Mr. Speaker, I move—

Mr. Chairman, may I ask for the privilege of the half-hour?

Mr. Chairman, when the cabaret is over and the waiter comes with the account one is obliged to pay the account whether the show was good or bad. Here we have the hon. the Minister of Finance in the role of the head waiter presenting the bill for payment. Even though parts of the meal served to us were not of particularly good quality and even though there were some items printed on the menu which we were not served at all and even though there are questions and proposals which remain unanswered from the Budget debate proper, yet we must pay, the taxpayer must pay. Perhaps it is not inappropriate to say that the hon. the Minister ended his reply to the Budget debate by referring to the receipt by him of a vast number of answers in the way of a solution to the problem of inflation, which was the most serious one with which he had to contend. It seemed to us that what he had done was to take all the solutions, put them all in a hat and then endeavoured to draw one, but unfortunately for South Africa he has drawn a blank.

In having to deal with a number of Votes today my major object is to examine the hon. the Minister’s policy and I venture to suggest that the analysis of that policy shows, in the first place, that there is a lack of courage on the part of the Government in tackling the problems which face us today. Secondly, there is a failure to use the fiscal tools which are available and to use them effectively, particularly in the fight against inflation. Thirdly, there are policies which are being applied and which will not enable sufficient employment opportunities to be created, opportunities which are needed in order to solve South Africa’s problems. What is the real challenge facing the hon. the Minister? It is true that a Budget’s object is to keep the machinery of the State running, and this is obviously essential, but what is the real challenge which this hon. the Minister and the Government have to face? It is to use the ability to shape policy, to use the fiscal tools at his disposal in order to shape an economy which can meet the challenge of tomorrow, to create opportunities and to create the foundation for the well-being of tomorrow’s society. The major challenge which, I believe, faces the hon. the Minister and this Government is how to turn the have-nots of the South African society into haves without the existing haves becoming have-nots. I believe, with every sympathy for the hon. the Minister, that he is unable to meet that challenge because he is a captive of the ideology of the political party to which he belongs. I have some doubt as to whether the Government and this Minister, with respect, even appreciate the magnitude of the problem that exists. Sir, I propose in this broad fashion to address the hon. the Minister through you in the first instance.

We have, for instance, sitting at the present time a commission of inquiry not only into the political future of the Coloured people, but also into their economic and social future and their upliftment in that regard. It is a simple question to ask why there is no commission sitting in respect of the economic and social upliftment of the Asiatic people of South Africa. For that matter, what about the Black people of South Africa? It is almost 20 years since the Tomlinson Commission report was issued in 1955. Should we not look again, also, at the economic development of the homelands? It is perfectly true that the hon. the Prime Minister has his advisory council and that we have an economic development programme, but if we are to solve the problems which confront us—I refer here to the economic and financial problems because I do not propose to deal with the political problems at this stage—and if we really are to uplift the non-White people, we need to grow much faster than we are growing, we need to create many more opportunities than exist, we need to train many more people and we need to give those in South Africa who are not White the kind of stake in society that all men want. I refer here to the quality of life that we as White people enjoy and which should not be our exclusive right. Other people in South Africa should have the same quality of life and this requires meaningful alteration in the structure of economic society. It does not merely require small gestures but real, meaningful change in the economic structure of this society. Therefore I want to suggest to the hon. the Minister that he should raise in the Cabinet with the Government the question of appointing a multi-racial commission to investigate and report upon the socio-economic upliftment of all the underprivileged people in this country and to formulate plans which will enable people of all races in South Africa to share in the fruits of our society and, I may say, in the wealth of our land. This commission will have to investigate many facets of our economy, it will have to see what sacrifices have to be made and it will have to present a blue-print for an economic society which will be the most potent weapon not only in the fight against poverty but also in the establishment of an economic order in South Africa that will ensure peaceful co-existence for all. This commission, which I would like to call a “share-in-the-wealth-of-South-Africa commission” or a “share-in-wealth commission”, would be, if I may say so, a magnificent gesture on the part of the hon. the Minister if he could procure it as a legacy to leave behind him when he vacates this office. When I talk about sharing in the wealth of South Africa, I do not mean that we are to give something away but that people must work for what they want, that they must contribute for what they want to receive; but they must have a real chance of attaining and obtaining a share in the wealth of the society that, in fact, is the South African society as such.

When we talk of the recessionary tendencies that exist in other parts of the world, and we look at the policy of this Minister, we are able to say that in many countries that are regarded as being underdeveloped or as still progressing, there can be shown a fairly reasonable growth in the GDP and also in the GNP. What we in South Africa have to do is something which in fact is often not done in other countries in the world which are in a state of developing towards greater industrialization. We must ensure that the growth actually occurs in the sectors where it should occur. Growth can take place in an economy where the rich merely get richer and the poor poorer. In 1955, Simon Kuznets advanced the concept that as underdeveloped countries have developed and become industrialized, income inequalities have tended to widen. This has been more recently supported by research. There is evidence that in certain developing countries inequalities in many cases have increased with an increase in the growth rate. Researches have indicated that out of a sample of 40 developing countries, in 21 the average per capita income of the poorest 20% of the population was less than 28% of the national average income. There are many countries where, in fact, vast sections of the population live below what is referred to not only as the poverty datum line here but an international poverty datum line which is much below that. In India, for example, the per capita income of some 110 million Indians is 38 dollars compared with a national average of 100 dollars. There is also evidence that in the majority of developing countries the benefits of economic development accrue chiefly to the highest 20% or even a lower percentage of the population. I wish to commend to the hon. the Minister that in so far as our programme of growth is concerned, we do not simply ensure that we grow overall but that we ensure that there is also growth in respect of the poorer sections of the community so as to restore some measure of equilibrium between the various sections of the population in South Africa.

The third point I wish to make relates to what I believe to be perhaps one of the most important ingredients of financial policy, and that is the need to have confidence. By this I mean confidence on the basis that people have confidence internationally in South Africa and, secondly, that people in South Africa have confidence in our country. I believe that in finance this is one of the major factors because without that confidence one does not find the willingness to invest, there is no willingness to lend, and one does not have what is required for a flourishing economy which is what South Africa not only requires but sometimes needs very urgently in order to progress in that direction. I believe that when it comes to the question of confidence, we need to have confidence by reason of our ability and necessity to trade because we are a major trading power and depend upon our trade very substantially for our economic success. I should like to refer the hon. the Minister to one important lesson and that is the lesson that I hope South Africa learnt from Sharpeville. We know what happened after Sharpeville in regard to investment, in regard to the withdrawal of foreign funds and in regard to the economy, not because of any economic defect in South Africa but because of its effect upon the confidence of the people in our country. I want to say in all seriousness that I believe a responsibility rests upon the hon. the Minister to make sure that that lesson has been learnt and that it does not happen again. I want to tell the hon. the Minister that there are people today in South Africa who in fact fear what may or may not transpire on our borders. It is no good pretending that things may not happen. This is one of the things we must face realistically. If things do happen on the border, we must ensure that they are not regarded with a sense of shock but that we show not only to the people of South Africa but to the world that we are able to deal with the situation and, what is more important, that we demonstrate to our own people and to the outside world that this will not be a permanent phenomenon of South African life. I believe, Sir, as the hon. the Minister will be proceeding shortly to attend the meetings of the International Monetary Fund and of the World Bank, that he has a particular task there when he talks to international financiers and bankers and representatives of other States to assure them, and to assure them convincingly, that we in South Africa have a solution to the problems of the future; that we are seriously tackling these problems and that there is no need to have any fears that on a long-term basis we will find ourselves in a situation where we have a war of attrition on our borders and disturbances in our own country. I believe, Sir, that that is a fundamental message that must go out to the world, that in fact we are able to deal with our problems; because if we are not able to convince the outside world that they should have confidence in us on a long-term basis, we will have serious problems in respect of various matters which concern our economic and financial position. I believe that the message which the Minister must give to the people he will meet at the International Monetary Fund meeting is, firstly, that we are prepared to bring about real changes with a view to the economic upliftment of our non-White people—and that is why I prefaced my remarks by referring to the commission—secondly, that we are prepared to give meaningful political participation to the non-White people of South Africa and, thirdly, that we will consciously eliminate discrimination and humiliation in South Africa. I believe that the Minister could have no greater weapon in regard to these matters than he would have if on these three issues we could find common ground in South Africa and if he could go forward and say that the concept of the “Share of Wealth” Commission is one which he himself has accepted.

Sir, dealing with the other matters which will perhaps be discussed at the International Monetary Fund meeting, because I think they concern us fundamentally at this point of time, there is no doubt that no one will disagree that there is a need in the world for an agreed code of conduct in respect of the monetary affairs of the world. In the same way as the world, in respect of political matters, appears to be unable to come to terms—those who are strong and tough take one line and double standards are often applied—so we find that the same kind of concepts are creeping into relationships in respect of monetary matters. I think that while generally outlook in respect of finding a solution are pessimistic, the world must somehow find a solution to this problem. I think that there are three particular matters which may cause that to come about. Firstly, I think that if individual countries can put their own house in order, if conditions can be stabilized in the individual countries of the Western world, we will already have gone a long way in the right direction towards finding a solution and getting to terms. Secondly, I think that Governments throughout the Western world, including our own Government, will have to have the courage, if necessary, to introduce unpopular but effective steps in connection with matters which may cause problems internally in regard to their economic conditions, and, thirdly, if that does not work, then the one way in which perhaps the world will come to its senses will be if there is a major collapse in the world and if countries then take fright as a result of this collapse and decide that they are going to do something about it. I want to say to the hon. the Minister that I am confident that wherever that collapse may be, South Africa, with the economic strength that we have and with the application of the correct policy, is not a candidate in this regard. Sir, I think the question that has to be asked very firmly and very clearly is whether in fact the free enterprise system, such as it exists in the Western world today, can continue, if a degree of discipline is not introduced, to withstand the social and political tensions which are being caused by the monetary and economic upheavals which confront us. I do not believe that the solutions are beyond the ingenuity of man. Solutions can be found and the solutions are there, I think, for many people to see. I for one do not want to be presumptuous and suggest them, but there are a number of matters which I would like to draw attention to.

The first is that I think it is very clear that it is desirable that there should be free movement of funds between Western countries at least, if not on a broader basis, for investment purposes. But while I believe in the free movement of investment funds, I certainly believe that there must be control of speculative money and that the disequilibrating capital flows must be brought under control, if necessary, by exchange control measures in certain Western countries. Here again I think we cannot ignore the influence which the Arab money may have on the Western world, not only for economic reasons but for political reasons. Then may I say that the continuing cry of the undeveloped countries for more and more aid and for more and more assistance coupled with less and less desire to help themselves is something which I think needs attention. It is perhaps not out of place here to refer to the fact that the Arab States do not appear to be so forthcoming with the vast quantities of money which they have in order to be of assistance to the under-developed world, and if they have a moral obligation in having increased the price of oil then they certainly have a moral obligation to provide assistance to the under-developed world rather than leave it to the industrialized States to deal with these problems in the future.

Here it is perhaps not inappropriate to refer to what was said by the general manager of the International Monetary Fund only a relatively short time ago when he drew attention to really what was the impact of the movement of the funds and what the effect of this has been on the industrialized countries and also on the under-developed countries, and when he pointed out what the tremendous adverse balances were which were created as the result of this kind of activity. This demonstrates without doubt that the Arab States have a moral obligation to the under-developed countries of the world to be of assistance and that the industrialized States which have played their part over so many years, are now entitled to say it is somebody else’s turn.

If we now turn to another matter which relates to the International Monetary Fund and international monetary conditions, we find that the hon. the Minister spoke in his Budget in two ways. When he introduced the Budget he spoke with great confidence, but when he replied to the debate he spoke in a less optimistic way and referred to the perils which threatened the world monetary system. But, with respect, I want to draw the hon. the Minister’s attention to the fact that there does not appear to have been an adequate appreciation of the serious political consequences which inflation may have, political consequences for us in South Africa, arising from what may happen in Europe. Sir, Lenin is reported to have said that capitalism would destroy itself and that its destruction would begin with the collapse of the currencies of the capitalist countries. Bearing that threat in mind, let us look at what has happened and is happening in Europe. Sir, it is clear that in times of economic stress there is a tendency to swing away from moderate policies to extreme policies, either to the left or to the right. The extreme right is discredited in Europe, particularly by reason of the Second World War, but you will remember that the right came into power in Germany and Italy as the result of economic problems and for very little other reason. The swing now in Europe is to the left and perhaps no greater danger shows itself today than the situation of Italy with its economic problems and the threat that the left constitutes in Italy at this very moment of time. I mention this as an example of this particular issue. But the political implications of this have economic implications for us. We are a trading nation; the Reserve Bank in its report refers to the dependence of the economy on the external trade of South Africa. Here politics plays a part. When left-wing Governments take over in Europe we find ourselves in all sorts of problem areas. Look at the situation in respect of Britain. In regard to Britain there are all sorts of threats in regard to what they wish to do with us economically, and I think it is only their own economic problems which prevent them from really doing something about it. Sir, let us look at Britain’s situation again. As the trade with Black Africa has increased, and as they have, in fact, a greater trade balance with Black Africa than with us, we cease to be of such great importance. Should they overcome their own economic problems, a Labour Government might take a completely different view of us. Similarly, by reason of their relationship with Nigeria, and the ability of Nigeria to provide oil, this is a tremendous factor which we must bear in mind. And I believe that the consequences for our economy of political changes to the left in Western Europe could, in fact, be extremely serious.

I also want to refer, in this context, to overseas capital and to the threats that have been made to us in this regard. Let me here be quite realistic. The hon. the Minister talked about a surplus Budget. It is true, no doubt, that there will be a greater surplus of revenue than he has actually budgeted for. But without borrowing any money, this is a deficit Budget, a deficit Budget of R633 million. There is expenditure of R5 502 million, as against receipts of R4 869 million. There are loan redemptions due, amounting to R513 million. This means that we must find R1 146 million from borrowings in the next year. It is quite interesting to compare this figure of R1 146 million with a figure fo R1 246 million on the Loan Account. How does the hon. the Minister intend to finance this? He is going to take R300 million from Public Debt. He is going to take R315 million from conversions. He hopes to get R52 million from loan levies, R47 million from premium bonds, R100 million from new local loans and R334 million from new foreign borrowings. Sir, with great respect, if we compare this position with that of the last 12 months, we find that in the last 12 months—the period ended June 1974—the marketable domestic Government stock rose by only R7 million, as opposed to the borrowings he intends to make in respect of the forthcoming year. The net foreign indebtedness dropped by R38 million. With great respect to the hon. the Minister, should one not put it to him that there is an elementary lesson here that one should borrow when money is more readily available and rates are more attractive, and exchange rates are more favourable We have now just devalued again. In fact, rates are going up and money is not as readily available. Euro-currency conditions are far from stable, and this is a time when we are now going to go into the market in order to borrow extensively. We have heard the story about the Post Office as well this afternoon. Sir, I believe you must borrow when you can get the money, and you must borrow at the attractive rates. You must borrow under the most favourable rates of exchange at the time. Then, during a relatively strong growth period we did not get the inflow of capital which we wanted. In fact, at times there was an outflow of money. We are told that this is due to an interest differential, speculation in the rand and switch of trade credits. If I may put it to the hon. the Minister, Sir, this is an aggravating feature because if there is an outflow of capital, it will aggravate inflation as it has done.

Was the outflow of capital mainly due to interest rate differentials? I believe that there were other reasons as well. There was an outflow due to long-term capital repayments by the Government, which resulted is a negative situation of R24 million for the year. There was also a stock exchange outflow of R46 million. What is interesting here, is that this R46 million outflow was at a time when stock exchange prices were, in fact, lower, except for gold, when higher dividends were being paid, and when a very interesting set of facts appeared, pointing to the fact that ever-increasing percentages of our gold-mines are being foreign held. A publication by a very reputable and leading firm of stockbrokers demonstrates that, for example in respect of Free State Geduld, no less than 43% of the shares are held through American depository receipts, of Durban Deep 29,1%, of Welkom 29%. There is a long list of shares which are being held by overseas investors. Then there is the question of the outflow of short-term capital. We already knew in the middle of 1972 that the differential has turned against us in respect of the United Kingdom, at the end of 1972 in respect of the U.S.A. and in 1973 in respect of Germany. Yet there were adjustments only at a very late stage. I want to say to the hon. the Minister that if you interfere with market mechanisms you must be constantly vigilant in order to take remedial measures as soon as possible. Then there is the question of speculation against the rand. Together with interest rates this is again in respect of the movement of goods. It is quite clear that we could take certain actions. I believe that we can tighten control in respect of the terms of payment in regard to exports. Secondly, we could give incentives to borrow abroad when it is desirable to do so for the economy. When speculation against the rand starts, it is necessary to act decisively and not to dither around and do things which only lead to delays.

Let me for a moment talk about banking. All over the world there are fears in respect of banking institutions. We have seen the situation in Germany in respect of banks; we have seen the situation in America in respect of banks and we have also seen the French banks in the United Kingdom in trouble. I want to say here so that there is no misunderstanding about it, that I believe that in regard to the banking structure in South Africa, the public is entitled to have every confidence in the stability of that structure. I also believe that the legislation which exists, while no doubt like all legislation is not perfect and can be improved upon, is something of which this country can be proud because it regulates our banking structure in an effective manner. Before I forget it, I believe that the status of the registrar’s office might well receive the attention of the hon. the Minister. May I again refer him here to paragraph 902 of the Franzsen Commission’s report in that regard, as insufficient time prevents me from quoting what was said. [Time expired.]

Mr. Chairman, with due respect for the way you have been controlling this debate, I am sure you will permit me to remark that if I had not been present when the consideration of this Vote was moved, but had entered the Chamber a minute or two later, I should not have been able to gather, from the speech by the hon. member for Yeoville, that he was engaged in discussing the Treasury Vote. I had the impression that he was giving a speech on the Fabian Society in London, a society whose aim it is to promote Socialism in the world, particularly in Great Britain, at all costs.

We are, of course, in full agreement with the hon. member for Yeoville that we should continually strive to reduce the gap between the haves and the have-nots. On this point we are in full agreement with the hon. member. Where we differ with him, of course, is in respect of the method to be applied to reduce that gap. This reminds me of a good friend of my youth whom I knew just after I had taken a degree in economics and law at the university and was very clever about all these matters. At one stage I discussed this matter with this good, practical friend of mine. After listening to me, he remarked as follows: “Wynand, I am prepared to pool my assets with those of the haves and have-nots and to divide them equally amongst all of us, but only once.” He would then live frugally again and work hard and by so doing build up a fortune again, while the other people who had pooled nothing but had nevertheless shared the prosperity with him, would simply spend everything, become lazy and refrain from working as they did before. That is why he was prepared to pool his assets with those who had nothing, but only once.

Now the hon. member is asking for a “multi-racial commission to create a socioeconomic uplift for the non-Whites”. Sir, a commission is not necessary for that. That is precisely what this Government is doing; that is precisely what this Government has been doing over the years and precisely what it is again doing in this Budget. Surely this is what it is doing by giving the entrepreneurs incentives to create employment opportunities. Because, Sir, the surest way of uplifting the have-nots, is to create employment opportunities for them. If they do not then want to make use of those employment opportunities, then no government can help that. This Government does make provision for those employment opportunities.

Having heard so much this afternoon from the hon. member for Yeoville about what needs to be done to uplift the less privileged, the less fortunate in our society, I want to break a lance for the entrepreneurs in our economic set-up. They are people who do their utmost to create employment opportunities and opportunities for promotion. After all, a people does not become great merely by standing with open hands and expecting the Government, or whoever it may be, to fill them. A people can only become great and economically strong if it uses both its hands, together with its head, to develop to the utmost of its ability.

I can understand why the hon. member for Yeoville is getting worried about the leftist tendencies of the governments of Europe. On the one hand he is worried about the fact that the have-nots do not have enough; on the other and he is worried that the leftist tendencies are taking over. Then he mentions the example of Great Britain. Sir, do the problems of Great Britain not lie in the very fact that when a Conservative Government is in power, its ability to rule is paralysed by continual strikes, with the result that wages rise much faster than productivity? In that way Great Britain is being priced out of the world market. She is pricing herself out of the world market. I repeat, I want to break a lance this afternoon for the entrepreneuring class in our economy which creates those possibilities of wealth for everyone; not only for the entrepreneurs themselves, but riches for everyone who wants to work. It is the problem of Africa today that the enterpreneuring class are being driven out, with the result that the masses in Africa are sinking back into absolute poverty. Then they go and complain from the platforms of the world that the rich countries of the world do not care for the poor countries, whereas they themselves have driven out of their countries those who could have brought about their upliftment. They even made it impossible for the entrepreneuring class to continue with their enterprises. But I have now followed up on the hon. member in the Second Reading Debate for long enough.

I now want to deal with the Treasury Vote and bring to the attention of the hon. the Minister a small matter which is troubling many of our people. I have had a number of calls recently from people who knew that I was on the Stock Exchange Commission. These people complained to me that they had to wait interminably for delivery of the shares they had bought. In 1971 we adopted a Stock Exchanges Control Amendment Bill. In clause 3 of that legislation we granted very wide powers and very substantial protection to the stockbroker. We admit that before that time they had suffered heavy losses as a result of buyers not honouring their commitments, and so we granted very substantial protection to the stockbrokers by providing that a buyer of shares had to pay for them within seven working days. This, of course, entails that the buyer has to pay before getting hold of the share certificates. This, again, lays a very heavy burden on the buyer; it places him in a very uncertain position, because in the case of bankruptcy of a stockbroker, such a buyer could lose big money. Admittedly, it is true that we did build a certain amount of protection for him into that legislation.

He can make arrangements with the bank.

Yes, I am coming to that. The hon. member should just contain himself a little. For example, the purchaser can buy through a bank against payment of the shares. Another means we employed to protect the buyer, was to provide that the Stock Exchange should build up a guarantee fund strong enough to reimburse the people who would otherwise have suffered loss in all such cases. The point is, of course, that the brokerage was raised from 0,75% to 0,85%, in other words by one-tenth of a per cent, to make that fund sufficiently strong. Whether a buyer buys through the bank or not, it is costing him money because he has to pay that increased brokerage. Now the only permanent, or the best, solution is still that there should be far quicker transfer of certificates. In that same legislation we provided for the Registrar of Financial Institutions to have a representative on the Stock Exchange Committee, namely the Deputy Registrar. Now we want to ask the hon. the Minister in all courtesy to see to it that this representative of the Registrar of Financial Institutions on the Stock Exchange Committee endeavours to ensure that the companies’ transfer secretaries transfer shares which are bought or sold, much faster. That is the only sure way for the buyer as well as the seller to be protected in cases where there is bankruptcy of a stockbroker. [Time expired.]

Mr. Chairman, I want to tell the hon. member for Yeoville that he is still going to become very bitter, impatient and frustrated in this House. He stood up here today and was very earnest. He spoke very earnestly to the great financial powers in the world and suggested what they should do. I found it striking that he spoke for half an hour without once saying what the United Party thought. He did not mention his party’s name once; for the whole time he only spoke about what he thought and about what should happen. I have news for him. It is that neither the Minister nor the world powers are going to listen to him. They are not going to take much notice of what he said.

I want to refer to a few things he said here and to a few attacks he launched on the hon. the Minister. He said, inter alia, that the Budget of the hon. the Minister gave no evidence of policy. He mentioned, inter alia, three points of criticism, which were “a lack of courage”, “failure to use the monetary and fiscal tools”, and “there is no creation of employment opportunities”. I want to tell the hon. member that I think he is being unfair. I think that if he were really to think it over, he should rather give credit where credit is due. To submit a growth budget like the one the hon. the Minister submitted during the period of high inflation we are experiencing at present, is evidence of courage; it is a measure of courage. It has been proved in the past that this is in fact a method of fighting inflation. A firm hold was kept on inflation and it did not get out of hand. In comparison with other countries, inflation in this country is still under control. The hon. member can criticize, but then he must be fair.

Now the hon. member says that no use was made of monetary or fiscal measures. A growth budget cannot be submitted unless one makes use of monetary and fiscal measures. A great deal of use was made of them. I expect greater insight on the part of the hon. member. Lastly he said that there was no creation of employment opportunities. I do not think that we can argue much about that. The hon. member said that the have-nots should also become the haves. How on earth does he want to achieve that? I want to ask him whether or not he advocates a redistribution of profits and of the prosperity of the country. In the past this Government, using all possible means, has tried to create industrial development and thus employment opportunities in this country. Take, tor example, the role played by the I.D.C. over the years. However, what do we get from hon. members opposite concerning the I.D.C.? We get the terrible accusation that we now want to engender socialism in this country. If the hon. member wants to make a speech of that kind, he should be specific in his references, otherwise I could accuse him of pursuing socialism.

I just want to put a last question to the hon. member. He attacked the Minister in regard to the method used to borrowing money. As he summed up the situation, this was not a suitable time to borrow money because money is expensive at the moment. I want to ask him: Does he borrow money when he does not require it, or does he only borrow money when he does require it? One is in the grip of circumstances; one cannot do anything about it. Where one is in the situation where one needs money, one has to borrow it whether money is expensive or not. Sometimes money is cheap and sometimes it is expensive and the two balance out in the end. I therefore think that the hon. member was somewhat unfair in his attack on the hon. the Minister.

I do not want to continue discussing what the hon. member for Yeoville said; instead I want to be a little more positive now. I want to talk about the Statistical Survey which the Minister made available to us. This is a publication for which I want to thank the Minister. I think that it is a fine and outstanding summary of our national accounts. It also provides exceptionally good figures, percentage-wise, of what is going on in the inner workings of our economy. It enables one to compare various sectors properly with each other. These days we hear a great deal about change; we are attacked about it by the other side of the House and specifically by these seven wonders who have come to the House and who want to tell us in what way we should change. I just want to say that I think that they are the seven biggest dangers to the identity of the White man in South Africa. Changes are in fact taking place in South Africa, although they are not, perhaps, the kind of changes which they would like to see. The changes which are taking place, are taking place under the government of the National Party and in the opposite direction to what they would like to see.

I am referring now to the idea that in the old days, on becoming a Union, South Africa was a country with a unitary economy. Although it was really a country with a dualistic economy, it developed in later years, under the National Party, into a state with a pluralist economy and, especially, into a pluralistic political dispensation. The idea of pluralism among different peoples was given more content under the activities and the guidance of the National Party. Today we have the position that there are eight different peoples, each with its own legislative assembly, except for two, as far as I can remember. We have progressed so far that in the case of one of them steps have even been taken towards sovereign independence. Each of the others already has a legislative body which constitutes the last step before one arrives at sovereign independence. The geographic borders of these territories have already been defined, except for one or two of them. This development has already reached this advanced stage and as I have said, this step of becoming independent, has already been taken by the Xhosa. Chief Matanzima has already stipulated the latest date by which independence must be attained.

I read in the newspapers that he said that this date will be 1976. This being the case, I think it is time that documents such as the ones we are tabling clearly reflected the pluralistic conditions of South Africa, this many-sided economic dispensation we are living in. I therefore want to ask the hon. the Minister this afternoon whether one could not extend this brilliant piece of statistics we have here to include, inter alia, certain information in respect of these self-governing countries within our territory. In the first instance, the size of the country may be given. Secondly, the population of each of these countries may be indicated. Thirdly I think it is important that the gross domestic product of each country be included in this information. Fourthly, we should also provide the growth rate of each of these countries.

There is also the important point—possibly one of the most important—that we can include the per capita income of each of these countries plus the per capita growth rate of each of these countries. I concede that it would be no easy task to calculate these things and that, in any event, they should not be absolutely accurate. Yet I believe that some information would be better than none. The position today is that each of these homelands has its own government. Each has its own budget and its own government machinery. I want to say that such a calculation has, in fact, already been made. I do not know what the exact date was, but I think that it was done in 1970 or 1971. It was done by Profs. Van der Merwe and Lombard of the University of Pretoria. They made a calculation. In another debate last year I projected their figures to 1972. I took the figures for the gross domestic product and the population increase and the figure which I eventually arrived at for the homelands made very interesting reading. [Time expired.]

Mr. Chairman, unfortunately our time for this debate is very limited. I hope, therefore, that the hon. members for Paarl and Pietersburg will pardon me if I do not react to what they said. As far as I am concerned, however, the messages they had to convey were of a completely uncontroversial nature.

In the speech which the hon. member for Yeoville delivered this afternoon he too had a message to convey to this House. The message I found interesting in that speech was the need for the Government to take what steps it can to insulate our economy from the adverse influences which may come from other countries of the world.

I would like to carry that theme a little bit further into the area of public debt, into the area of capital formation and into the area of savings. The hon. the Minister, when he spoke in the Second Reading debate, was quite correct when he emphasized the part which the promotion of savings can play in the fight against inflation. In my view the part which savings can play is probably second only to the promotion of productivity and the tight control of Government expenditure. The other side of the coin, of course, as far as the promotion of savings is concerned, is the vital aspect of the part which savings can play in providing the necessary finance for the capital requirements of our country.

Sir, Barclay’s Bank made an estimate recently that the savings that we will accumulate over the next five years in South Africa will fall short of our investment needs by something like R3 000 million; that is an average figure of R600 million a year. If this shortfall occurs, as I am sure it is going to occur, it can only be made good by a capital inflow from foreign countries. To me it is a sobering thought that over the past six years, there has been only one single year in which the capital inflow has equalled or exceed that figure of R600 million which is going to be required each year over the next five years. Under the present position in oversea money markets, with the present uncertainties prevailing there, the position is certainly not improving and may well get worse. Mr. Chairman, to me this all points to one thing and that is the need to take energetic steps to promote our domestic savings. When one looks at what is happening in the domestic savings field, one finds that it is in the area of personal savings that the major effort should be made. Personal savings over the years, in total, have normally been about twice as much as corporate savings, the other main source of savings.

Last year personal savings, for the first time, fell to a lower figure than corporate savings, so it is clear to me that there is ample scope for success in the promotion of personal savings. That thought is reinforced by the fact, a fact which is continually rammed down our throats by Government speakers, that salaries and wages have in fact been rising at a higher rate than the rate of inflation so that there is an increase of individual income available to be saved if you can induce persons to save. I suggest to the hon. the Minister that what is needed is an imaginative and a major campaign to promote personal savings, but if that campaign is to be successful the Minister must realize that public enemy No. 1 in this matter of savings is inflation. If the rate of interest, reduced by the amount of taxation that has to be paid on the interest, falls below the rate of inflation, then there is a negative real return on savings. In that case, which is the position as it exists in South Africa today, to put it perfectly bluntly, it is better to spend than it is to save. Sir, this is where the premium bond falls down; this is where the Post Office Savings Bank certificates fall down; this is where national savings certificates fall down, because despite their tax advantages they have a negative savings pull because the rate of interest applicable to them is lower than the rate of inflation.

I believe that if the hon. the Minister is to be successful in a savings campaign, he must do one of two things; either he has got to provide a savings scheme which provides an effective answer to the inflation disincentive, or he has got to provide savings schemes that provide other attractions. In the first category, namely providing an effective answer to the inflation disincentive, I think that the index-linked bond which was suggested by the hon. member for Yeoville in his maiden speech deserves further investigation. This has been tried in other countries. It has been tried with spectacular success in countries such as those in South America, where the rate of inflation has been very high and the success attending to it has been that savings have multiplied many times and the inflation rate has dropped. I find a great deal of equity in the idea of paying back in real terms what you borrow, and I believe that that equity and fairness should appeal to every member of this House.

The second category of saving schemes to which I think the hon. the Minister should give attention, is those that provide other attractions. I would suggest two. The first I think he should look at is the premium bond on the British pattern, where the interest on the bond, or part of the interest on the bond, is drawn by lot to pay cash prizes to the lucky participants. This has proved extremely popular in Britain. It has induced savings on a large scale and has induced savings on a stable basis in that investors in these premium bonds have tended to keep their money in this scheme rather than withdraw it, because by keeping it in the scheme they continue to qualify for possible cash prizes. I do not think this scheme is subject to criticism as being a gambling idea, because it does not have the moral disadvantage of ordinary gambling in that the investment in the scheme is not subject to the risk of loss. [Time expired.]

The hon. member who has just resumed his seat, tried to make a very strong case for saving. I have nothing against the hon. member trying to do this, but the hon. member tried to encourage saving in South Africa by means of schemes involving indexing of interest rates, or lotteries, like the scheme they have in England, where people may be fortunate enough to win the lottery and thereby, through luck, be encouraged to save. I do not think that we in South Africa, who have already discussed this matter in this House on previous occasions, are interested in encouraging our people to save by those means. Saving in South Africa in these times of inflationary conditions is not so easy, because inflation clashes with saving, and one cannot solve the matter so easily by holding a carrot in front of one’s people in the form of indexing or in the form of a lottery which they may win. I think that we should be far more positive. If the hon. member mentions the fact that we shall have a shortage this year when effecting the necessary financing in the country as a result of the non-inflow of foreign capital, then there are other reasons for that. Then, perhaps, it is a question of our pattern of interest rates which has not been high enough internally to attract the necessary inflow of capital here. One has to see these things in perspective.

The hon. member for Yeoville also referred to the confidence which the world must have in South Africa. In a previous speech I have already said that the best way of creating confidence in any country or its economy is to establish a strong and stable government there, like the one we have in South Africa. Particularly in this world we are living in today, this is priority No. 1, because pressure is being brought to bear on many governments with regard to higher wages which, in their turn, have an inflationary effect. This makes it difficult for those countries to find a solution to inflation, because the Government does not have the strength to take steps which would in fact be capable of combating inflation. However, we in South Africa have a strong government which often takes what are, perhaps, in the view of our people, unpopular measures, but which does this with the very purpose of breaking inflation, or at least checking it. However, I do not want to follow the hon. member up on this point any further.

I now come to another matter. In recent times we have become very aware of the rise in food prices. Over the past year, food prices have risen very sharply. Whereas we in South Africa have always thought that we had reasonably cheap food, we are now realizing that we are entering a new period in our history. We do realize, too, that everything in our power should be done to check this tendency in the best possible way. Solutions have been suggested. In this House we have heard from the Opposition that the solution to these high food prices should perhaps be sought through subsidization. We on this side of the House who have experience of this matter, are aware that it is not so easy to distribute the benefit of subsidies equally among the various population groups and strata. Since this is not easily done, we should investigate other methods as well and consider how best to ease the burden of rising food prices for our consumers.

In recent times we have had to deal with rises in the rates of interest to such a degree that the agricultural industry, which has really been very sympathetically dealt with in the past in this regard, is finding that its burden, too, is weighing more heavily upon it. I therefore want to ask the hon. the Minister to give attention to the possibility of coming to the assistance of the agricultural industry in an indirect way. In looking at the agricultural industry in South Africa, we realize that it is practised over a very wide field in South Africa and that we experience a high degree of instability in this industry. However, we also see that the agricultural industry makes a substantial contribution to the gross domestic product of South Africa. Over the past ten to twelve years that contribution has increased from R555 million to about R1 300 million last year. The percentage contribution to the gross domestic product, however, has dropped from 11% to about 8 %.

Our agricultural industry is a very important and basic industry in South Africa, particularly if we also consider the employment possibilities in agriculture and take account of the fact that the agricultural industry is also instrumental in training labour. Take our export trade. According to the 1972 statistics we exported goods to the value of R1 899 million. Of this total, the contribution by the agricultural industry was R754 million or 39,4% of the total export value. If these figures are borne in mind, one realizes that whereas there is a constant struggle to balance our export and import figures, the contribution made by agriculture is of such a nature that every time agriculture does make its contribution, we have no problems with our balance of payments.

I therefore have no hesitation in making a request to the hon. the Minister. This year R24,l million has again been made available to the Land Bank, of which R12,l million is to be utilized for the construction of mass stores and R12 million, together with other capital, which will have to be found, to make it possible for there to be long-term financing in agriculture. In view of the increased demands which are going to be made on the agricultural industry—since agriculture is an enduring asset, whereas many of our commodities are diminishing assets, even our gold—it is time now to assist our agricultural industry in its present condition, also owing to the fact that we have to assist the whole population so that they may obtain cheaper food—since the financing of the agricultural industry is going to play such an important role in the future—by providing the Land Bank to a greater extent with long-term and inexpensive funds in order that it may obtain more money on the open market and need not push up its interest rates for the agriculturist. This R11 million which was available last year, was really only a quarter of the amount which the Land Bank required for long-term financing in that particular year. I think that the burden on the Land Bank for financing is going to become very great. The rise in produce prices, too, stimulates the need for financing in the agricultural industry, to such an extent that we are going to have a very heavy burden on the agricultural sector of our population who will not be able to cope with this high interest rate of 12%-13%. That is why I want to ask the Minister to be so kind as to look into our gold position. Because we are so fortunate in this respect, could we not perhaps yield a little and adopt the policy of diverting more money to the Land Bank in order to assist by means of cheaper financing, and in so doing, assist all our consumers directly by producing cheaper foodstuffs. [Time expired.]

Mr. Chairman, since the hon. the Minister put forward his Budget proposals which, as the hon. members will recall, entailed increases in Government expenditure to the order of 23% on Revenue Account and 25% on Loan Account, the Governor of the Reserve Bank has delivered his annual report from which I should like to quote the following—

And then he want on to say further on that for some time now the monetary authorities have been pursuing a more conservative monetary policy which they will have to continue to apply in respect of the creation of credit for the private sector from the banks. In short, the Government’s own expenditure is not to be subjected to scrutiny either as to timing or to pruning. The private sector, however, is to be forced into an economic strait-jacket by a tight money policy. I do not want to discuss now the fact that the scenery has not changed since the last time that happened, nor do I want to repeat my previous argument as to what we might otherwise enjoy in this country. However, I would like to draw the Minister’s attention to the implications of the divergent courses which are now being followed by the fiscal and monetary policies of the Government, and the effect these are likely to have for South Africa. The first effect, the obvious one, is that this is going to enhance the role of the Government sector in the sense of its degree of participation in our mixed economy. That will happen, Mr. Chairman, even if the present terms of trade continue and show even further improvements in our favour, but more so if they do not. The Reserve Bank is also likely to come under pressure because it will find it very difficult to resist pleas when Government orders are placed. As justification will be advanced that this is in the national interest of the country. And therefore the Governor will almost inevitably be forced to bow. To that extent it will create money in South Africa, and to that extent it will be a self-defeating exercise. It will also take a way from the potential level of finance which would otherwise have been available to the private sector for more productive purposes. It may also act to put pressure on the balance of payments. In essence, the Government has put the private sector at an even greater competitive disadvantage vis-à-vis itself within South Africa.

The hon. the Minister and members of the Government have time and again exhorted businessmen in this country and drawn attention to how important it is for the private sector in South Africa to increase its productive capacity, particularly that of the manufacturing industry. We agree with such sentiments and, indeed, would support their implementation. However, we would give them a different priority for achieving their success than this Government. But let us look at the content of the proposals of the hon. the Minister and his Government, no more and no less. The private sector, as I have said, will be put at a very grave competitive disadvantage vis-à-vis the Government. Its ability to attract domestic capital from South Africa will be seriously impaired. Therefore, the private sector will have little or no choice. It can do one of two things: It can either arrange credit, or, if it is lucky enough to have the cash available, it can be permitted to import essential equipment or it can borrow from overseas. The Minister has encouraged businessmen to borrow from overseas, and he has given concessions to utilize ways which were previously denied them. That is certainly something, and the concessions are to be welcomed. But in so far as the import option is concerned, it will not remain open for very long, and certainly not on the required scale, because inevitably it is going to increase the strain on the balance of payments. We all know that demand is getting to the point where it is already surpassing the productive capacity available. But let us be quite clear about the consequences of what is going to happen. Given that we are one part of a world capital market, we are going today to have to pay the going rate for the money which we wish to borrow and bring to South Africa. We cannot expect any preference in that market for this country. Indeed, one could rather expect the reverse. Those rates are extremely high, particularly for long-term loans, if in fact at this point of time, in view of the liquidity preference of the Arabs, it is possible to raise long-term finance at all. The state of the Euro-dollar market of course leaves a very great deal to be desired. Sir, the monetary instability elsewhere in the world is with us. However much we would like to wish it away, we cannot do it. Therefore, my concern today is to try to draw attention to what can be done for South Africa without the help of others.

The private sector, in the light of the fact that it can in fact borrow from overseas, as I have said, will have to face up to the increased cost of money. It will be forced to pay rates of the order of 15%. That will push up costs and add to inflationary pressures in South Africa. It will also probably be reinforced to the extent that money is used to purchase essential goods from overseas, where the rate of inflation is even higher than that which prevails in South Africa. What money is available, save than to a few, is likely to be on short term. That is not likely to engender business confidence. Businessmen are quite aware of the dangers of borrowing short and investing long. They have to find the money to finance their working capital requirements to replace their assets and to replace their inventories against a prevailing rate of inflation of 12%, and which is still rising. They need to have that extra money to stand still, let alone to expand. Even the hon. the Minister acknowledged that fact in his reference during the Budget speech to the general effects of inflation.

In real terms, of course, those are the same factors which are producing the appearance of very great profits in South Africa. This is not to argue the level of profits which has been low recently; it is simply to say that in real terms they are not what they appear. Now, Sir, how is it going to be done? How are we going to expand the productive capacity of the private sector? I do not expect that it can be done in the way we would wish, and, indeed, probably in the way the Minister himself would wish. The result of the proposals of this Government is that the productive capacity of this country is going to limp into the future bleeding. It is yet another lamb which is going to be sacrificed on the altar of Nationalist policy. They are placing in jeopardy both the present economic wealth and that of the future which should be enjoyed by all our children. Although they deny it, they are steadily making inroads into the private sector, and we all know the name which is to be found at the end of that road. The Government must face reality. It is going to come sooner or later if that is the road it is determined to follow. The Government must accept that the cost of capital is nearly 15%. Let us have no more talk from those hon. members that 15 % is a reasonable return before tax on capital employed. To do that is simply to discourage or rather to put a blanket over the private sector.

This is something which the hon. the Minister and the Government have denied up to now—I hope they will not continue to do so. There is a limit to the number of investments in South Africa which hold out any anticipation of a return attractive enough for people to want to borrow large sums of money at 15%. Methinks the Government doth protest too much, particularly when one considers the scale and scope and present activities of corporations such as Iscor. This is a matter to which I should like to return under the appropriate Vote.

Finally, because my time is short, I should like to raise the question of the gold-mining industry. I agree with the hon. the Minister that this industry has served the country well and should be encouraged to do so in the future. However, it will only be able to do that if it can attract the capital which is required. The hon. the Minister is as well aware as I am of the fact that the sums of capital for the future requirements will be very large. Of course, it is to be welcomed that the hon. the Minister has raised the capital redemption allowance from 8% to 10,% but does he really think that is the cost of effective capital for the gold-mining industry? It only goes part of the way. I should also like the hon. the Minister to look at the present formula for the taxation of the gold mines. He should see whether it is still appropriate for the situation as it now is as opposed to the set of circumstances which prevailed in the past. We now have a price which* can fluctuate wildly as experience has shown. We need substantial capital, as I have said, to mine additional ore, such as for the three additional new mines that have already been announced. What is required is a tax formula which will encourage the opening up of these new areas in spite of the added risks arising from the uncertainty as to the price to be received. I am not asking the hon. the Minister to take less from the gold-mining industry, that is, to reduce the level of taxation. [Time expired.]

Mr. Chairman, I wish to start by replying to the hon. member for Johannesburg North. He has made a few general statements without giving any proof of what he said. In the first place he attacked the Government again for encroaching upon the private sector of the economy. He said that the Government was participating far too much in the private sector but he did not furnish us with any proof at all in this regard. He was just making a general statement but we want him to give us some proof of this. Last week, when I replied to the hon. gentleman, I mentioned a few of the corporations in which the State is investing money. I challenge that side of the House and the hon. member for Johannesburg North to tell me which of the State corporations has to be abolished. Is it Iscor, Escom, Foscor, Sasol, the S.A. Railways or the Post Office? These are the corporations in which the State invests money. Does the hon. gentleman mean to say that we should not have these corporations? Does he mean to say that they should be abolished?

Mr. Chairman, may I ask the hon. the Minister a question?

I am speaking now, the hon. member can get up again and ask me his question at a later stage.

In my reply I stated that the State has invested in these corporations. Now the State is being criticized by the hon. gentleman on the other side of the House for encroaching upon the preserve that used to belong to the private sector. The hon. gentleman says that the State is taking away the capital from the private sector through, I believe, these State corporations. I do not know what he means by that. Does the hon. gentleman not know that most of the capital which is used by those corporations, be it Iscor, be it Escom, be it the Railways or be it the Post Office, is borrowed from overseas? It is not always taken away from the private sector. Had the hon. gentleman known that he would perhaps not have made this attack on the Government. The hon. member talks about factors such as the interest rates. These are factors which are not peculiar to South Africa. These are factors which you find all over the world. If you cannot find the money overseas because the interest rate is too high, it is not the fault of this Government. I know it is very expensive, but do not blame this Government for the fact that money is expensive overseas. That is actually what the hon. gentleman’s words amount to. He talks about the scarcity of money and of capital, also in South Africa, and he gives the reply himself. It is not the fault of this Government but it is due to world circumstances. He mentioned world inflation; can he deny that world inflation is one of the reasons why there is a shortage of capital all over the world. This serves at the same time as a reply to the hon. member for Constantia, who made a very good speech. Inflation is one of the main reasons why people do not save and why there is a shortage of long-term capital in the world. Most investments are short term and not long term. The hon. member gave the answer by referring to the Arabs. Is that not one of the main sources of the shortage of capital in the world? Hon. members need not laugh, although they react that way when they feel a little unsure of themselves. I shall come back later to other remarks made by the hon. member for Yeoville, but I want to say that we know that payments to the Arabs in respect of oil draw money out of circulation in the rest of the world. This makes capital scarce. The hon. member mentions the monetary instability in the world. All over the world we have these factors which are the cause of shortages of capital in the world, here too. Yet, the hon. member for his own purposes blames this Government for the shortage of capital.

He said at the end that we were taking all the money. He talks of the balance of payments, but has he studied the balance of payments on the import side and seen what it consists of? If he had done so, he would have found that most of the imports into this country are goods that are imported by the private sector and not by the Government. Escom and the South African Railways and Harbours may be responsible to some extent, but private industry in this country is importing huge quantities with their own savings or else by means of money which is given to them in the form of bank loans.

I want to come back to the claim that we are intruding upon areas where we do not belong. Who is the greatest creator of capital, the greatest investor in South Africa today? The greatest investor in South Africa today is not the Government. The Government’s fixed investments amount to about one-seventh or one-eighth of that of the private sector. Was the 50% increase in bank lending last year money lent to the Government? I get no reply from the hon. member. That 50%, one of the highest increases in the world, did not go to the Government but to the private sector. We on this side of the House are getting sick and tired of this groundless attack on the Government that we are entering the field of private enterprise.

I want to come to the hon. gentleman for Constantia. I must say that he made a very good speech. He and I do not always agree, but we disagree in a friendly way. However, I fully agree with the hon. gentleman that savings are very important for the development of the country. I know that the savings rate in South Africa is far too low for the development which we would like. Again, I want to say that I do not put all the blame on the world situation, The inflationary conditions in which we live are partly the cause of inflation and partly the result of it. I know that the savings are too low and that we shall have to import capital from abroad. I know that in due course, because of conditions in Europe and America becoming more normal, capital will be more readily available. I think too that interest rates will be lower and we will be able to get more money at a lower rate of interest. However I fully agree with the hon. member that we should do everything we can to increase particularly private savings in this country. I do not agree so much with the means suggested by the hon. member to effect it. He mentioned the premium bonds similar to those they have in England. We have discussed this matter for many years in this House. As a Government we have always objected to this scheme because we say that premium bonds contain an element of gambling which we do not favour.

*The hon. member for Yeoville made an interesting speech here. At the outset he had a few digs at me, but his speech was nevertheless an interesting one. In any case, it sounded interesting, but upon close examination it would have been seen to be a very interesting speech for a debating society. In this Parliament we are dealing with concrete proposals and we do not want generalizations which reach for the sky. We are asking for proposals in regard to what is really fundamentally necessary.

Now you are being a politician.

In the first place the hon. member told me that as far as the theories which I had advanced to combat inflation are concerned, I had drawn a blank, that I had not proposed the correct solutions. However, the hon. member cannot give me an explanation of why it is that the level of inflation in South Africa is lower than that of most countries in the world.

Now you are making a mistake. I have all the figures here.

I am not making any mistake. Our rate of inflation is one of the lowest compared with comparable countries in the world.

How does it compare with that of West Germany?

Yes, West Germany is one exception. I was going to mention it. There it is about 8%.

What about Holland?

Compare it with England, France, America, Italy and Sweden. Our rate of inflation is one of the lowest compared with the rate in those countries. There are in fact a few where the rate is lower than here in our country.

I have them all here. You are making a mistake.

Order!

What about Holland?

I say that South Africa has one of the lowest rates of inflation compared with those of comparable countries in the world, and I stand by my statement. West Germany is an exception. Holland may be another exception; though I am not so certain about that. At one time Holland had a rate of inflation of 11%.

We must not go back to the position years ago. I am referring to the present position.

Order! The hon.

member cannot make a speech now.

Why then is our growth rate the highest of all comparable countries?

West Germany is less; Belgium is less ...

I am making a speech now. Singapore has a growth rate higher than ours, and so does Libya—all the places which have oil. Of the comparable countries in the world South Africa has the greatest real economic growth. When we consider the national income, we find that South Africa has a growth rate of 10% today. Is there any country in the world which has a national income today which increased by 10% above that of last year? The hon. member simply wants to show how poorly we compare with other countries. The hon. member is a newcomer to this House. I want to ask him in a nice way now, at the beginning of his parliamentary career, not to follow the example of other hon. members. He must not follow the example of many of his predecessors here by depicting South Africa here as the country with the most unsatisfactory or weakest economy in the entire world.

I am not doing that.

No, I am merely issuing a warning. The hon. member made a second remark which I found very significant. He spoke of a “lack of courage”. He said that this Government did not have the courage to do the things it should do. Why do they not have the courage to tell us what their policy is? Why did that hon. member not tell me what his policy is? The hon. member said here: “They have not got the courage to follow the proper policies”, but he never once told me what his policy in regard to the combating of inflation was.

I did so for an hour during the Budget debate, but you did not reply to me.

Then the hon. member must have said very little, otherwise I would have replied to him.

I said a great deal about it.

Order! I have warned the hon. member for Yeoville a few times already that he should not make interjections. Now I want to give him a final warning. He can have another full turn to speak in a moment, but he must not make interjections while the hon. the Minister is speaking.

Sir, is a member not allowed to make interjections when a Minister is speaking?

The hon. member knows the rules of this House.

Yes, I know them.

Hon. members are not allowed to make any interjections whatsoever; it is simply a concession on the part of the Chair to allow interjections.

I just want to ask you whether there is one rule when a Minister is speaking and another when an ordinary member is speaking?

Order! I cannot allow hon. members to keep on making interjections.

Sir, the hon. member said that we did not have the courage to adopt the ordinary fiscal or monetary methods in order to combat inflation, and I say that they themselves did not give us the answer. Sir, the ordinary methods which are applied to combat inflation are fiscal and monetary methods. The hon. member said that we did not have the courage to apply fiscal and monetary methods. Sir, in the debate which we conducted here last week, did hon. members on that side demonstrate to us that they were in favour of fiscal and monetary methods in combating inflation, i.e. restricting credit, reducing the money in circulation and increasing taxes? Did any hon. member on the opposite side advocate restricting credit, reducing the money in circulation and increasing taxes? No, on the contrary, all week long they advocated one concession after another. The hon. member for Constantia said “This is a time for tax lowering”. Sir, I should like that hon. member to be explicit about this. I am sorry that he cannot reply now, but I must have, once and for all, a clear answer from hon. members on that side to this question: Are they in favour of stricter fiscal and monetary methods, or are they not? The hon. member rightly stated that there is wealth in our country on the one hand and poverty on the other, and he said that it is our task to ensure that the “have-nots” enjoy a higher standard of living without detracting from the standard of living of the “haves”—a very fine social and sociological ideal. Sir, we have already to a very large extent succeeded in our country in giving the less well-to-do in South Africa a standard of living which is high compared with the standard of living of other people in this part of Africa, or in Africa as a whole. The “have-nots” in our country have to a very large extent reached a higher level than those in other countries, and South Africa has already given them a great deal.

Sir, the hon. member told us further that we should ensure that confidence in South Africa develops. I do not know why he again invoked Safta on this occasion; it was not necessary. But he said that we in South Africa should ensure that international confidence in South Africa develops. I just want to tell him that I agree with him that there should be international confidence in South Africa, but I also want to tell him that in an economic sphere South Africa enjoys international confidence which very few countries in the world have. We who have to make frequent trips abroad as part of our work and who travel from one country to another, from one ministry to another and from one bank to another, find that there is the greatest confidence in South Africa’s economic and financial position; we find this throughout the world. One of the examples which I could mention to the hon. member and which he in particular would appreciate, is that there is almost no bank of any importance in the world which would not dearly like to establish a branch here in South Africa. One of our problems in recent years has been that major banks of the world want to establish branches in South Africa, and when we tell them that it is our policy not to allow the establishment of more branches, they ask us whether they cannot have a share in branches of banks which already exist in South Africa. Sir, surely it is a demonstration of confidence if some of the largest financial institutions in the world want to establish themselves in South Africa in some way or another. Yesterday or the day before the hon. the Prime Minister spoke here about our relations with neighbouring states, and the hon. member was right to mention this. I know that other countries feel a little anxious, a little uncertain, about the relations of other countries and states to our economy, or what the effect of states such as Mozambique may be if things happen there, and what the effect on South Africa’s economy might be. I think the hon. the Prime Minister gave a very good explanation here yesterday, and if that explanation becomes known throughout the world, it would be beneficial to South Africa. I myself have, in recent months, had to make this same statement in various places to inform the people in the outside world that South Africa will remain strong, whatever happens in the outside world.

The hon. member referred to the International Monetary Fund. I appreciate his contribution in this respect. He discussed conditions in the world in the financial sphere, the confusion, the uncertainty, the instability which is prevailing. He also made a few suggestions. He said, firstly, that every country should learn to set its own house in order. This is one of the things which we have been saying for a long time. You will recall that we referred in the past to the stream of dollars which is flooding the world and to the inflation which that is causing. We have referred to the American deficits at home and abroad, and we then said that one of the first steps to bring the world to its feet again economically and financially is for every country to sweep before its own door and to set the conditions in that country in order. But I am in complete agreement with the hon. member that this is what must be done. In fact, we have been advocating this for a very long time.

The hon. member again used the words “the Government has to have courage” to do certain things. I do not want to go into this any further. He said that we should have the courage to do certain things. The hon. member mentioned the problem of the “destabilization of capital movements”. Again I agree with him on that score. One of the problems of the Western, in fact of the entire, world today is that enormous amounts of capital have in the past flowed from one country to the other and that this has had a destabilizing effect on the currency markets and have caused great difficulties for many countries. I agree with him that because that “destabilization capital movement” had a very detrimental effect on exchange rates, it is still one of the gravest dangers which has to be combated. One of the methods which has been applied to combat it, is floating rates, and at the next meeting of the Committee of Twenty you will perhaps see proposals being submitted and perhaps accepted in regard to the measures which ought to be adopted to help put a stop to these devastating capital movements.

The hon. member also referred, quite rightly, to the Arabian obligations. Hon. members will be interested to know that the Arabs will during the course of this year, receive an amount of $100 million for their oil, and it is calculated that of that amount of $100 million they will be able to use $40 million for their own purpose, and that if the other $60 million is withdrawn from the rest of the world, it will cause great deficits in almost every country of the world and will place the world economy in grave difficulties. This is one of the causes of inflation, of the scarcity of capital. The countries of the world today have to borrow money on the capital market to pay their oil accounts to the Middle East. Hence the scarcity of capital and high interest rates. I agree with the hon. member that something must be done “to re-cycle that money”, and joint efforts are now being made by the International Monetary Fund and the banks to re-circulate that money to the channels where it is needed. This is no easy task, for at the moment the money is returning to the West from the Arabs, but only to a few countries, particularly to America, as well as to Germany and England, although to a lesser extent. However, it returns in the form of short-term capital which cannot be used, or at least, very little of which can be used. That entire problem which arose though the withdrawal of money from the rest of the world as a result of the oil position is and remains one of the greatest problems confronting the world today.

The hon. member mentioned something which was very contradictory. I hope I understood him incorrectly, and if that is the case, he could merely shake his head. The hon. member said that the Budget is not a surplus Budget but is a deficit Budget. It is a deficit Budget because we have to borrow R334 million from overseas. He says it is an inflationary Budget. Is that correct?

May I furnish an explanation?

The hon. member may put a question.

I shall put in the form of a question. What I said was that without the money which has to be borrowed there would be a deficit on the current account. I did not say that this was inflationary. I think the hon. the Minister misunderstood me.

Very well, the hon. member said there would be a deficit on current account.

I made that reference to prove that we need money from overseas.

Very well, the hon. member said we have a deficit, and this is proved by the fact that we need money from overseas. We will not be able to find all the money here, and therefore we have to borrow money from overseas. What that insinuation amounts to of course is that the Budget is inflationary, for money which is drawn from overseas, has to have an inflationary effect because it is new money entering the country, not so? However, I shall leave the argument at that; the hon. member can give me a reply to it in a moment.

However, the hon. member went on to say: “The outflow of money will aggravate inflation”. This is something which I do not understand at all. The hon. member can explain it to me in a moment, but I cannot reconcile these two views at all. The hon. member said the fact that money has to enter the country is proof that there is a deficit. We have a deficit Budget. And: “A deficit Budget is an inflationary Budget.” But afterwards the hon. member said: “The outflow will aggravate inflation.” He then mentioned examples. He said it was not the interest rate differentials which caused the outflow. Perhaps I do not understand English after all. As it is, he did say: "The outflow is not only due to interest rates.”

Mr. Chairman, may I explain what I said?

No, the hon. member may not do so now; he may explain it subsequently by means of a speech.

I would be glad if the hon. member would explain it later on, for I do not want to criticize the hon. member wrongly. Consequently I would appreciate it if the hon. member would clear up these two views. He said that the Budget is not a surplus Budget but “a deficit Budget”. His evidence for saying that it is a “deficit Budget” he finds in the fact that we are having to borrow approximately R330 million overseas. Consequently he referred to the “inter-State differential” and said: “The outflow will aggravate the rate of inflation.” He added that it was not the interest rates which were causing this, for the State had paid out money to overseas countries while there was also a flow of money to overseas countries from the Stock Exchange as a result of the losses which had been suffered. Why did the State lose money to overseas countries? The State lost money to overseas countries because interest rates were so high, it had money left over and it used this to pay off its loans because of the high interest rates. Why has there been a slump on the Stock Exchange? There was a slump on the Stock Exchange because money was so expensive and the interest rates so high. People invested less in shares, and less money entered this country from abroad to purchase shares. People preferred to convert their shares to cash and invest this at fixed rates of interest. I would be glad if the hon. member would explain those statements so that I could reply to them at a later stage.

The hon. member also referred to “banking uncertainties”. I agree with the hon. member’s idea in this regard. In South Africa we are pleased that in spite of all the criticism of our financial situation, the banks in South Africa are sound. In the course of two months four banks closed down in West Germany, a phenomenon which has also occurred in other countries. Here in our country, however, we are certain that our banks are in such a sound position that we have no fear that close-downs of that nature will occur.

The hon. member also referred to the Registrar of Financial Institutions, and referred to the difficult work he has to do and to the fact that his staff position is critical. In this respect as well I agree with the hon. member that the position is critical. One of the reasons for this is, however, that we are losing financial staff to the private sector. As soon as a person reaches a certain level in the Public Service and is really competent, he is usually attracted to the private sector. That division is one of the divisions which is suffering the most from this phenomena.

The hon. member for Paarl referred to the difficulties which are being experienced in obtaining shares bought on the Stock Exchange. The hon. member knows very well that regulations exist which stipulate the period within which shares which have been purchased should be handed over. However, we shall give attention to this matter and ensure that a more favourable situation develops.

The hon. member for Pietersburg requested that the Statistical Survey should also contain data in regard to the LBS countries. Officially, these statistics are not at our disposal. As he rightly said, private bodies have in fact made studies in this regard, but we cannot include in our official documents those studies and the conclusions they arrived at.

The hon. member for Heilbron made a plea on behalf of the farmers, and for the alleviation of their interest burden. It is true that the prosperity and the adversity of our farmers played an important part in our balance of payments, in the welfare of our country as a whole, and in the struggle against inflation. Therefore we as a Government will look after the farmers. The farmers’ difficulty is not only a financial one. There are certain things we can do nothing about, such as the droughts for example. For this reason the Government has already assisted the farmers in various ways, by means of a subsidy on fertilizer, Railways rates, foodstuffs, etc. In this respect the Land Bank is at this time helping to finance the farmers’ crops by almost R200 million. The Land Bank is also providing loans to farmers at lower rates of interest. The R10 million to R12 million which we make available annually to the Land Bank at 2% interest, enables the Land Bank to negotiate other loans at a very much higher rate of interest, with the result that the rates of interest on the total available funds can then be afforded by the farmers. The hon. member may rest assured that the Government will always look after the interests of our farmers to the best of its ability.

Mr. Chairman, I rise only to explain to the hon. the Minister what I think he did not understand initially so that he can reply to me. When he spoke about an outflow of capital and indicated in earlier debates that this was due to an interest differential, I doubted that this was the only reason and said that there were other reasons for this as well. I did not dispute that that was a reason because, in fact, I pointed out to the hon. the Minister that if there was an interest differential—and there was—he had already been aware of it earlier, because the interest differential had developed in respect of the USA, the United Kingdom and Germany some considerable time ago and no action had been taken. Therefore interest differential was quite clearly a factor, but it was not the only factor. As regards the other reasons for capital outflow, I mentioned two of them. The first was the outflow from the stock exchange, about which I expressed my concern, particularly because gold shares are being bought and other shares are being sold. Secondly, there is the question of confidence which is at issue, and confidence also affects the inflow and outflow of capital. The third reason was that there was actually a repayment of Government loans. So therefore the suggestion that interest differential was the only reason, was one that I cast doubt upon in my address to the Minister earlier today.

The second point that he also did not understand was what I said when I referred to what the significance of the deficit was which I pointed out. I quoted the figures. I said that there was in fact a deficit, excluding borrowing, of R633 million, and that if you included the amounts that had to be provided in respect of further loan redemption, the figure came to R1 146 million. In other words, the balance of the cash which we require is not satisfied entirely from revenue. It has to be satisfied, in respect of a substantial portion, from loans. In respect of that amount on loan of R1 146 million he has been obliged to provide that we intend to borrow no less than R334 million in the current year from overseas. I quoted that figure in order to indicate how important confidence in South Africa’s economy is, so that we shall be able to borrow. Secondly, political changes, which may come about in Western Europe by a swing to the left, might in the future have an adverse effect on our ability to borrow money overseas. I tried to demonstrate that there were two factors here. One is the question of confidence. The second is that political changes overseas might have serious economic consequences for us in the future. I hope I have now made that clear to the Minister.

Mr. chairman, I am pleased that the hon. member gave me that statement, but I want to emphasize that he did, after all, say that interest rates comprised one of the factors causing money to flow out of the country. That is my whole point. Interest rates also comprised one of the prime factors which caused less money to enter the country. With reference to what the hon. member for Johannesburg North also said, I can say that less money entered the country because interest rates abroad have been far more attractive that has been the case here. One of the major problems in acquiring capital for South Africa, and throughout the world, has been the question of interest rates in particular. The hon. member said another important thing. He mentioned it in his previous speech last week. He said that we should borrow money while the money is available.

I want to tell the hon. member that up to now, South Africa has had no problems about getting money. It speaks volumes that in these times, when money is so scarce throughout the world, when people are seeking capital, when money is being drained away by the Arabs’ oil sales, South Africa is able to borrow R330 million or R340 million abroad. It was offered to us without us having to ask for it, for the most part. To me this is a sign of very great confidence in South Africa. So that money is there. It was not necessary for us. We can get it. Why does the hon. member think that things are going to be far more difficult in future years, and that we should borrow now what we may need in four or five years’ time? I think it would be a little unwise to borrow money long before one required it, owing to the high interest rates of that money, and bearing in mind that we have always been able to borrow money. Even from a country such as Germany which is a socialist country.

Then I want to say to the hon. member: There is no point in borrowing money now and thinking that the interest rates will rise later. If one borrows it now at 9% one should not think that it will be 12% later. It is almost always the case that there are not only fixed interest rates. One borrows money in accordance with fluctuating interest rates because “fixed interest loans” are out of the question. Even though we were to borrow money now at 9% because we were afraid that it would be 12% later on, the day that the interest rates rose, we too should automatically have to raise our interest rate. I think that I have already given that assurance to the hon. member.

Votes agreed to.

Revenue Votes Nos. 7.—“Provincial Administrations”, 8.—“S.A. Mint”, 9.—“Inland Revenue”, 10.—“Customs and Excise” and 11.—“Audit”, and S.W.A. Votes Nos. 2.— “Inland Revenue” and 3.—“Customs and Excise”:

Mr. Chairman, I have listened to the hon. the Minister and the hon. member for Yeoville. According to a recent report in The Cape Times, the hon. member for Yeoville said this Budget was an “optical illusion”. After the hon. the Minister had dealt with him, I think we are justified in saying that if there is one man who is having an optical illusion, it is the hon. member for Yeoville.

In the short time at my disposal I should like to touch on a few small matters. The first question I want to raise is in regard to Vote No. 10. On this Vote an amount of R66 million is being voted for payment to neighbouring countries under customs and excise agreements. I raised this matter last year as well, and we are well aware of the situation existing in this regard. We know of the customs agreements and we are aware that there is no quantitative restriction in regard to customs, import duty, etc. We also welcome the thought that a trade alliance which can almost be compared to the EEC is developing. I think this is a step which is welcomed by us. It indicates that we at the southernmost tip of Africa are creating a trade alliance and an economic inter-dependence which can be of great benefit to us all.

However, I want to point out that in this process—and I am now speaking specifically of the development taking place in our neighbouring states—development takes place mainly through the private sector. In this process capital is channelled on a large scale from the private sector in the Republic of South Africa to the neighbouring states for the purposes of development. I do not in fact have any objection to that but for one qualification—I should very much like to have clarity in this regard—that I believe and trust that such a measure of control exists in regard to the outflow of capital to the neighbouring states that it cannot lead to a disorderly situation nor to the exploitation of the situation in the light of the agreements which exist. If not, I believe that this may be detrimental to our monetary position. It is especially detrimental if one views it in the light of the fact that we are also striving in the direction of the development of our border industries and our agency industries in the homelands. One should very much like to see it developing as desired. I want to leave this matter at that, but I should very much like to have some clarity in this regard from the hon. the Minister, at his convenience.

I also want to refer to another matter. In respect of sales duty we welcome the fact that the hon. the Minister again made concessions this year and that there are further reductions. We welcome this and we are also aware of the fact that these are fiscal measures. We are also aware of the fact that in drawing up this Budget applicable fiscal and other measures of a restricting nature were applied in a very judicious manner. In regard to these and other measures the Government is taking, I read in Sakerapport of 11 August 1974 (translation)—

It made the further statement (translation)—

They went on to say—

The opinions are then given of certain businessmen who also speak out in this direction. The names of these businessmen are also mentioned in the article. In this regard I just want to say that in the same edition of this newspaper the reports of various companies appeared getting their profits for the year. The fact that they are particularly prosperous is also mentioned. I think that this report and the statement by these businessmen against the Government—if they were reported correctly—is not only very unfair, but also a totally wrong and unfounded statement to make, for it is this very State and this very Government that have built that measure of stability, permanence and growth into this Budget, too, which promotes the very position of these businessmen throughout South Africa and enables them to progress and develop as they are doing.

When one considers this Budget, one can say emphatically that there is no clamping down on credit restrictions here. There are no cut-backs, as they are called. There is no freezing of prices or wages, except in the case of commodities which have to be controlled. Inflation is being controlled in a very healthy and effective manner, i.e., by way of growth. In point of fact, the Budget sets itself the primary objective of promoting productivity. There is the stimulation of capital and there is import and export trade, and the fine rate of exchange existing in this regard, in terms of which we show a very favourable balance. There are the concessions in respect of industries. There is the replacement of equipment, the in service training of labour and the concessions which are now also being made to the banks. There is the price of gold which benefits us. There is the fact that this Government is holding an amount of R650 million in reserve. There is the further stimulation and development of large projects such as those of Iscor, Richards Bay, Escom and others.

In a developing country like South Africa it really is necessary for some of the industries of this magnitude and with this scope to be controlled to a certain extent by the Government and the State. The statement made by those businessmen is further contradicted by the tremendous grouping of mighty consortiums which are at present coming into existence throughout the country. These concerns are extremely well provided with capital. I therefore think the position is actually quite the opposite of what it is made out to be. I think it is an unfounded, incorrect and unfair statement which is being made by capital concerns—I do not want to belittle their own capacity in this regard—whose growth, development and present prosperity are due in such large measure to the efforts of this Government.

Mr. Chairman, had this debate on this Vote—the South African Mint—taken place 19 days later, it would have been precisely one hundred years ago that the first gold coin was released in South Africa. On 22 September 1874 the well-known Burgers pound was released in the Transvaal. I do not want to dwell on the history of this particular coin. One might just mention that President Burgers visited the gold-fields at Lydenburg in 1873. There he found a lot of gold nuggets which he sent to Birmingham in England, and from these, 837 gold coins were minted for the old South African Republic. Where we are now celebrating the centenary of this coin one finds it a pity that this historical event is not being commemorated on one of our coins this year. One has great appreciation for the South African Mint, which was willing to strike commemorative medals to commemorate this coin. However, I think one should make a plea here that in future events of such an historical nature should also be depicted on our South African coins. These coins have a special message for us in South Africa today. I regard it as being historical, for I have here a photostatic copy of the note which President Burgers wrote to his son, in which he entrusted these coins to him. It may be interesting to note that what held true in those times still holds true today. He wrote as follows (translation)—

In dropping the subject of this Burgers coin, I should like to express a few thoughts on the Kruger rand, for which there is a very great demand throughout the world today. When one looks at the figures released in respect of the number of Kruger rands which are currently being sold overseas, one finds that since 1971 approximately 3½ million of these gold coins have been bought overseas, particularly by German and Swiss banks. I find it rather alarming that only about one-tenth, 374 000, of those bank coins—they are not sample coins—are in the possession of South Africans today. I think it would serve a good purpose if we were, in this House as well, to make an appeal to our people to appreciate the value of the Kruger gold rand with a view to combating inflation and the depreciation of money. However, while there is such a tremendous demand for the South African gold coins at the moment because their composition is something exceptional and because it is almost impossible to counterfeit them, provision is also being made in our legislation for the minting of a gold R5 coin. Since marketing conditions abroad are so exceptionally favourable at the moment, since there is such a tremendous demand for these South African gold coins, one would suggest that this R5 coin, for which statutory provision is being made, should also be minted now. The South African Mint seeks occasions for minting these particular coins. Perhaps the opening of a new Mint would be a good occasion for this, but then one would like to request that a distinction be made between the collector’s coin or sample coin and the coin which will be made available by various banks for trade in South Africa as well as abroad. Sir, one does not want to be jealous of the distribution of these particular gold coins, but I think the gold coins of South Africa are a sacred treasure to us in South Africa because their composition is of such a nature that the gold coins of no other country in the world can compare with those of South Africa, and that also applies to the finish and the design of the South African coins.

Mr. Chairman, I noticed today that up to and including this year no likeness of our present State President, President Fouché, has appeared on the South African coins. In 1968, when the previous State President retired, South African coins bearing his likeness were minted, and since this is of historical significance to us in the sense that it concerns the development of the Republic, we want to request that consideration be given next year to preserving the likeness of State President Fouché on these coins.

For the sake of interest, I should just like to mention that after these coins had been introduced in the Transvaal Republic, President Burgers ran into trouble in the sense that some of his colleagues reproached him, as a devout Christian, for having allowed his likeness to be reproduced on a coin. I requested in this House last year that we should consider minting a special coin—I called it the Diederichs rand. I can assure the hon. the Minister that there will be no complaints from our side if his likeness appears on that coin.

Sir, just one final thought: The 837 gold coins minted by President Burgers were shared out among the members of the Transvaal House of Assembly, and on the first day of sitting, on 22 September 1874, one Burgers gold pound was presented to each member in payment of his first period of service in the House. We are not asking the hon. the Minister to follow this example, but we do want to suggest to him that the great demand for our gold coins should be exploited and that we should also, if necessary, mint a R5 Kruger piece in order to find a wider market for South Africa’s gold.

Sir, I hope the hon. members for Ermelo and Bethlehem will forgive me if I do not react to what they have said. I want to deal with a matter which I raised last year in the Budget debate, a matter which I believe has become more and more important as time has gone by, and that is the financing of capital works for the provincial administrations. When I raised this matter last year I had a measure of support from the hon. member for Bloemfontein East in regard to the situation in which the provinces found themselves in dealing with their capital planning. I have some remarks to make to the hon. the Minister in this matter and I hope he will be able to indicate what steps have been taken to rectify the difficult position in which the provinces find themselves. Sir, my attention was particularly directed to this problem of forward planning in regard to capital works when I had the privilege of attending an international building research conference organized by our building research department under Dr. Webb during May of this year, and I would like to say what a tremendously valuable congress that was; it was one of international standard. The hon. the Prime Minister nods; he was at the opening function. More and more, as the conference developed, one realized the importance of the co-ordination of building plans, not only in the interests of the various levels of government, but also from the point of view of the building industry and the cost of building.

Business interrupted to report progress.

House Resumed:

Progress reported and leave granted to sit again.

Mr. Speaker, I move—

I move the adjournment so that the House may proceed to consider the subject on the Order Paper, the purchase of land by Iscor in Saldanha Bay.

Sir, I sought to move this motion as a direct result of answers given to me in this House by the hon. the Minister of Economic Affairs relating to the purchase of land at Saldanha Bay. Much research has subsequently been done in relation to those answers. I regret that this research has not been completed. Certain further facts have been brought to the public attention and indeed I believe that in the course of the next week or so further information will be made available. But to the extent that information is available at this stage, I believe that this House should consider this question.

Mr. Speaker, I believe that the whole story of the development at Saldanha Bay, seen from a township point of view, is enough to make the hair stand on end of anyone who is concerned with orderly development in the public interest. The story over the years is one of speculation, of lobbying, of pressure groups and special pleading, of inside trading and fantastic personal profits being made at the taxpayers’ expense, and of indecision and bungling. Sir, here is a classic illustration of how not to develop a growth point rather than how to develop a growth point.

One asks who is immediately responsible, and one can argue that it is the speculators, the township developers, and the board of Iscor. All of these are factors in the Saldanha Bay saga. But I believe that responsibility for the shambles which has developed in that area also rests with this Government, and in particular with the Ministers more directly concerned with this issue during the years 1967 to 1970. There is no doubt that the public interest has suffered as a result of the difference over the advisability of the scheme between the West Cape lobby represented in the Cabinet by the then Minister of Economic Affairs, Mr. Jan Haak, and the S.A. Railways and Harbours lobby represented by the then Minister of Transport, Mr. Ben Schoeman. The records of the period from 1966 to 1970 are studded with speculative, stop-go statements by Cabinet Ministers and other people, culminating in a flurry of speculation prior to the announcement on 6 December 1969 by Mr. Jan Haak, then Minister of Economic Affairs, that the Government was indeed considering Saldanha Bay as an iron ore export port. A further decision in this matter was then announced by Mr. S. L. Muller, the new Minister of Economic Affairs, on 17 July 1970. At this stage costs had risen from an estimated R295 million, which was the projected figure in 1967, to between R650 million and R700 million, which was the figure given by Mr. Ben Schoeman to this House in June 1972. In the end there was a final final decision on 15 February by the Cabinet that the total scheme would be proceeded with. So much for the brief history.

What is obvious and what must have been obvious all along is that Iscor would require a considerable amount of land and that in view of the nature of the terrain and the lack of development around the bay area, land would be readily available for this project, and that it should be available at relatively low cost. The information given by the hon. the Minister on the 27th of last month was that three categories of land were acquired. Firstly, there was a strip of land for a railway terminal which was expropriated in terms of the Sishen-Saldanha Bay Railway Construction Act. Secondly, there was a number of single residential erven totalling R204 450, with a municipal valuation of R87 890. The third was a number of pieces of agricultural land which had a combined 1961 divisional council valuation of just over R610 000, which was purchased by Iscor for R6 115 145. This is a summary of the figures given to me by the hon. the Minister.

The first question that has to be asked, in view of the fact that taxpayers’ money is, and is going to continue to be involved, is whether the price paid for the land was too high. As far as the agricultural land is concerned, valued in 1961 at R610 000 and for which Iscor paid over R6 million, I have no doubt that the price that was paid was too high. An examination of the figures given to the House by the hon. the Minister shows that certain individuals have made fantastic profits at the taxpayers’ expense. It has been argued that the 1961 divisional council valuations were too low. We have checked the subsequent valuations of some of this land done for the purposes of estate duty. We have discovered that land valued in 1961 at R26 950 was in 1962 valued at only R20 000. The valuation in 1962 was therefore at a lower figure than the figure set in 1961. In another case land which was valued at R39 290 in 1961 was valued at R40 500 in 1967. Therefore there is no indication that there was a gross underestimate of the value of that agricultural land in 1961. Of course, over this period of ten to 12 years the value of the land might well have doubled and it might even have trebled, but certainly it did not rise by 30 times, 40 times, 50 times or by 58 times its valuation. Yet this is the difference between the Divisional Council valuation and the amount actually paid by Iscor for certain pieces of this land.

It has been argued that the land was no longer agricultural land, that it was industrial land. This argument is just not true. At the time when this land was purchased, it had not been rezoned for industrial purposes. It was still agricultural land. It only became industrial land when it was in Iscor’s hands. Before that stage it was not zoned for the purpose of ordinary industrial usage. Indeed, some of this land had already been purchased before the decision was made that Iscor would undertake certain developments there. The decision was only announced by Mr. Jan Haak on 6 December and yet prior to that two important pieces of land had been purchased. By no stretch of imagination could one have argued that that was industrial land because at that stage no decision had been taken to proceed with the Iscor scheme in the Saldanha Bay area.

What is more, one of the persons who made very significant profits out of his land argued that he was using his land for agricultural purposes. Another one who made a tremendous profit said that he intended using it for recreational purposes and that it had only been under the threat of expropriation from Iscor that he had decided to surrender the land. You cannot argue that you are using land for agricultural purposes or that you intend using it for recreational purposes, and at the same time claim that the land is industrial and that it has been zoned for that purpose.

I come to the second question. In view of the public nature of Iscor why was the land not expropriated? Iscor does not have powers of expropriation, but the Government does. It could have asked this House for the same expropriation powers as it obtained for the Shishen-Saldanha Bay railway scheme. The Government could have used its general expropriation powers which it obtained in terms of the Expropriation Act of 1965. In terms of the amendments to that Act, passed by this House in 1971, the Government was given specific authority to expropriate land on behalf of some other body which was wanting to use such land for public purposes.

What is more important is that in assessing the value that should be placed on the land, the Act specifically states in section 8(4)(f) that any enhancement after the date of the notice to expropriate “which is a consequence of any work or act which the State may carry out or perform or intends to carry out or perform in connection with such purpose, shall not be taken into account.” The Expropriation Act specifically states that you shall not take into account any enhancement which may accrue as a result of the use to which the State wishes to put the land. Therefore there is absolutely no case for this land to have been valued at current industrial land rates.

The third question is: If the land was obtained by private negotiation, as the hon. the Minister said it was, what procedures were adopted? How was the market value of the land actually established? Whose advice did Iscor take on the value of this land? Were there sworn appraisals by people other than those who had an interest in Saldanha property deals?

Mr. J. P. Coetzee, managing director of Iscor, said that in advance of the Government’s decision to proceed with the Saldanha Bay scheme it was necessary for Iscor to proceed to purchase certain pieces of land. One asks oneself why they only purchased two pieces of land. Why did they only purchase the piece of land from Prof. Van der Meulen and his syndicate for R300 000, only 18 months after he had purchased that land for only R65 000? Why did they only buy one section of the Ystervarkenrus Boerdery (Edms.) Bpk. for R202 000 when it had only recently been purchased for R65 000? The balance of that property, which they did not purchase, was purchased by somebody else for R30 000, who four years later resold it to Iscor for R750 000. Did Iscor attempt to secure its future interests by acquiring options on that property?

One of the replies given by the hon. the Minister of Economic Affairs to this House, maybe it was given to him incorrectly, was misleading, in particular when it relates to the figure of R501 668 being the purchase price paid to a Mr. or Mrs. M. M. Smit for certain land. What the hon. the Minister did not reveal in his answer was that R185 000 was paid to that individual, and that R316 000 was paid to some other individual who had acquired an option on that land. One wants to know to whom that extra R316 000 was paid? How long did that person hold the option? How many times has that option changed hands? How many of the other so-called purchases had taken place under these option provisions? What steps did Iscor take to see that it acquired options rather than to allow these to be taken up by other individuals?

Was there any inside trading? Was privileged information made available to certain people? Certainly the hon. members are aware that rumour and general talk say that there was. All I can say is that the scurry of land dealings, of options and the precision with which certain parts of farms with relatively low values, were purchased, divided, consolidated and resold at vast profits, indicate that there was a likelihood of some inside trading or a leakage of information or at least favours for friends at public expense. This is a serious suggestion for me to make, but it has been made and the substantial evidence would indicate that something was happening in the Saldanha Bay area which was unhealthy, unwholesome and not in the public interest.

One asks why the land prices were not frozen? Within seven weeks of the Richards Bay project being decided on by the Government it was declared a controlled area in terms of the Natural Resources Development Act, but right until this day this has not been done to the Saldanha Bay area. Land values have not been pegged and it is still not a controlled area. Saldanha Bay has become an area of intense speculation, of profit-making and, one suspects, from time to time, of inside trading as a result of inside information.

I want to suggest that there are two ways of remedying the situation. The first is that the whole Saldanha Bay area be immediately proclaimed a controlled area in terms of the Act in order to prevent this mad rush in land speculation. Secondly, the Government must immediately appoint a judicial commission to inquire into the purchases of land which have already taken place, to report on whether these purchases have been properly made and whether they have been made in the public interest, to recommend steps to be taken in connection with the purchases of land which may not have been made properly in the public interest, and, finally, to advise on steps that should be taken to ensure that the general public’s interest is protected in the future.

One might ask why a judicial commission should be appointed. I believe that only a judicial commission would be in a position to play the independent role that so serious an investigation demands. It would have the right to call for papers, to summon witnesses, to allow evidence to be led and for witnesses to be cross-examined. Only a commission with judicial status could get to the root of this matter and satisfy tens of thousands of taxpayers. This is a matter of very general concern in the Western Cape and in the Boland area. I believe that only a commission of this nature could satisfy the taxpayers of South Africa that their interests were being protected and that in this whole situation justice was being done.

Mr. Speaker, here we have just had another conglomeration of insinuations about irregularities such as one can only expect from that hon. member and his party.

Surely the whole question of whether the State should have expropriated the land in this case, cannot be debated in a snap debate such as this. The only fact I want to mention for consideration, is that the principles of the Expropriation Act of 1965 explicitly state that when the State expropriates, it has to expropriate at market value. Now I want to tell the hon. member that in that area as much land was sold to other bodies as was sold to Iscor, and at prices which were at least as high or even higher. Therefore, if the State had to expropriate and had to do so at market value it would in some cases have had to expropriate at a higher price than that at which it purchased the land. To my mind Iscor managed to buy very advantageously.

But it is very clear to me that the hon. member is being used by The Cape Times and other English-language newspapers, that he has been taken in tow by them, in the same way as the hon. member for Newton Park was taken in tow by the Sunday Times in 1970. He should go and ask the hon. member for Newton Park what happened to him after they had used him and then cast him aside. On Friday morning there was another gem of this nature in The Cape Times. This was a prominent report on the front page. The hon. member could just as well have referred to that. The report referred to the land bought by Iscor from one Prof. Van der Meulen and five partners. The chief reporter of The Cape Times said that Prof. Van der Meulen had five partners, but that he did not want to say who they were. The insinuation is, of course, that a scoundrelly deed was committed, and that that is why the names of those five partners are being kept secret. They are being protected. But in the same breath The Cape Times said that Prof. Van der Meulen served on the board of directors of the Owen Wiggins Trust and that the hon. member for Paarl served with him on that board. The insinuation is that he is one of the scoundrels who sold that land to Iscor for R300 000. What was, of course, not disclosed, is that that transaction took place in January, 1969, and that I became a member of that board only in May 1973. Naturally I know nothing about the whole transaction, but this is just another typical example of the character assassination in which these hon. members and The Cape Times engaged. The road they have travelled is strewn with the bodies of those who fell victim to character assassination. This is exactly what they are again trying to do here. However, they are very, very far from the truth.

Mr. Speaker, listening to the hon. member for Sea Point, I really think I am entitled to say at the start that he has just been too clever by half. He has raised a matter here by means of a snap debate. This in itself is a most far-reaching step to have taken in this House. He has asked for the interruption of the business of the House, to do what? Without giving us any evidence whatsoever in support of his case, he endeavoured to cast suspicion wherever he could and reflections on the management and the directorate of an absolutely first-class organization in this country, Iscor. That is what he has done.

Sir, I have so little time. I just want to ask the hon. member across the floor of the House, to start with: Does he say or imply in any way whatsoever that there have been irregularities of any kind in these deals? He can answer me, yes or no.

It all depends on what the hon. the Minister means by “irregularities” ...

Order! The hon. member cannot have a second turn now.

Obviously, the hon. member is not prepared to answer yes or no. He talks about “bungling” and “inside trading”, he talks of “a shambles”, of “speculative stop-go statements by Ministers”. It is very easy to make these insinuations and statements across the floor of the House without substantiating them. What are the facts? First of all he said that fantastic prices were paid and that fantastic profits were made at the taxpayers’ expense. He said that the prices paid were out of all proportion to the divisional council valuations. His great friends of The Sunday Tribune talked of “sensational land deals”, of “staggering profits”—to mention only a few terms. What is the position? In February 1968 the newspapers throughout the country said with great publicity that Iscor was going to start a very big development scheme in that area. Iscor, upon considering this matter and upon making a judgment as to whether in fact this must take place or not, had to make a judgment about what the chances were if they were to proceed with big development at Saldanha. They came to the conclusion that this would certainly have to come and they immediately stepped in and bought three properties, and not two as the hon. member for Sea Point has said. They bought those properties at an average value of R331 per morgen. Great publicity is given to the transaction with Prof. Van der Meulen at an average price of R1 000 per morgen. That price was dead cheap under those circumstances.

What did he pay 18 months before?

In December 1971 the hon. Minister of Economic Affairs of the day said that the Cabinet had given provisional approval for certain development projects and then said specifically:

Again Iscor had to weigh this matter up and immediately stepped in by taking up a whole number of options. The hon. member talked of options and that is what they did. They took up options, in fact a whole series of them. They also bought land at that time and despite the publicity and the pressure to buy land Iscor was able to buy a whole number of properties and to exercise options on land up to nearly the end of 1973 at an average purchase price of R252 per morgen. There was one single deal at an average price of R2 569 per morgen and yet the average price they paid, including this instance, worked out at R252 a morgen. That is the average price that was paid in 1972 and 1973. Hon. members must remember that Iscor bought some of the finest land in that whole area. I have a map here—I wish I could have put it up on the wall—which will show hon. members that Iscor among other properties acquired 8½ km frontage on Saldanha Bay. Today you cannot buy that land, never mind the price. Yet it was done in 1972 and 1973. Then, in February 1973, the Minister announced that the final decision had been made. Again Iscor stepped in and made further purchases of land, which it absolutely had to have. Even at that stage Iscor bought that land at an average of R1 116 per morgen. The point is that the average cost for all the purchases which Iscor made, totalling some R6 million, was R350 per morgen. It is in the circumstances the cheapest series of purchases I have heard of in this country in recent years. I shall come to that again. The hon. member must not laugh too soon. Let us make a few comparisons. [Interjections.] Let us look at the hon. member’s reasoning that one must look at the divisional council valuation of 1961, a valuation which was made on the basis of agricultural land. He repeated it after Mr. Coetzee of Iscor had made his statement. I want to say that it is manifestly absurd, so absurd that I have no argument to bring in against it.

Let us look at some of the transactions between purchasers other than Iscor and dealers in land at the corresponding time. I want to name a few private transactions. On 24 October 1969 there was a transaction between two private parties where the one party paid an average of R1 221 per morgen. At about the same time Iscor bought land at R331 per morgen, On 31 July 1972 a certain property was bought and sold by private interests at Saldanha at R4 483 per morgen. About the same time in July 1972. Iscor bought land at R202 a morgen. The land which Iscor bought was very close to that and was excellent land. In other words, Iscor bought land for R202 per morgen as against R4 483 paid in a private transaction at the same time.

Then the hon. member from the Progressive Party—which presumably stands for freedom and permissiveness in all things including economic affairs—comes and says that we must not have private treaties in a capitalistic economy. We must have forced that we must not have private treaties in a capitalistic economy. We must have forced sales; we must expropriate wherever possible. What about expropriation? Iscor had to expropriate certain land to get their railway track. The hon. member knows that if you put a railway over a certain topography, you can only put it in one optimum position. If you put it in a different position it is at a greater cost. Iscor had to dp that; it had to expropriate for that purpose and it had the power. It also has the power to expropriate for pipe-lines and for transporting their products to the port. Those are the only powers it has. Not for these purchases. Iscor now has a claim outstanding from that expropriation—a claim against it at the rate of R7 887 per morgen for land it expropriated. This claim is still hanging over its head. [Interjections.]

Order!

The hon. member knows that, apart from the principle, you don’t force a sale in a capitalistic economy unless you have to. You do not do it unless it is as a last resort. The hon. member now forgets all his principles, if he has any. He says that we must force these sales, and this is what has happened. What about the costs when these matters go to arbitration and to the Supreme Court? What about the delay when you have a vast organization busy with one of the biggest development projects in the history of this country, from which everybody is going to benefit in this country, including those taxpayers about whom the hon. member is so worried? Now. Mr. Speaker, what about Richards Bay which is a perfect comparison, the best I can find in this country? I refer to a publication called Decentralization Growth-points, 1974, which is issued by the Department of Planning, by my hon. colleague over there. In it you will read, Mr. Speaker, that at the end of last year, 1973, when Iscor was buying at R300 per morgen at Saldanha Bay—and at R1 100—at Richards Bay the price was R21 367 per morgen without a siding. The price was R27 350 per morgen with sidings. Those figures today, a few months later, are R30 000 and R38 000 per morgen respectively. That is at Richards Bay. At about that time Iscor was buying on average at R350 per morgen. At Prospection, south of Durban, an area of development near Amanzimtoti, do you know what the price of land was at the end of last year, Sir? It was R232 000 per morgen. Without a siding the price was R158 000 per morgen. At Newcastle it was between R5 000 and R6 000 per morgen. These figures make Iscor’s Saldanha figures virtually pale into insignificance. Interestingly enough, a well-known politician at Newcastle bought some land there at the end of 1968 for R25 800. Five months later, when the new development started to hit Newcastle, he sold that land for R597 800. R25 000 as against R598 000, after five months! No one mentioned those things, Mr. Speaker. Why does the hon. member latch on to Iscor? We know that Iscor’s total purchases of land represent less than 1% of its aggregate outlay at Saldanha. Its total purchases there are less than 1% of its total capital outlay. This is unheard of. I think I have one minute left, Mr. Speaker, so if you would allow me I just want to refer to the scandalous sort of thing that has arisen out of this hon. member’s vendetta against Iscor without any evidence. In The Daily News there was a leading article which Stated-

This is a very scandalous statement, Mr. Speaker. It goes on to say—

What has this got to do with politicians? This was Iscor dealing independently. Finally—

In conclusion, Sir, I want to say that I have no evidence before me whatsoever of any kind of corruption or irregularity. In the circumstances I reject completely the hon. member’s request to me to institute an urgent inquiry. The day he brings me clear evidence of any irregularity I shall make an immediate inquiry.

Hear, hear!