite things at the same time. What we will succeed in doing if we go on like this, is to create some kind of curious amalgam of the two aims. We will have people living in both places. We will have people living in their homelands, with all the costs involved in terms of accommodation, services, and so forth, and also, for a part of the time, or alternatingly, in the industrial areas. They will be shuffled back and forth. But whichever way it is done, we are going to have to accommodate them at least part of the time in both these areas. We are going to have to provide services for them in both these areas, and we are going to have to provide endless transport for them between these two areas. Sir, if there is one way to load your product with unnecessary cost, you can hardly find a better formula than just that. There is no way better than the one that I have just described to increase the cost of labour, to increase its inefficiency, and therefore to lend wings to the process of inflation. The fact is that the policies of this Government are inherently inflationary. Whatever their other motives or objectives may be, however well-intentioned they may be, however inspired they may feel themselves to be, it is a hard fact that their policies are inflationary, and they will have to live with this if they want to keep their policies going. If South Africa wants separate development, it has to face up to the facts of inflation. You cannot solve this kind of inflation by the classic economic methods, because it has other causes. You can only solve it by going back to the root political causes which created it in the first place. Politically created inflation is something which is necessarily deprived of economic remedies. Sir, you may remember that Gilbert and Sullivan produced a play called Iolanthe, in which it was sung that—

Well, Sir, in the South African context, I think we might vary it in this way—

There is a further feature which needs to be looked at. I believe that when inflation starts running in a country, the Government of that country finds certain advantages in inflation and does certain things which encourage inflation to continue running. Governments have a special incentive to inflate. Despite the other political disincentives which exist, Governments, and especially Treasuries, the Ministries of Finance, have a special incentive to inflate, because inflation provides a wonderful way of raising additional revenues without the necessity for introducing new and unpleasant measures and resorting to taxation. Sir, inflation is a hidden tax system. It is a tax system without legislation. Indeed, a Minister of Finance can even earn gratitude for having taken the money which inflation has enabled him to take, returning a little bit of it to the taxpayer and earning the taxpayer’s thanks.

The fiscal advantage operates in three main forms. The first is when additional money is created. A Government is able to finance its own expenditure, and to enable the banking system to create additional near money, by simply running along with the inflation system. In 1973 the gross domestic product in South Africa rose by 19,4%. Money and near money rose by 23%, outstripping the GDP by nearly 4%. Expenditure on Revenue Account, which hopefully might have been expected to limit itself to the 19% of the gross domestic product increase, in fact by some coincidence also reached 23%, the rate of increase in the new money supply. Expenditure went up not by 19%, as the gross domestic product might have suggested it would be prudent to do, but by 23% on Revenue Account and by no less than 25% on Loan Account. The hon. the Minister can well afford this because of the hidden tax advantages and the manner in which he is able to dispose of loans cheaply in a devalued currency.

Secondly, there is the increased tax yield. As inflation rages and as wages necessarily rise, people move into higher tax ranges. They are not necessarily earning more in real terms, in fact they might even be earning less, but their nominal salaries rise into higher tax ranges and therefore they pay a higher percentage on their incomes. Companies suffer from the same thing. Their costs, their original capital equipment, their inventories, remain to some extent at historic levels, uninflated, but their profits inflate. Therefore, when they balance costs or write off costs against their profits, the profits show a very remarkable rise and the hon. the Minister is able to take his percentage of that rise. Therefore, once again the revenues from company tax are increased by inflation. We have the example in this Budget. The hon. the Minister gained R97 million more from individuals than he had calculated, R122 million more from non-mining companies than was calculated, and R133 million more from mining companies. Of the R97 million he gave back R41 million to individuals by way of abatements or reduced loan levies. In the case of non-mining companies and mining companies taken together, he gave back to them by way of relaxation something of the order of R50 million which is about one-fifth only of the increased taxes taken from these companies. This is a very happy situation for the hon. the Minister to be in because it is so painless. The individuals and the companies were hardly aware of what was happening to them. They were increasing their profits or their incomes nominally, but they found themselves liable at these higher ranges for a greater tax payment to the hon. the Minister. He has the advantage. In fact he enjoys the double advantage of being able to appear generous by giving a little bit back to them.

There is the further advantage that the hon. the Minister may reduce his debts. The loans which he made in the domestic market can be reduced by virtue of the fact that the taxpayers are paying him to pay them back. Excess payments by the taxpayers are being used to repay loans made by taxpayers. The interest rate, being lower than the inflationary rate, also has the effect that the taxpayer receives less back than he originally paid in real value. The only cold comfort in this is that the taxpayer, who is himself paying the Minister the money which the Minister will use to repay the taxpayer what the taxpayer lent the Minister, may say that he is at least making some saving out of this curious deal in that when he gives the Minister money to use to pay back the money which he lent the Minister, the money which the Minister pays him back will cost less than the money he gave the Minister. The taxpayer may fancy that he is making a curious kind of tax saving in that way.

I want to come to a more serious matter. We find in the Budget provision for R130 million, on Loan Account, for the purchase of Iscor shares. The reason which the hon. the Minister gave, was:

What does this mean in simple language? It means quite simply that Iscor has overextended itself and is now having to be bailed out with taxpayers’ money. As long as 1972—I think it was in March 1972—I predicted in this House that Iscor was doing just that. I predicted that it was going to over-extend itself on the Sishen/Saldanha scheme and that, inevitably, either because of its inability to find sufficient capital or because of its inability to find contracts to service sufficient capital, Iscor would have to come back to this House and the taxpayer was going to have to carry the can for Iscor. I said this specifically in March 1972. Now it has happened. I do not claim any special virtues as a prophet. A simple calculation at that stage was good enough to show which way it was going to run. I said that this scheme, being out of tune with the times, was going to become an albatross round the neck of the taxpayer. That is precisely what has happened. The R130 million which has been transferred to Iscor and which is being used to purchase shares for Iscor, is money which could very well have been spent to relieve the excessive burden on the taxpayer or to pay for additional social benefits for people in this country. The fact that we had to use this money for Iscor was a direct loss and disadvantage to the taxpayer in this country.

Do you really mean that?

Yes, I do. If he had not been obliged to go to Iscor’s help, I believe the hon. the Minister could have used this money to further reduce the burden of taxpayers in this country.

I think we need to look at the whole question of State corporations. I believe that the State corporations, which are now occupying a large share of the economy, need to be brought under parliamentary control. It is absolutely intolerable that the State corporations, which in terms of investments now make up one-seventh of the gross domestic investment of this country, are entirely free of control by Parliament. Parliament supervises the activities of the South African Railways and Harbours, that, after all, is a State corporation. It supervises the activities of Posts and Telegraphs which, since its independence, has also become a semi-State corporation. Particularly in a case such as that of Iscor which actually has to fall back on Parliament for aid when it gets into deep water, it is essential that Parliament should have some control, some say, over these State corporations. The State corporations must be made accountable to Parliament. It is unthinkable that we can go on exempting so large a part of the economy of this country, which is not private enterprise and which is therefore not governed and disciplined by the conditions of the open market, from control by Parliament. These are protected and sheltered State industries. Nevertheless they are in the position that they are subjected neither to the disciplines of the open market nor to the disciplines of Parliament. They are going scot-free. This is not good enough. One way or the other, these State corporations must be subjected to the kind of disciplines which keep other companies solvent and profitable in their operations.

If the Government will not or cannot remedy inflation—and, as I have said, I believe it to be impossible unless their political policies change—the Government must instead decide to compensate for inflation. If there is no remedy in terms of Government policy then indeed we must look at some kind of compensation. While much may be said for and against indexation, or indexing as it is sometimes called, we should nevertheless look at it very seriously in this country as a means of reducing the distortions which take place in our economy through inflation. I repeat that if we could find a remedy, if our situation allowed a remedy, then we would not have to search so diligently for some form of compensation. Since it seems, however, that a remedy cannot truly be found within the political complex in which we operate, we may well have to look for a form of compensation. If we have no alternative to living with inflation then the least we can do is to try to minimize its effects.

Indexing is not a new theory; it goes back, some say, to 1707 when a Cambridge Don tried to work out how to maintain the value of fellowships at his college by some form of indexing. He tried to do this over a period of 600 years. History, however, does not relate whether or not he was successful in making an accurate production. As far as the Government is concerned, I believe that indexing should in certain ways become compulsory. As far as private enterprise is concerned, I believe it should be voluntary and it is, in fact, practised in certain sectors of private enterprise. I think it should be compulsory as far as the Government is concerned in the sense—perhaps a reverse sense—of maintaining a sort of discipline or disincentive in Government spending. For example, I believe in the case of income tax that the abatements should be multiplied by the index number over the base number so that the abatement is constantly pushed up to give an equivalent benefit to the taxpayer as the value of money falls. I believe that the same should apply to the tax tables where in fact the margins at which tax percentages change should also be adjusted as the value of money is reduced by erosion. The same thing could apply to company tax in respect of the depreciation of equipment and of inventories and I believe that the same thing should apply to certain Government securities and loans. The present system whereby the Government takes compulsory loans from the public at a rate of interest which is below the inflationary rate and then repays them eventually in depreciated currency, is no more than a bucket-shop operation. It is intolerable for a Government to treat its citizens in such a shabby manner during a time of inflation. I believe it is morally indefensible. If the Government borrows money from the public, not voluntarily but by compulsion, I believe that the Government has a moral duty to ensure that when that loan is repaid it will be at least not less in value than its value when the loan was made. I believe that the Government owes the lender more than that. I believe that it owes him a reasonable rate of interest as well. I feel that this is a moral issue which needs to be looked at very seriously.

If indexing were to be introduced by the Government in this sense it would reduce the incentive of the Government to accept inflation as a natural course of events. It would impose a greater degree of discipline on Government expenditure. It would encourage thrift in Government departments and elsewhere in that they would know that they did not have an endless call on inflated money, and it would temper the hardships and distortions which now arise in the economy because of inflation. It would also even out these distortions, for example, sudden wage demands, in that the wage-earner would understand that wages would be increased at a steady rate consistent with inflation and he would not have to hold his employer to ransom, unexpected ransom. It would also make for better planning because the course of the cost rises would be more predictable. It may all sound like a reversal of the conventional economic wisdom of the ages. Sir, I believe that it is time we began to question the conventional wisdom of the ages in the economic field. There are new circumstances, new conditions, new difficulties, new problems, which do not respond any more to the classic economic theories. I believe that we have to think hard, and even if indexing seems a somewhat new and brash idea, I believe it should nevertheless be looked at hard, particularly in the context in which I have mentioned it. I am not suggesting that it should be applied universally without qualification, but I think that in certain respects it may well help to solve the kind of problem that we are having to face now.

Sir, I have spoken of the conventional wisdom. I think unless we end inflation fairly soon, a lot of things are going to be destroyed, and amongst those things that will be destroyed will be much of the conventional wisdom that we have learned to live by. And another thing, Sir, that will be destroyed will be the free society which we are all trying to protect.

Mr. Speaker, when I opened the Sunday Times on Sunday, 4 August, I read, “One bold decision can curb inflation.” I immediately started reading with great interest to see what solution was being proposed, and, inter alia, I read the following there—

The Lord help us!

Yes, if South Africa is to be saved by these men, we will need help.

Mr. Speaker, the other day the hon. member for Yeoville, referring to his predecessor, said that he hoped his predecessor would yet be admitted into public life and that justice would be done to him. I want to tell the Opposition that they really made a poor exchange. The hon. member for Yeoville badly disgraced his predecessor today. All he said was “I believe, I believe”. All that I can exclaim to that is: “ I believe he didn’t know what he was talking about!”

He “believes” only in himself.

The hon. member concluded with these words, that there was such a large cake that there was a share for everyone: that everyone could have a bite of it: but I think that in the end the hon. member was left with nothing but a mudcake. Sir, the hon. member for Von Brandis made the profound statement here that the Sunday Times was to have said that he would be able to dictate to South Africa what it had to do; that he would be able to give the hon. the Minister such a store of good advice. The hon. member is trying to imply that the hon. the Minister should not have given this R130 million to Iscor. Is the hon. member serious when he says that? I wonder whether the hon. member realizes what he is playing with. The Opposition accuses us of doing nothing to promote growth in South Africa, of not creating the necessary infrastructure, and now that the hon. the Minister is making provision for R130 million for Iscor, which produces iron, one of the most important products in the world without which no industry and no country can make any progress, he tells us that Iscor should not have been given that R130 million.

No, he did not say so.

No, it should have been distributed among the people in the form of alms. Where does that R130 million come from? Indirectly, it is financed by public loans which the hon. the Minister is going to raise abroad. If the hon. member’s theory were watertight, i.e. when he suggests that Iscor should have borrowed this money from the private sector, in other words, that Iscor should have borrowed it locally, then one would have to accept that the necessary funds are indeed available locally, but the hon. member knows that that amount of money cannot at present be borrowed locally. If this money had to be borrowed abroad, the hon. the Minister would probably have had to underwrite the loan. What difference does it make whether Iscor privately borrows the money abroad, or whether the State borrows it? The hon. member must tell us why he is against Iscor being expanded.

I am not.

The hon. member said that he had warned us back in 1970 that we would land in this position, but surely we know, that that hon. member and his party do not want things to go well for South Africa and Iscor, for they see that South Africa is actually the National Party and that the National Party is South Africa, and if things go badly for South Africa, he thinks that they will also go badly for the National Party. No, Sir, I want to tell the hon. member that the National Party will see to it that things go well for Iscor.

I should now like to come back to the Budget. The hon. member for Paarl has already told us what the Assocom people think of the Budget. Let us see for a moment what other people are saying about it. I have Die Transvaler of 15 August here before me, and I should just like to mention the names of one or two people and read out what they think of the Budget. I want to take an Afrikaans businessman. After all, the Sunday Times said that the Minister should have got a businessman to advise him; however, here we have a businessman, Dr. Dawie Marais. He says (translation)—

That is what the businessmen are saying, and this is what all the Afrikaans businessmen will tell one throughout. But let us see what the English financial institutions in South Africa have to say. Let us see what Dr. Cloete, the chief economist of Barclays Bank, has to say. He says (translation)—

Just a fraction too small—

That is what Barclays Bank has to say. Let us see what the Standard Bank, the other large bank, the second largest bank in South Africa, has to say. We can certainly listen to what these men tell us. The general manager of the Standard Bank, Mr. Gordon Oxford, says, inter alia (translation)—

That is what those people say about the Budget. Look at what the Chamber of Mines says. Its president says the following (translation)—

That is what the Chamber of Mines tells us, and this is what we are told by two major financial institutions in South Africa, two banks, and who are the Opposition to differ with those people? Who are their advisers, the people who are telling you that this is not a good Budget? We should like you to be so kind as to mention names here and tell us who said that this was not a good Budget. In the few speeches we have heard so far, it was said that too little was being done for the man in the street, for the poor man, but let us look at the Budget for a moment. Let us take only the subsidies which are paid in respect of foodstuffs. In respect of butter there is a subsidy of R12.7 million, and for the import of butter and cheese it is R1¼ million. In respect off the price of bread it is R39 million and for fertilizer it is R15 million; in respect of the railage on manure and compost and lime, which are necessary for the production of food, there is a subsidy of R2,5 million and in respect of the price of maize it is R32,4 million. This is the subsidy the Government is granting, a total of R103 million, to the nearest million, in order to provide the poor man with cheap food in this country. Now, who are the poor people? It is most certainly not only the rich ones who share in these subsidies. These subsidies are directed at the foodstuffs which are mainly consumed by the non-Whites and the poor. And then hon. members opposite come along and say that the State is not doing enough for these people.

Mr. Speaker, this afternoon I should like to approach this Budget from another angle. Over the years we have had the Opposition saying that South Africa is doing nothing for its non-Whites, and it is given out that the non-Whites in this country are exploited by us and that there is nothing in this Budget for them. Now, if we take this Budget and look at certain items of expenditure which, after all, are intended exclusively for the non-Whites, then we see that in this Budget R376 million is being budgeted for Bantu Administration and Development as well as for Bantu Education, R143 million for Coloured Relations, and R51,5 million for Indian Affairs. Then there is the Bantu Trust for which R2,8 million is being budgeted and the Bantu transport services for which R5,3 million is being budgeted. This afternoon it was said that transport cost the Bantu a great deal of money, and that no assistance was being given to them. In respect of the transportation of Bantu passengers R9 million is being budgeted in order to offset the loss suffered in this regard. An amount of R20 million is being paid to the South African Railways in respect of non-White passenger services. However, in spite of this the hon. members are saying that the Government is not doing enough for the Bantu. Close on R4 million is being budgeted for national roads in the Transkei. All in all R612 million is being budgeted outright for the non-Whites in this Budget.

Let us look at the Loan Account. There we find that under the Public Works Vote a further amount of R20 million is being budgeted in respect of Bantu Administration, Bantu Education, Coloured Relations and Indian Affairs. That makes a grand total of approximately R631 million. We should, however, also look at the rest of the Budget. It is always being given out that nothing is done for the non-Whites in South Africa. I think the sum voted for defence amounts to approximately R700 million. Is that amount being voted exclusively in respect of the Whites, or is it in respect of safeguarding the whole of South Africa and all its peoples, Whites as well as non-Whites? This defence expenditure is for the benefit for each and everyone in South Africa. It is for the protection and maintenance of our security, as has been the case throughout the years. However, the hon. members of the Opposition are suggesting that the Whites are not doing their share in regard to the non-Whites.

This afternoon we have heard a great deal about the problem of inflation. I should like to say at once that if there is a body which is concerned about it, it most certainly is the National Party, and pre-eminently the hon. the Minister who presented such an excellent Budget to the House. Over the years we first had a demand-push inflation and then a cost-push inflation, but now we have a mixture. There are various methods of solving this problem. This year we have an inflation rate of approximately 10%. The hon member for Paarl pointed out, however, that Japan had an inflation rate of 21,9%. I think that we in South Africa can count ourselves very lucky that we at this stage have one of the lowest inflation rates in the world. A moment ago the hon. member for Von Brandis spelt it out rather strongly that it was as a result of this Government’s policy that we had inflation in South Africa.

The hon. members of the Opposition often suggest, too, that our inflation is attributable to the fact that Bantu are not allowed to work where, when and as they wish, and that they are not allowed to hold posts to which higher wages are attached. South Africa is ostensibly the only country which follows such a policy, but what is the position in the rest of the world where there is no job reservation? What, then, is the reason why Japan and the other African countries which have exclusively non-White populations are finding that their economies are not growing at such a terrific pace? What is the position in Europe and America? They do not follow an apartheid policy. If apartheid is supposedly the great scapegoat, the next speaker must please tell us why those countries are experiencing inflation as well and why their rate of inflation is much higher than ours. Why are things going so well for us? If we were doing so badly, why are there nearly one million foreign Bantu in this country who refuse to return to their own country? Why did the Indians not wish to return to India at the time when we offered to pay their passage money for them? They said that they wanted to remain in this country because they knew there was no country in the world which was as good as South Africa.

There are several factors we should look at. We should ensure that our production factors are applied more productively. However, if the hon. members of the Opposition continue carrying on as they are carrying on now and as they have been doing during the past years in which they have been sitting here with me, surely, then we cannot make the progress we ought to make. They are the stumbling-block in the National Party’s works programme to allow this country to grow more rapidly. They are the millstone round our necks, and I think they ought to realize that.

There are three production factors which I should like to mention. One of them is technology. As we know, this know-how is mainly imported. But as a result of South Africa’s vigour, willpower, zeal and the encouragement given by the National Party we have already made a great deal of progress, so much so that we are today ahead of the world in many fields. In this way South Africa is, for example, ahead of the world in the field of medicine, and the same goes for research in connection with uranium. These achievements are, however, not recognized by hon. members opposite. Capital is another difficult factor. We are but a small country which is only a few hundred years old. However, we compete with and beat big countries which are hundreds of years old. Hon. members opposite, however, want to compare us with countries in Western Europe which are centuries older than South Africa and which, what is more are made up of far fewer population groups than we are. However, they do not see the dangers and problems of those countries, but they do see spectres for South Africa.

In South Africa we have one problem, and that is labour. This afternoon I wish to make an appeal to all our labourers in this country, White and Black, to work harder, one and all.

What about trade unions?

Everyone, whether or not he belongs to a trade union. There is a certain trend, a tendency, in South Africa, i.e. that people just want more money. They ask for more money, but they are indeed not prepared to lift a finger to work harder for that money. They have much more free time and their salaries are higher, but since luxuries tend to make any person a bit of a slacker, they do not want to work harder. I want to ask our labourers, our salary-earners—all our workers—to live up to the motto “it is more blessed to give than to receive” on their part as well, and not to expect this only to come from their employers. After all, we in South Africa are lucky. We have a tremendous growth rate in spite of inflation.

For the period 1963 to 1973 the real growth rate of our gross domestic product was 5,4% as against Britain’s 2,8%, the U.S.A.’s 4%, and West Germany’s 5,7%. Let me add here that it is estimated that this growth rate will be between 6% and 7% this year, while in Western Europe it will only be between 1½%. and 2%. This, surely, is proof that this National Party is doing its share and achieving more than any other country can achieve. The high rate of inflation is a source of concern to all of us and not only to the Opposition. On the contrary, it seems to me as if they are sometimes treating it as a joke. It seems to me as if they are glad when there is inflation and things go badly for us. Let us, however, take a look at the standard of living enjoyed by our people in South Africa. In South Africa we maintain a tremendously high standard of living.

Are you referring to everybody now?

Yes. Let us measure this standard of living against the net national per capita income of the population. During the period 1960 to 1970 it was 2,7%. It is a high standard of living which we maintain in this little country. One can also measure this level of prosperity even further, against the working hours. Let us compare a period ten years ago with today. If a man earned R6,40 for an eight-hour shift 10 years ago, he earns approximately R12 for that same shift today. If he paid 20 cents for a packet of cigarettes at that time, he will pay 27 cents for it today. When one converts this, one finds that if he worked 15 minutes for that packet of cigarettes ten years ago, he will work only 11 minutes for it today. That is proof that our standard of living has improved greatly in this respect.

Let us look for a moment at the employees, about whom so much is being said. Relatively speaking, the employees of South Africa have fared much better over the past years than hon. members opposite are trying to suggest. In 1965 the employees earned 63.6% of the total income, while the income of the employers, i.e. their profits, including interest, dividends, rentals and other elements, amounted to only 36,4%. In 1971 the employees earned 68.3% of the income, while that of the employers dropped to 31,3%. This shows one that, as far as this is concerned, the employees did not lag behind. After all, we have often had the charge from hon. members opposite that the employees in this country do not share in the prosperity of South Africa. I should like the hon. member to come forward with his figures and try to refute that. He will, no doubt, participate in the debate. In this country we must try to maintain a growth rate of 5,75%. If we maintain this growth rate, the annual investment should be approximately 25% of the gross domestic product. However, the past years have proved that it is very difficult to maintain that percentage and that that percentage is more probably 24%. Unless a supreme effort is made to achieve it, we cannot always save 25% of our gross domestic product. As the result of the high rate of inflation people are inclined not to save. Matters have now been rectified by the hon. the Minister by the introduction of higher interest rates, and the public will probably begin to save again now.

I think that we should also make an appeal to our people today, especially to our housewives. Our housewives control a very large percentage of the money spent in this country. I want to ask our housewives today to make a stand against high prices wherever they do their spending, whether they are buying domestic or other requirements. Our people are far too inclined to walk into a shop and ask that a particular item be packed without our ascertaining its price. They do not even inquire at a second place whether it is not perhaps cheaper there.

Where do you meet these women?

We know that to a great extent housewives arrange and manage households here in South Africa. We should not simply pay any price and then, as a result, ask for higher salaries. We should also contribute our share for South Africa.

I should just like to mention a few facts here today in connection with the complaints that the Bantu in South Africa are not fully compensated for their work. I should like to refer to what happened when the “State Department” in the United States of America decided that people working for American companies in South Africa should not be paid less than R100 a month. According to them, that is a living wage. Shortly afterwards an inquiry was made and it was found that in America itself there are 24 million Americans earning less than R100 a month, and that while America has a much higher standard of living than South Africa and a higher rate of inflation than we have here. A few months ago the Bureau for Market Research at UNISA completed an exhaustive study of the standard of living and minimum living wage of the non-Whites in South Africa.

The minimum living wage which they accepted as a basis will create a Utopia for many of the Black people in the rest of Africa, as well as for those in Asia. What were their findings? They found that 57% of all single Bantu employees, both male and female, working in urban areas, earned more than the minimum living wage. Of the remainning 43%, i.e. of those of whom there are two or more in a family, there are 77,5% who live above that breadline—that is to say, according to them 9% of the Urban Bantu are below that standard. Anglo-American, one of the largest mining groups in South Africa, also instituted an inquiry recently and found that every Black mineworker saved 35% of his income after he had sent his money home. He saves 35% and lives very well; there are no problems. In the ’sixties the buying power of the Bantu rose by 67%, much more than did the buying power of the Whites, but that is not told to the world. These people are trying to make the world believe that the National Party are robbing the Black man in this country of a decent income. During 1973, last year, the income of the non-Whites rose by 17% as against the 10% for that of the Whites, but this is not held up to the world; nobody is told about that. Let us look at the average wage of our Bantu in industry. Their wages are 80% higher than those paid in Ghana.

Today we again heard complaints from the hon. Opposition—we continually hear them—about job reservation. What do we find under job reservation? The people who are affected by it and about whom they are complaining so much only constitute 2,9% of the employees. Nothing is said about the other 97%. We are reproached with supposedly barring the Bantu, the Coloureds and the Indians from opportunities for work so that they cannot get employment. It is said that if they should come in, things would go much better for South Africa. Do hon. members know that 95% of the employees in the building industry, in clothing factories and furniture factories in the Western Cape, are Coloureds? Why do hon. members not speak about that?

What is happening as regards education? Let us look at it for a moment. This year almost seven times more was spent on Bantu education than was the case in 1955, but this Opposition is trying to suggest that nothing is being done—and this is in addition to all the things which the hon. the Minister of Finance announced a short while ago. The amount of R109 million which has now been voted for their education is equivalent to R46 for every adult White man and woman in this country. I can go further. A portion of that R109 million is, of course, paid by the Bantu themselves. That is true, but 95% of the direct taxation out of which these amounts are financed comes from the Whites. Approximately 80% of the indirect taxation also comes from the Whites. Let us take a further look and see how many Bantu children attend school today. Approximately four-fifths of the Bantu children who are of school-going age are attending schools. That is not proclaimed to the world. Every year we also have a large number of Bantu who graduate at the colleges and universities. For the information of hon. members I should like to say that they receive a subsidy twice as high as that received by White students. Let us also take cognizance of that, please. When we take into consideration that the Whites keep 3 million Bantu children at school as against 1 million White children, then this is most certainly a feather in the cap of the National Party and the Whites in South Africa.

Let us look at medical services. I have already mentioned that our medical services for Bantu are of the best in the world. I want to refer hon. members to the Baragwanath Hospital. This hospital has the reputation that it can compare with the best equipped and the most efficient hospitals in the world. This hospital treats Bantu exclusively, and no fewer than ¾ million Bantu patients are treated there annually. Two-thirds of these patients get free treatment and the rest pay a nominal fee. The rest comes out of the pockets of the Whites.

Let us look at Bantu housing in Johannesburg. A Bantu pays R8,50 for a four-roomed house in Soweto. It is situated close to the school, nursery schools, shops, sports fields, cinemas and other facilities. I have already mentioned how much is being done in the field of transport. I think that South Africa is doing its share, and with this excellent Budget the hon. the Minister has done his full share for all the sections in the country.

Let us see how strong South Africa’s economy is. We are continually being compared with the United States of America, but I wonder whether hon. members realize that our economy is only equivalent to 2% of the economy of the U.S.A. and 12% of the economy of England. We do not even total 4 million Whites, as against the 200 million inhabitants of America. Things therefore are going well, surely? On the other hand, things are also going well for our Bantu, for as far as cars are concerned, our Bantu in South Africa have, proportionately, more cars than the Russians have.

In conclusion I want to say that we in South Africa have taken good care of our Bantu. In 1970 the Bantu’s spending in South Africa was higher than the spending in Zambia, Malawi, Botswana, Swaziland and Lesotho combined. That is how this Government provides for its country and its people.

Finally I should just like to say that we must congratulate our hon. Minister and the Cabinet, as well as the officials who were concerned in this, on the outstanding Budget which they presented this year. It is not easy, under such difficult circumstances, to produce a Budget such as this one, especially since we have to combat inflation and promote growth, but this Budget gives positive assistance in all these respects towards achieving those objectives.

Mr. Speaker, when one rises to speak here in the highest council chamber of the country and one realizes that one is doing so before a group of erudite men, it is probably only normal that one should feel as one felt when one participated for the first time in a school debate many years ago. When one realizes, too, that one will in future have to make one’s humble contribution—however humble it may be—to the writing of the history of South Africa, in a very interesting, but difficult and even dangerous period, and if one bears in mind that one represents 13 000 voters, and has to follow in the footsteps of such a man as the previous Speaker, a man who left a lasting imprint here, one is filled with a sense of piety, and it is one’s earnest prayer that it may be granted to one never to disappoint one’s voters, and in due course to become a worthy and honourable member of this House, capable of making constructive contributions to the business of this House.

Sasolburg is a new constituency concerning which I should briefly like to furnish a few facts. It is situated in the northeastern corner of the Orange Free State. It is almost exclusively an urban constituency, with only a relatively small agricultural hinterland. But here we find a group of progressive farmers who work hard, run their farming enterprises scientifically, and who must definitely count among the most productive farmers in the Republic of South Africa. Let me say that I am proud of the farmers of Sasolburg. Sasolburg has grown, in the short space of 20 years, into the third-largest town in the Orange Free State. It has grown to be one of the brightest stars in the firmament of the Orange Free State. With the coming of the energy crisis it has also become one of the brightest stars in the firmament of the Republic of South Africa, for in Sasolburg one not only finds the largest chemical industry complex in Africa and the largest gas manufacturing industry in Africa, one also finds there the only economic project in the world for the manufacture of oil from coal.

Sasolburg is also one of the best planned and most modern towns in the Republic of South Africa. Thirty six per cent of its area consists of streets and open spaces, with the result that the usual oppressive atmosphere of the old, less well-planned urban complexes, which are detrimental to the human spirit, is totally absent here. Very characteristic of Sasolburg are the green belts which criss-cross the town, and along which its many children can reach the schools with minimum use of streets. This is important, for Sasolburg is one of the most prolific communities in the sphere as well with its 5 702 children of school-going age, and numerous pre-school children still at home. In fact, on my home visits before the election I arrived at the conclusion that if all White communities in South Africa were to be so richly blessed with children, the need for immigration would definitely fall away within the foreseeable future. Sasolburg is also the only urban or semi-urban complex which I know of in which the White population far exceeds the non-White population. There are, to be specific, 23 000 Whites as compared to 13 000 non-Whites. This is symptomatic of the sophisticated industries of Sasolburg which have to rely on skilful labour. So much for my constituency.

If one thinks of Sasolburg, one thinks automatically of the concept “energy”. Allow me to express a few brief ideas on this subject. When one discusses energy, it is perhaps desirable to begin at a very early stage. One could then imagine a quiet world as it existed many years before the coming of mankind. Even at that stage the omniscient Creator, the all-powerful Creator, mindful of the future needs of mankind, made provision for his future. A portion of the energy from heat and light which flooded the earth underwent a chemical conversion with the aid of vegetation and was stored for future utilization by mankind. I am referring here to the formation of fossil fuels such as coal, oil and natural gas. The history of mankind’s development is consequently one of the use or abuse of energy. In the early days, when mankind had to rely for his energy needs solely on his own physical energy to provide itself with accommodation, food and clothing, mankind was doomed to remaining in a barbarous state. Mankind had to exploit other sources of energy to give itself the good things of civilization, such as leisure and time for constructive thought. As long as mankind had to rely on its own energy it was, as I said, doomed to remain in a barbarous state. In due course manking began to exploit the energy provided by wind, water, fire, animals and people in the form of slaves, to bring itself civilization. The slave trade was only abolished when technological developments made the slave replaceable. For many years manking used these forces of energy, and for centuries there was slow, but very stable and secure growth. Then came Watt and Stephenson. They gave mankind the ability at last to convert heat energy into kinetic energy on a vast scale. This heralded a whole new era for mankind, an era which could not continue for ever. The industrial revolution brought a great change in respect of the quantity, as well as in the type of energy consumed. Since oil has been utilized as a source of energy the more developed nations of the world have vied with one another to deplete this source in order to create for themselves prosperity and even affluence. Proof of this is the fact that between 1940 and 1973, a period of a mere 33 years—these are facts—world oil consumption increased tenfold; in other words, by 1 000%. The great difference was that while the earlier sources of energy, the windmill, the water-wheel, the ox-waggon, the forest of firewood—were recreatable, mankind has now begun to draw on a capital source which cannot be recreated by mankind. I said that the consumption of energy increased at the time of the industrial revolution, and that the type of energy consumption also changed. According to the International Petroleum Encyclopaedia, which is accepted throughout the world as the authoritative work on this subject, mankind, in 1937, relied upon oil for only 18% of its energy requirements and upon coal for 60%. The other sources mentioned were hydro-electrical power and gas. In 1973 oil already provides 50% of the energy requirements of mankind, with coal in the subordinate role of only plus-minus 30%, while nuclear energy as a source of energy is increasing in importance. But there has also been a geographic shift in the sources of energy throughout the world which was significant. In 1940 the U.S.A. supplied 66%—this is very significant—of the world’s oil. The Middle East and North Africa supplied only 5%. In 1973 the U.S.A.’s contribution dropped to below 20%, and that of the Middle East and Africa rose to 50%. It is also a known fact that 60% of the world’s known reserves are situated in the Middle East and North Africa. For many years oil was sold at 80 American cents perbarrel. In 1971 this price rose to 125 cents, or in fact 1,25 dollars, with a further envisaged increase to 1,80 dollars in 1975. The consumer countries of the world were paralysed, but they had no idea at all of what was still awaiting them. All that was needed for a drastic increase in the oil price was the shortage caused by the Arab-Israeli war, and the fact that the Arabs actually realized for the first time that they had a powerful political weapon in the form of oil, and this drove them into one camp, but all this is history by now, and I shall not bore you with it. What is important, is that the price of oil soared to 10 dollars per barrel, and in some cases even further on the external markets. This fact, and the fact that the Arabs denied and withheld oil even from the powerful U.S.A., aroused the world and compelled it to action. Economizing measures were introduced throughout the world, but despite this growth in many Western countries was brought to a halt as a result of this tremendous increase in price. Britain and Norway were fortunate in that rich oil discoveries were made in their North Sea territorial waters at this very stage. Although a submarine source is not brought into production easily Britain should, by 1980, be self-sufficient in regard to oil, if its organized labour does not leave it in the lurch. France has completely replanned its energy economy, and this will mean that up to and including 1975 there will be no increase in energy consumption, with a controlled growth of 3% after that, to be supplemented for the most part by means of nuclear energy. America began at once with what they call “Project Independence”, and they envisage increasing their production growth from 3% to 4,7%, and reducing the increase in consumption from 3,6% to 2%. In this way they hope to be self-sufficient by 1980, and after that even capable of exporting. South Africa has also introduced economizing measures. In fact, the whole world is working overtime to introduce economizing measures, and all this means is simply that the world is trying to move away from oil as a source of energy. This bring us to the important fact that the world is, to an increasing extent, looking to coal as an alternative source of energy. South Africa is in the very fortunate position, as has already been mentioned here this morning, that it is only dependent upon oil for 20% of its energy requirements, as against Western Europe’s 63%, and Japan’s 76%. South African is also fortunate in having enormous reserves of coal, and in having, after America, the larget uranium reserves in the Western world. As I have already mentioned, we are very fortunate, too, in having the only project for the economic processing of oil from coal. In this regard we have the greatest knowhow, as the Americans term it, in the world. Sir, indicative of this is the fact that the mighty America is now shipping lignite to South Africa, to be used in gas production tests. At this stage I want to say, Sir, that I am immeasurably proud of the industries of the people of Sasolburg. I am especially proud of the people from Sasol itself who placed South Africa so prominently on the world energy map. I said at the outset that the history of mankind’s development on earth really amounted to the use or abuse of energy. Since man began to use fossil fuels and oil in particular, this seems to have gone straight to his head. Thus it has been calculated in America that if the average American of today were to be deprived of his machines, he would require 500 slaves to maintain something approaching his present standard of living. Mr. Speaker, this means that a family of five—a father, a mother and three children—would have to employ 2 500 slaves to enable them to maintain something approaching their present standard of living. We who employ workers know that such a large concentration of workers leaves behind a great deal of pollution, and then one has to find other people to clear up the pollution.

Talking about pollution, this is apparently one of the things which the Western world will have to learn to live with, especially as far as its energy consumption is concerned. It is not always practical to prevent or counteract pollution completely. A group of engineers completed a thoroughgoing study in America of the daily flow of traffic across Times Square in New York. They calculated the horse-power which would be needed to perform only those tasks which were being performed by that traffic, for the horse-power of the engines of many motor vehicles was far too high. They converted that horse-power into natural horse-power, for the cry is, after all, back to nature in order to counteract pollution. They found, after a careful calculation, that if they had to utilize horses to perform the tasks performed by the machines crossing Times Square every day, Times Square would be three metres deep in horse-manure every evening. Talk of pollution! The Americans were also well on their way to introducing a standardized emission of exhaust control system for their motor vehicles which would combat pollution to a large extent. The energy crisis caused them to stop and make calculations first, and the conclusions they arrived at through calculations after experiments, were that if they were to install the standardized emission system in their vehicles throughout America, it would mean an increased petrol consumption of 25 000 million gallons per annum. And to make us realize the enormity of this figure, it would mean seven times the quantity of petrol consumed annually on the continent of Africa. This has brought home to us very clearly that the combating of pollution is not always practicable or cannot always be afforded. In this respect as well Sasolburg took the lead. Pollution is to a great extent being curbed in its factories, but only in so far as it is realistic and practicable.

Mr. Speaker, I want to conclude. The highly developed nations of the world are also, ipso facto, the greatest consumers of energy from oil, but within this cadre there are nevertheless very significant differences. So it happens, for example, that Norway, whose per capita income is almost the same as that of America, has a per capita oil consumption of precisely half of that of the Americans, primarily as a result of the Americans predilection for enormous motor cars and the fact that they make the minimum use of their public transport systems. In fact, Norway has calculated that with meaningful re-organization they can achieve a further 25% saving in their fuel consumption. South Africa is a small consumer, but we are also called upon to play our part and apply fuel-saving measures as far as possible. Consequently the Government has introduced the necessary measures, for which we are grateful. I wish to suggest tonight that the average South African is not yet in real earnest with regard to this economizing campaign. I think specifically of the thousands of motor cars which stream into Cape Town and other cities in our country every morning. I have come to the conclusion that at least 90% of them are conveying only one individual to work and back. In this country we use fuel chiefly for mechanical conveyance. We must save fuel on our roads and on our lands where tractors are used. Now the question to our farmers is whether they are really giving attention to instructing their Bantu tractor drivers to save oil to the greatest possible extent. Are our working-methods really geared to saving oil? Sir, this is important. The cardinal question confronting Western man today is how he can reorganize his life to draw on as little as possible of these sources of energy by dismissing some of his slaves, particularly if one bears in mind that according to the experts the known oil reserves of today can last only another 17 years.

Mr. Speaker, the hon. member for Sasolburg has come through his maiden speech, through his baptism of fire on the floor of this House, with exceeding credit. He has given us a saga of the history of Sasolburg and the great industry which revolves around it. He has told us of the saga of this world’s cry for energy and of the place which coal may well take in the future. He has indicated too his awareness of the fact that we as a country can be proud of the fact that America has just landed some 9 000 tons of brown coal which will be sent to Sasolburg for experimental purposes. The Americans hope to learn from our expertise and this may well be of some benefit to mankind. I am certain that the hon. member’s constituents will be proud of him when they read his speech in Hansard. I am certain too that all members of this House will follow me conveying to him our congratulations. I think that he has a real part to play in the financial discussions which will follow in this House. We congratulate him on having taken the step of making his maiden speech in an important debate such as this Budget debate. His speech will not readily be forgotten.

The hon. member for Sunnyside unfortunately, and I believe regrettably, departed from his usual courteous manner in attacking the hon. member for Yeoville, who is a relatively new member in this House, and in questioning his financial ability. I would say that the hon. member should know that in world banking and world finance the hon. member for Yeoville has a reputation which is not played with and which does not qualify him for disdain by the hon. member for Sunnyside. We believe that the hon. member for Yeoville will make a tremendous contribution across the floor of this House and that the Nationalists in those benches will still come to realize that many of the projects that have been developed by our side of the House will be re-expressed by the hon. member for Yeoville and only to the benefit of our country as a whole.

I want to refer also to the reference made by the hon. member for Sunnyside that we in this country, because of our apartheid, do not share the same degree of inflation which is experienced in other countries of the world. I shall deal with that more specifically in my speech.

Returning to the Budget debate as such, I want to say that it was quite clear to all of us that the hon. the Minister of Finance was balancing on a tight-rope when he was endeavouring to steer a course between inflation and growth. I believe it is only right that I should say to the hon. the Minister of Finance that we thank him for having taken the step of consulting with businessmen from all over South Africa just prior to his Budget declaration. In fact, I would go so far as to say that in future years such discussions should not take place merely on the eve of such a debate, but should take place throughout the year and certainly about the stage when the Budget proposals are first being formulated. We in this country seem to have a code of secrecy that attaches to the preparation of the Budget speech. The hon. the Minister is almost locked away for two or three days beforehand and the decisions would appear largely to be his. Let me remind this House that the Budget is not the Budget of the hon. the Minister of Finance, but the Budget of the people of South Africa. There is a practice in America, and it is growing in Britain, for congressional committees to discuss openly and vigorously Budget proposals throughout the year. There is far less secrecy than we have here and as a result far more knowledge becomes available to all sectors of the public. Fewer sectors are able to benefit specifically from detailed information which may, unfortunately, leak. I would recommend that in future not only the hon. the Minister of Finance, but possibly also the Governor of the Reserve Bank, observe a practice which has become common in the private sector, namely the presentation of a half-yearly balance sheet, a directors’ report, so that we in this country may be kept informed timeously of developments and trends which may well call for attention. I believe that if we are to see the hon. the Minister of Finance’s Budget proposals in their true perspective, we should also realize the nature of our economy. In this respect I feel that my hon. friends on the other side often fail to realize that we are in fact a dual economy. The three or four million Whites in South Africa belong to what we may describe as the fortunate economy of the haves. But in the shadows we have the 15 or 16 million Blacks who belong to the other side of this dualistic economy, those who have not. Nothing could be more descriptive of the fact that we do not bear this in mind than the reference the hon. the Minister of Finance made during his Budget speech when he inferred that we should be highly satisfied with the low degree of unemployment, and his failure to realize that it could possibly be a danger sign. He indicated that there was virtually no unemployment amongst the White sector of the population, amongst the Coloured sector of the population and amongst the Indian sector of the population. I want to say that this is probably one of the most dangerous lines of thought we can follow. It has always been amazing to me that in the first reports of the Economic Development Plan it was indicated that the whole basis on which Government deductions were made accepted the fact that statistics were available for registration of unemployment amongst Whites, Coloureds and Asians, but not for Blacks. Since our whole economy is virtually based on the assumption that we will have a ready supply of Black labour, one realizes just how fallacious the concept is that we, the White population, can be so pleased with the crumbs that fall from the rich man’s table in a Budget of this nature. Immediately after the Budget speech, there was a claim by most of the English-language and Afrikaans-language newspapers that the Budget concessions, including the increase in the allowance to pensioners, and various other allowances and concessions, for instance those to industrialists for the training of labour, had been well received everywhere. Within the next day or two, however, the headlines in the papers were that if butter was available at all, the price increase would be one of 20%, from 50 cents to 60 cents for half a kilo. There was also an announcement of a price increase for margarine. The price increases for food go on uninterruptedly to the distress not only of the poorer classes but also of the housewives for whom the hon. member for Sunnyside seems to show so little concern. There was also an announcement regarding an increase in the price of steel, as well as an increase in the price of motorcars. The battle we are fighting in this country is one against inflation. It is no earthy use our saying that the Budget is promoting growth and is making concessions to the broad majority of our people unless we face up to the fact at the same time that the savings of the man in the street, the fixed income earner, the pensioner, are being so eroded that in the course of the next 10 to 15 years, any of the concessions that are made today will be nullified. At the time when the individual who has made his contribution to South Africa and to many a Budget passed by many a Minister, most needs his savings, he will find that we are not a rich country. Because of the policies followed by the Government, these individuals will find that their money has little or no value, and that their life savings, which have been placed, at the suggestion of the Government, into pension and other funds, have virtually eroded to the extent that they will not be able to look forward to an old age with any degree of security or assurance.

The Nationalist Government has been in power for the past 26 years. To the credit of the hon. Minister of Finance, he has been in command of his Ministry for almost 7½ years, since 1967. During all these years, he has committed his Government to a reduction in the rate of inflation. I remember that in the early years, when I was privileged to become a member of this House, which was in 1970, it was already indicated that a 3% or 4% rate of inflation was causing concern. It must be a bitter blow to the hon. Minister of Finance to realize that in what may be his last presentation of a Budget, he has lost the battle of inflation, and that he has to face up to the fact that at this very moment in time we are experiencing inflation which goes into double figures. As far back as March 1965 the then hon. Minister of Finance commented in a Budget speech that in this country, with our dualistic economy, we cannot afford to gamble with inflation. We have come a long way since those days. In fact, we are losing the gamble against inflation. In the same speech the then Minister of Finance indicated that we could regard the balance of payments figure as a token of the general, overall economic wellbeing of a country in the same way that one’s eyes indicate the general physical tone of the individual. Well, South Africa has had her ups and downs as far as her balance of payments is concerned, but one thing is certain—without the largesse which has been given to us by a beneficent nature, without our agricultural crops, which from time to time turn out as records, without our activities in the field of non-gold minerals, which are increasing from year to year and without the gold price bonanza, we in this country would be in the situation in which so many other countries overseas are finding themselves.

The hon. the Minister of Finance, during the years in which he has delivered his Budget speech, has shown himself to be a Joseph wearing a cloak of many colours. Sir, you will recall that he has appeared in the role of a doctor, a gardener, a fisherman, a chef, a prophet and, certainly, a philosopher. On this occasion, as has been said earlier, as an elderly statesman, his homilies have added zest and piquancy to the otherwise sombre nature of his Budget debate addresses. On this occasion he has quoted extensively from Aesop’s Fables. I believe that he has really been endeavouring to throw up a smoke-screen to hide from members on this side of the House the fact that he has been unable to withdraw himself from his fundamental philosophical dilemma of having been a prisoner in his own house over the years. Over the years he has had to conform to his own admitted statement that, if necessary, he would bend the economy to suit the Nationalist ideologies. No recourse to fables can hide the hard facts, that not even this hon. Minister of Finance, for whom we have the greatest respect, can out-Canute King Canute in holding back the tide of economic realism and economic reality. It must be galling in the extreme to the hon. the Minister of Finance to have to face up today to the fact that our economic laws are as immutable as they always have been in the past and that they cannot easily be trifled with. Today the stark reality of the South African economy is that inflation, that cancer in our economic life, remains public enemy number one. I refer to the inflation with which we have the tools to deal, to some extent. No one can gainsay the fact that inflation is eroding the heard-earned savings of our people and that it takes from the poor and gives to the rich. It is the scourge of the fixed income earner, it is the scourge of the aged and the sick. This Government must bear the same responsibility for the inflation which has grown under its 26 years in power, as that which other Governments in other countries must accept for inflationary development in their countries. The hon. the Minister of Finance has a prodigious memory, but on this occasion he has slipped for he seems to have forgotten that in 1971, when South Africa devalued its rand by some 12½%, we on this side of the House warned him that this could be a highly inflationary manoeuvre. His reaction at the time was that it was necessary in the interests of growth and in the country’s overall interests, but that the inflation brought about by the devaluation of the rand in 1971 would be short-lived and once only. In the same way he indicated when he introduced, during his Budget speech, the concept of the sales tax, that the effects would be once only. We know today that we are all still suffering from the inflationary effects of the devaluation of the rand and the introduction of the sales tax.

This malady of inflation eats more and more each year into our savings and affects our economic health. This year, with the inflation having reached double figures, I may well say that the agony of the consumer is pitiful to behold. It does not help those of us who are in the upper middle income brackets to say that we are grateful for the small concessions which have been made to us, that we can get along and that life is not really a struggle. Let the hon. member for Sunnyside go out into those constituencies which represent the blue-collar worker, which represent the poorer classes, and beyond those constituencies into the shadow of the silent voters who have no say in matters affecting the running of this House. Then he will realize. Sir, that the effects of inflation, particularly in regard to food prices, clothing prices, transport and the price of health, are such that life is becoming a burden to the extent that we cannot trifle any longer and merely treat inflation as one of those illnesses that exist in all parts of the world.

The hon. member for Von Brandis has indicated that we on this side of the House see inflation not merely as an economic malady but, in this country regrettably, as something that is largely influenced by the direction of our political policies. I believe that there is much that we can do to relieve inflation. Had the hon. members on that side of the House and the hon. the Minister of Finance accepted the recommendations, based on the philosophies that we hold on this side of the House, five, 10 or 15 years ago, then we would not today be faced with the situation that we now have to grow when so many of our resources that we need in our productive machine are in scarce supply. At this stage we would have been producing a sufficiency of wealth to make that wealth just that more available to all our people. It is also necessary that we should realize when discussing this Budget, the important part the labour policy of this Government has to play as far as the incidence of taxation is concerned. It is not generally realized that in South Africa only about 10% of our total population pays income tax compared with between 30% and 40% of the population of peoples in other parts of the world. Of those paying income tax, a relatively small number is responsible for the greatest contribution. In fact, approximately 6% of our taxpayers are responsible for almost 66% of the income tax the payment of which devolves on the individual in South Africa. In fact, the White population pays 95% of the total direct income taxes of the country. The Bantu pay 2,5%, the Coloureds 1,2% and the Indians approximately 1,2% as well. This must indicate that, unless we are prepared to scrap our old ideological obsessions and make it possible for more and more workers to play their part in contributing towards the productivity of our gross national income, we as Whites are going to become poorer and poorer, quite unnecessarily, in terms of the real income per capita. This is a stark and inescapable fact facing all members on both sides of the House.

The hon. the Minister of Finance indicated that we had come through a particulary good year as regards the agricultural crop, that our non-goldmining activities had been on the increase and that the gold price had been a record one, almost unexpectedly. I do not think for a moment that either the hon. the Minister himself or any member in the Nationalist seats would claim that these bounties from the Almighty can be ascribed to the efficiency of the Nationalist Government itself. One can only say in respect of the Budget that has been presented that the growth which we are enjoying in South Africa is in spite of the machinations rather than because of the actions of the Nationalist Government. If we continue at our budgeted rate of spending on the assumption that we will continue to have bountiful climatic years for our agriculture and that the gold price will never suffer a set-back, one shudders to think just what would happen in the event of years of drought which may occur and in the event of declining commodity prices the signs of which are already present in overseas countries.

We have had drought for eight years.

In regard to the need for growth which this Budget envisages, a previous speaker has already indicated that the growth rate of 5,7% envisaged in our Economic Development Plan for the current five years, may possibly not be maintained. We have a backlog of failure over the past few years. This year for the first time we have a healthy and creditable growth of some 7% or 8%. However, if we are to maintain this average which is necessary if we are to avoid excessive unemployment among our non-Whites we have to maintain a growth rate of 6% It will be common knowledge that the Stellenbosch Bureau of Research has come forward with what may be a pessimistic prediction, although it is a valid and scientific one, that next year we may see the growth rate falling to 4%. If that is to be the case, the assumption is, as was mentioned previously by the hon. member for Yeoville, that we could have an unemployment figure of approximately 750 000 persons in South Africa. The hon. the Minister has indicated to us that he is concerned that bottlenecks are appearing. He is concerned about the fact that there is almost no unemployment in the European, Coloured and Asian sectors. However, this is a classic example of a bottleneck which could be critical to the country and which should have been tackled years ago. The credit that the hon. the Minister may now validity claim for the fact that we are at long last setting aside considerable and significant sums for the training of African labour in White areas and in the Black homelands, should have been claimed many years ago. This will not have any effect in helping us in the immediate future however creditable and acceptable the move may be. It is for this reason that I want to deal particularly with one point, viz., that there is every indication from the Budget figures themselves in relation to expenditure on Revenue Account and on Loan Account that Government spending in this day and age is suspect. It was our criticism in the years 1971 and 1973 that Government expenditure had increased at a rate of 20% above that for the previous year. This year we realize that the main reason for the extremely high rate of Government expenditure is the increased defence expenditure. I want to repeat that we support this principle and we accept it as an insurance for all our peoples against the unsettled situation that exists to the north of us. However, no one will gainsay the fact that an increased rate of expenditure of between 17% and 20% at Government level is highly inflationary. It is bad enough to have to say that defence expenditure is possibly hyper-inflationary because it is largely non-productive. It filters through into the demand section of our sector and, as I say, is hyper-inflationary. When we examine the size of our Civil Service—we were given figures yesterday in reply to a question put by the hon. member for Sea Point—and if we examine the total number of skilled employees engaged in the Public Service sectors—Government, the provincial councils, the utility sectors, the Post Office and the Railways—we realize that in relation to other countries there is between 20% and 25% of our total viable population engaged in these services. It is commonly accepted that their contribution to the growth rate of the country does not in any way measure up to the productive growth rate of the private sector. We believe that however necessary Government services are as far as infra-structure is concerned, this Government may be criticized for its proliferation of Civil Service departments and for the escalation not in the salaries of those dedicated servants who carry out their tasks so ably but possibly in the number of persons appearing on the pay sheet. I believe that if a comparative study was made of the percentage costs of running our Civil Service in relation to those in countries of equal stature and rate of development in Western Europe, we might well find that we could say that we are saddled with an autocratic bureaucracy. This is one of the scourges that have resulted from our country being ruled, as it has been said, from Pretoria. There is so much time for unnecessary interference in the life of the individual that we are finding this a luxury that South Africa can scarcely afford.

Let us look at the immediate future. It has been said that because of the present budgetary plans we can look forward to a period of stability, a period of growth. I wonder how many people realize the tensions and the trends that are setting in the world’s major economic communities, in America, Britain, Germany and in Japan. Just as it has been said in Stock Exchange circles that when Wall Street catches a cold we sneeze in Hollard Street, so one must not believe for one moment that we will escape unscathed the whirlwinds of economic recession if they take hold in the other industrialized countries. [Time expired.]

Mr. Speaker, if there is one term I have heard ad nauseam in the brief time I have sat in this House, it is the expression “changing world”. I also want to say something about the changing world, but this time in the non-political sphere. I want to express a few ideas about the use of computers in education, and in general I also want to refer to the influence of computers on our lives today. We can indeed say that the computer plays a vital role in our world, which is in the process of changing. There is hardly any one of us who is economically active, who is not in some or other way involved with a computer or its product. I think that our Public Service itself, seen as a whole, is the largest single user of computers. Even commerce, in our country, is already using computers on a tremendous scale. If we think of the Railways, the C.S.I.R. and the Atomic Energy Board, etc., we can begin to understand what would happen if we suddenly had to do without computers today. When we think of commerce, we realize that there is probably one area where all of us have encountered a computer, i.e. when we go and draw our money from a building society or a bank. Because I have studied this system abroad, I am proud to be able to say today that as far as financial systems are concerned, we in South Africa do not stand back an inch for the best systems one encounters abroad, and there are very good reasons for that, i.e. the shortage of manpower and people who entered this field in good time. In South Africa there are at present about 14 000 people directly or indirectly involved in the computer industry; this is a very large number of people if one considers that these are all highly trained people. There are more than 10 000 computers in use throughout the world today, about 600 of which are in South Africa at the moment. These things are not always well-known, but it is estimated that the investment in South Africa at this stage is already more than R500 million. Over the past few years the computer industry has also proved itself to be one of the most rapidly growing industries. In America the graph has already levelled off slightly, and the figure is about 15% per year; in Western Europe it is about 20% per year; in Japan it was 30% per year and in South Africa it is in the region of 20% per year. It is therefore a tremendously rapid-growing industry.

When, in 1970, the then Minister of Education and Science for the Netherlands opened the first world congress on the computer in education, he said that the computer was probably one of the most important factors in the increased prosperity being acquired for us all, and that our labour structure would undergo fundamental changes as the computer was put to ever greater use in an increasing number of places in our day and age. Now it surely follows logically that if the labour sphere undergoes certain changes, the educational sphere, teaching, would also have to undergo fundamental changes in the course of time, because when all is said and done education is there to furnish products, to furnish productive manpower in the field of labour in the quickest and easiest manner.

When the computer industry established itself here, the suppliers naturally played the biggest role in the training of people, but very quickly a much greater need arose for manpower, particularly at higher employment levels in the computer industry and here our universities immediately began to play a very important role. But before I refer to that any further, Sir, I first want to tell you of an important breakthrough, actually several breakthroughs which have caused drastic changes to the whole question of the training and utilization of computers in the past ten years. Ten years ago the computer industry was actually still in its infancy; then there was still a magical air of mystery surrounding programmers and people who could work with a computer, and indeed it was a fact that computer memory—where the information is stored—was a tremendously expensive item. Memories were virtually manufactured one by one, and it was therefore a very expensive manufacturing process. We then obtained small computers with small memories, and the programmer who was quick at writing a programme that required a small memory, was a much sought-after person. But that was an untenable situation, because under these circumstances one could not even scratch the surface of what could actually be done with a computer. Over the past two or three years, however, computer storage elements have been decreased in size by a factor of more than 200. We have all found this in the small calculating machines that are available at present, although they are not actually “computers” in the true sense of the word. Likewise this development has also had its influence on large computers in that memory began to be cheaper than programming manpower. Manufacturers then also channelled their research funds into developing and manufacturing not only large memories by mass production, and therefore very cheaply, but also into providing the basic supporting programmes with a view to making the use of these computers an easy matter. This had a very interesting series of consequences. In the first place it is now becoming easier for people to use computers, and programmers no longer need to be highly qualified persons. There is no longer anything mysterious about the whole matter either, and, the tremendous market demand for highly qualified people has slowly begun to decrease and change. It is interesting to note that there is still a tremendous gap between these new requirements of the industry and the training provided, but I shall say a little more about that at a later stage. And in today’s industry we have computers that are ten or 20 times bigger, in terms of memory, than they were a while ago. There are consequently many more facilities available with which the sophisticated systems that we have in South Africa can be developed. One can therefore also model and simulate an entire national economy in a computer, and one can also, very cheaply and very easily, for example, simulate all the traffic problems, and in that way arrive at the easiest possible solution.

But, to get back to the universities, one unfortunately finds the emphasis still falling upon the mathematical use of the computer. If one looks at the dissertations for master’s degrees and doctor’s degrees, one finds the emphasis beginning to shift much too slowly from mathematical to business-orientated studies. It is necessary for our universities to provide us with people at the mathematical level, because without those people one cannot do the complex work that is necessary at the Atomic Energy Board or at the C.S.I.R., or even, with reference to management sciences, work like the pre-estimation of banks’ cash requirements, etc. Mathematically-orientated computer scientists are needed for that, but it is a pity that at this stage our universities cannot yet send a greater number of business-orientated people into the industry. A need also exists with respect to management sciences, project control, feasibility studies, the collection of information, etc., and the proper use of information for the scientific management of an undertaking. That is where the greatest need actually lies, because outside the laboratory of the developer, the supplier and the manufacturer there is little room today for the highly qualified mathematically-orientated computer person. In South Africa we do not nearly have the potential yet to get our own computer industry on its feet.

As far as our high schools are concerned, as I said a moment ago, we find that as the industry has simplified and the computer become a simpler aid, the level of training for people entering certain levels of the industry has steadily dropped, so that today we have a very great demand for people who have only Std. 10. If we investigate what is necessary for children at school, with a view to linking up quickly with the industry one day, one finds very simple concepts and skills there, things that have to be taught to people today at very great cost while they are in service. One need only go and look at what suppliers frequently have to ask to train such people, and we would then find that the cost of in-service training is 50 times more than a university course. At this stage it is therefore really worth while giving serious attention to introducing a computer course as a formal course at school level.

I have tried to indicate to you the number of people involved in the industry, and I have also tried to indicate that the computer is making closer contact with our everyday life. I recently attended a lecture by someone who holds a foremost position in the development of computer techniques and technology in America. He foresees that we will live to see a housewife from her home being able to switch in to an information network through which she will be able to do her shopping and pay for the items, and that she will also be able to inquire about where she can take classes or get information about Japanese flower arranging, for example. This is the kind of information field we are moving in, where the computer is making closer contact with the man in the street, and therefore we must start thinking about teaching it at school too. By the time, children, who are at present at primary school, reach university level, students will already be making much greater use of computers than is the case today. I therefore believe that from an educational point of view alone it is vital, even now, to present this as a general educational course in schools which are preparing children for post-school training. We must also introduce it as quickly as possible in schools that are preparing children to take up special professions one day, so that the children can fit in productively when they leave school. This applies, for example, to women who are going to work at terminals, with punches, etc.

In this connection we can look at what is happening in other countries. In America it has long been a compulsory subject in most schools, and at certain universities a computer course is a compulsory discipline, even in the theoretical human science studies, because an ever-increasing amount of information can be stored in the computer. One can no longer master all the information, but one has already gone a long way if one at least knows where and how to obtain information. It is interesting to see that in France, according to a master plan drawn up by the Government, they plan to train 180 000 people in computer science in the years 1971 to 1975. Only 55 000 of these people, i.e. 30%, must obtain university training. I can therefore state very gravely that I think the time has come for us to give very serious attention to instituting computer training.

I am aware that the Transvaal is already proceeding with that on an experimental basis, but we must cross over from the experimental basis to general practice and to the national level. Here there is perhaps a problem, since because it is a specialized subject, and because special facilities are needed, it is impossible to do this properly if one cannot do it on a national basis. There is so much work that has already been done in the world in that connection, and there are already so many syllabuses available, that one can bring over some of that knowledge to South Africa, but we could never justify the cost if we did this on a provincial basis. This matter must be planned and tackled on a national basis.

†Having tried to indicate why it is necessary for our teachers to take upon their shoulders yet another subject, I should like to refer to a few points which will indicate that the very same instrument which has brought this burden onto them, can also play an important role in relieving them of some of the problems which will face them. I think it is true to say that a teacher is at his busiest outside his classroom. He is continually marking papers, drawing up lists, tallying numbers and all at varying standards, continually setting up tests and again at varying standards between the various schools. What can be more monotonous and uninteresting and soul-destroying than the typical drill and practice exercises that we find particularly in primary schools in subjects such as arithmetic, language, vocabulary, spelling and even reading. I should like to sketch what has been done by way of relieving the teacher of these chores in particularly the United States. In Chicago, for instance, a system has been installed whereby 32 schools are connected to a central computer. This system concentrates on arithmetic and, as they call it, language arts and English. Sixteen children are brought into a little room with 16 terminals connected to the central computer for only ten minutes a day. It has been found that in this short period of ten minutes a child learns, particularly in arithmetic, the equivalent of 50 minutes’ normal class work. What the child does there is a repetitive kind of drill and practice exercise. One particular boy required only nine attempts before he was able to master long division and another little fellow required 3 000. However-nobody shouted at him and he was not shy because only he and the teacher knew. She obtained a written report about his progress at the end of each class. What is also most important in this case, are the tremendous side-effects that are obtained. In this particular urban area, inhabited by the under-privileged, the high incidence of truancy disappeared almost completely. A high level of learning motivation has been maintained in this class for an extended period of time. All of a sudden these kids, having been able to achieve something in these other classes, have also been able to transmit their enthusiasm into their other subjects and are achieving much better results than before.

I am not for one moment saying that the computer is the end-all as far as teaching problems are concerned, but I do believe that in our particular situation, where we have a shortage of teachers and where we are after certain methods in order to improve the lot of the teacher and to make his job more interesting and satisfying, we can seriously consider this particular development.

I would also like to point out that this Budget currently under consideration clearly indicates that this Government is serious as far as the raising of the level of education amongst the Blacks is concerned. The system to which I referred in Chicago is particularly successful in the under-privileged areas, which just happens to be in a Negro area. They have been able, at a relatively low cost, to bring a level of basic literacy to these people at virtually a fraction of the cost which the normal system, with normal buildings and the normal constellation of people, would have required. I think we can, in the light of what we are already prepared to spend on education, and in the light of our particular problems in certain areas such as Soweto where there is apparently a shortage of teachers, relieve these shortages by applying methods such as computer-assisted instruction.

*It is interesting to look for a moment at the development of this computer-assisted instruction (rekenaar-geassisteerde onderrig). I know this is not a very good Afrikaans term, but I am still looking for a suitable one. Let us call it “onderrig met behulp van die rekenaar” (instruction with the aid of the computer). It is very interesting to see how far this technology has already developed, i.e. 15 years of ups and downs of success and failure until it has now eventually found a balance and a place as supplementary education and not as substitutive education. The teacher can never be replaced. The personal contact, love and security, which a child gets from his teacher, can never be replaced. But those aspects that take up a teacher’s time and prevent him from giving proper attention to all his children, in respect of the formation of personality and character, can indeed be lifted from the teacher’s shoulders.

After the Americans had got off to a haphazard start, and numerous universities had gone off on a tangent of their own, they realized that they had wasted a tremendous amount of money. It was then decided to concentrate all the endeavours at only two universities—the university of Illinois and the Brigham Young University. At the University of Illinois there is a tremendously ambitious project which will eventually have 5 000 terminals. Here, for example, a pre-school child is taught within a few minutes to tell the time because they have, amongst other things, sophisticated equipment where finger impulses obtain a reaction from the computer and applause, for example, is transmitted by means of earphones whenever the youngster has the correct answer. There they are thus engaged in a tremendously ambitious project where hundreds of students are at present working on computer instruction courses as part of their theses. At Brigham Young the equipment is on a smaller scale, but work is being done highly professional. There a team of five is working on small course modules. This team of five consists of a psychologist, an authority in the learning process, a computer scientist, an educationist and a subject specialist. On a small scale, not ambitious in terms of material, these people are doing valuable work, and one can expect very good directive results from them in the not too distant future.

As I have said, one must not be over-ambitious about this matter, and one must not draw too rosy a picture. I believe, however, that it is in the national interest for us to take proper note, at this stage, of this work that is being done, that we obtain what is useful from these people so that we can begin, in good time, to build up knowledge locally. If one did decide to do this today, one could in any case not expect much in the form of results within the next five years. Therefore, since we are now within the sphere of influence of the Budget, I want to allege that if we make the necessary money available in good time, and if we have a co-ordinating body that can prevent our universities from working at cross purposes or duplicating each other, we could possibly in this way make a tremendous contribution, particularly in respect of giving our Black people a basic level of literacy. As you know, what is at present being done in terms of adult education for the Black people can surely not be successful without a basic infrastructure of literacy. I believe that the possibilities I have presented to you can make a contribution to that.

In conclusion let us look only at the strategic importance of the computer in the light of threats we have long been aware of, i.e. that our supplies can be cut off and components withheld from us. I really think it is necessary for us to look at this matter at a high level with a view to co-ordination throughout the country as a whole. There is one of our neighbouring states which has not been obtaining fresh supplies for a long time, but their computer industry is still alive. The reason is that they can use components of one article to keep another going. If we have a veritable confusion of tongues with a hundred of different manufacturers, and we should perhaps land up in a fix, it would not be possible to get out of it easily. There is also a tremendous unutilized potential. I am thinking of computers that are not being used at night. If, in co-operation with commerce, we could perhaps place this computer capacity at the disposal of our researchers on a co-ordinated basis—it is no use wanting to do research with small computers—I think we would have, to our own advantage, gone far towards letting the computer in South Africa come into its own. If we could achieve what we have achieved in the enrichment of uranium and, as the hon. member for Sasolburg indicated to us, could do so much in the production of oil, we can surely use the computer as the aid to education, management and in our everyday lives in the future.

Mr. Speaker, I should like to congratulate the hon. member for Florida on his first effort here. There is no two ways about it that he introduced it on a high level. Today we have had a contribution in the petrochemical field and here we have just had another concerning the computer. I must admit, the discussion is now becoming much too technical and too complicated. As far as I am concerned, I have already reached saturation point. However, I do think that it is completely relevant for the hon. member to have referred to the computer, because scientists tell us that the invention of the computer is as important an event for the businessman and the human sciences as was the invention of the microscope for the pure sciences. As far as the computer is concerned we shall not of course, want to get involved in an argument with the hon. member, as he is proficient in the field, but we look forward to debating other matters, political matters, with him in the future.

Sir, since we should like to return to the debate with a fresh mind, I move at this late hour—

Agreed to.

Mr. Speaker, I move—